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Pharma Industry ‘Entering a New Era’: Eli Lilly CEO

Thursday, 11 Apr 2013 | 12:36 PM ET
Eli Lilly CEO on the Future of Big Pharma
Thursday, 11 Apr 2013 | 10:10 AM ET
John Lechleiter, Eli Lilly's chairman, president and CEO, discusses the company's drug pipeline as its stock nears a 52-week high.

The pharmaceuticals industry is entering a different phase, and markets can expect a wave of product launches over the next few years, John Lechleiter, Eli Lilly's president and CEO, told "Squawk on the Street."

Lechleiter said that the Food and Drug Administration is reviewing drugs more quickly than previously, with 39 approved just last year. According to Reuters, that number is a 16-year high for the agency.

He also pointed to an industry-wide survey showing 5,000 drugs in clinical development and 800 in late-stage development.

"I believe that we're entering a new era for this industry where we're going to see increased levels of productivity and output," Lechleiter said. "That's how we'll overcome our patient challenges and resume growth.

"I think the industry to some extent is coming back into favor now," he said. "That's because we are reliable cash generators—and those dividend payments. People are starting to see what's out there, what's ahead. They're starting to see pipelines that they're more excited about. We've never had so many great opportunities to get great medicines to market," he said.

Lilly plans to maintain its dividend and consider stock buybacks while considering other uses of capital, Lechleiter said, adding that, at current levels, the company is able to offer a good yield to shareholders while increasing research and development.

Short term, Lilly has frozen all executive salaries—a cost-cutting move in reaction to the expiration of several major patents this year, including its largest product, the antidepressant Cymbalta.

Eli Lilly shares stood at a 52-week high in Thursday trading.

"We saw this coming, and we took measures to ensure not only that we could make it through this very challenging period from a financial perspective but that we were investing appropriately in our pipeline," Lechleiter said. "Today, we have 13 molecules in late-stage development; we have got the strongest late-stage pipeline in our history. Our ability to launch these products in the next several years will take us out of this trough and get us back to growth."

One key will be a better Alzheimer's treatment.

"I think we are hot on the trail of Alzheimer's," Lechleiter said. "I have to say for the industry, I'm confident that we're going have some new advances in the next 5 to 10 years. That's the time where I would expect to see multiple opportunities to make a difference."

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul

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