The story
Founded by Eli Lilly in 1875.1
Founding
The company was founded by Colonel Eli Lilly, a pharmaceutical chemist and Union army veteran of the American Civil War. Lilly served as the company president until his death in 1898.
In 1869, after working for drugstores in Indiana, Lilly became a partner in a Paris, Illinois-based drugstore with James W. Binford. Four years later, in 1873, Lilly left the partnership with Binford, and returned to Indianapolis. In 1874, Lilly partnered with John F. Johnston, and opened a drug manufacturing operation called Johnston and Lilly.
In 1876, Lilly dissolved the partnership, and used his share of the assets to open his own pharmaceutical manufacturing business, Eli Lilly and Company, in Indianapolis. The sign outside, above the shop's door, read: "Eli Lilly, Chemist."
The Indiana Historical Society recreated a replica of the first Lilly laboratory on Pearl Street for its exhibition, "You Are There: Eli Lilly at the Beginning," at the Eugene and Marilyn Glick Indiana History Center in Indianapolis. The temporary exhibition (1 October 2016, to 20 January 2018) also included costumed interpreters portraying Colonel Lilly and others.
In 1886, Ernest G. Eberhardt, a chemist, joined the company as its first full-time research scientist.
Lilly began his manufacturing venture with three employees, including his son, Josiah (J. K.). One of the first medicines that Lilly produced was quinine, a drug used to treat malaria, a mosquito-borne disease. By the end of 1876, sales reached $4,470.
Around 1890, Col. Lilly turned over operation of the family business to his son, Josiah, who ran the company for the next several decades. Col. Lilly remained active in civic affairs and assisted a number of local organizations, including the Commercial Club of Indianapolis, which later became the Indianapolis Chamber of Commerce, and the Charity Organization Society, a forerunner to the Family Services Association of Central Indiana, an organization supported by United Way of America. Josiah's sons, Eli and Joe, were also philanthropists who supported numerous cultural and educational organizations.
19th century
In 1878, Lilly hired his brother, James, as his first full-time salesman, and the subsequent sales team marketed the company's drugs nationally. By 1879, the company had grown to $48,000 in sales.
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The company moved its Indianapolis headquarters from Pearl Street to larger quarters at 36 South Meridian Street. In 1881, the company moved to its current headquarters in Indianapolis's south-side industrial area, and the company later purchased additional facilities for research and production. The same year, Lilly incorporated the business as Eli Lilly and Company, elected a board of directors, and issued stock to family members and close associates.
Lilly's first innovative product was gelatin-coating for pills and capsules. The company's other early innovations included fruit flavorings and sugarcoated pills, which made the medicines easier to swallow.
In 1882, Colonel Lilly's only son, Josiah K. Lilly Sr. (J. K.), a pharmaceutical chemist, graduated from the Philadelphia College of Pharmacy in Philadelphia, and returned to Indianapolis to join the family business as a superintendent of its laboratory.
In 1883, the company contracted to mix and sell Succus Alteran, its first widely successful product and one its best sellers. The product was marketed as a "blood purifier" and as a treatment for syphilis, some types of rheumatism, and skin diseases such as eczema and psoriasis.
By the late 1880s, Colonel Lilly was one of the Indianapolis area's leading businessmen, and the company had over 100 employees and $200,000 in annual sales.
In 1890, Colonel Lilly fully turned over the day-to-day management of the business to J. K., who ran the company for 34 years. The 1890s were a tumultuous decade economically, but the company flourished. In 1894, Lilly purchased a manufacturing plant to be used solely for creating capsules. The company also made several technological advances in the manufacturing process, including automating its capsule production. Over the next few years the company annually created tens of millions of capsules and pills.
In 1898, Lilly's son, J. K. Lilly, inherited the company and became its president following Colonel Lilly's death. At the time of Colonel Lilly's death, the company had a product line of 2,005 items and annual sales of more than $300,000. Colonel Lilly was a pioneer in the modern pharmaceutical industry, with many of his early innovations later becoming standard practice. His ethical reforms in a trade that was marked by outlandish claims of miracle medicines began a period of rapid advancement in the development of medicinal drugs. J. K. Lilly continued to advocate for federal regulation on medicines.
As the Lilly company grew, other businesses set up operations near the plant on Indianapolis's near south side. The area developed into one of the city's major business and industrial hubs. Lilly's production, manufacturing, research, and administrative operations in Indianapolis eventually occupied a complex of more than two dozen buildings, which covered 15-block area, in addition to its production plants along Kentucky Avenue.
In addition to Colonel Lilly, his brother, James, and son, Josiah (J. K.), the company employed other Lilly family. Colonel Lilly's cousin, Evan Lilly, was hired as a bookkeeper. Lilly's grandsons, Eli and Josiah Jr. (Joe) joined the company from a young age. Under J. K.'s leadership, the company introduced scientific management concepts, organized the company's research department, increased its sales force, and began international distribution of its products. For the rest of the late 19th century, Lilly operated in Indianapolis and the surrounding area as many other pharmaceutical businesses did, manufacturing and selling "sugar-coated pills, fluid extracts, elixirs, and syrups". The company used plants for its raw materials and produced its products by hand. One historian noted, "Although the Indianapolis firm was more careful in making and promoting drugs than the patent medicine men of the era, the company remained ambivalent about scientific research."
1900s
In 1905, J. K. Lilly oversaw a large expansion of the company, and it reached annual sales of $1 million.
Following the 1906 San Francisco earthquake, the company sent much-needed medicine to support recovery efforts.
Before and after World War I, the company experienced rapid growth, including expanded manufacturing facilities at its McCarty Street plant, which improved production capacity with a new Science Building (Building 14), opened in 1911, and a new capsule plant (Building 15) in 1913. In 1913, the company began construction of Lilly Biological Laboratories, a research and manufacturing plant on 150 acres near Greenfield, Indiana.
After World War I, the company's expanded production facilities and introduction of new management methods set the stage for Lilly's next crucial phase—its "aggressive entry into scientific research and development." The first big step came in 1919 when Josiah Lilly hired biochemist George Henry Alexander Clowes as director of biochemical research. Clowes had extensive medical research expertise and links to the scientific research community, which led to the company's collaborations with researchers in the US and elsewhere. Clowes's first major collaboration with researchers who developed insulin at the University of Toronto significantly impacted the company's future. Lilly's success with insulin production secured the company's position as a leading research-based pharmaceutical manufacturer, allowing it to attract and hire more research scientists and to collaborate with other universities in additional medical research.
In addition to developing new medicines, the company achieved several technological advances, including the automation of its production facilities. Lilly was also an innovator in pill capsule manufacturing. It was among the first manufacturers to insert medications into empty gelatin capsules, which provided a more exact dosage. Lilly manufactured capsules for its own needs and sold its excess capacity to others.
In 1917, Scientific American described Lilly as "the largest capsule factory in the world" and reported that the company was "capable of producing 2.5 million capsules a day". One of Lilly's early innovations was fruit flavoring for medicines and sugar-coated pills to make their medicines easier to swallow. Over the next few years, the company created tens of millions of capsules and pills annually.
Other advances improved plant efficiency and eliminated production errors. In 1909, Eli Lilly, grandson of the company's founder, introduced a method for blueprinting manufacturing tickets, which created multiples copies of a drug formula and helped eliminate manufacturing and transcription errors.
In 1920, Josiah hired biochemist George Henry Alexander Clowes as a research chemist; Clowes was promoted to director of biochemical research the following year.
In the 1920s, Eli introduced the new concept of straight-line production to the pharmaceutical industry, where raw materials entered at one end of the facility and the finished product came out the other end, in the company's manufacturing process. This new process led to an increase in output and profit for the company. Under Eli's supervision, the design for Building 22, a new five-floor plant that opened in Indianapolis in 1926, implemented the straight-line concept to improve production efficiency and lower production costs. One historian noted, "It was probably the most sophisticated production system in the American pharmaceutical industry." This more efficient manufacturing process also allowed the company to hire a regular workforce. Instead of recalling workers at peak times and laying them off when production demand fell, Lilly's regular workforce produced less-costly medicines in off-peak times using the same manufacturing facilities.
During the 1920s, the introduction of new products brought the company financial success. In 1921, three University of Toronto scientists, John Macleod, Frederick Banting, and Charles Best, were working on the development of insulin for treatment of diabetes. Clowes proposed a collaboration with the researchers in December 1921, and then again March and May 1922. The researchers were hesitant to work with a commercial drug firm, particularly since they had the Connaught Laboratories' non-commercial facilities at hand. But as limits were reached at the scale to which Connaught could produce insulin, Clowes and Eli Lilly met with the researchers in 1922 to negotiate an agreement with the University of Toronto scientists to mass-produce insulin. The collaboration greatly accelerated the large-scale production of the extract.
In 1923, the company began selling Iletin, the company's tradename for the first commercially available insulin product in the US for the treatment of diabetes. Numerous objections were registered by the Insulin Committee of the University of Toronto in regard to Lilly's use of the term "Iletin", although production continued under this name and the objection was later dropped "as a concession".
Also in 1923, Banting and Macleod were awarded the Nobel Prize for their research, which they subsequently shared with co-discoverers Charles Best and James Collip. Insulin, "the most important drug" in the company's history, did "more than any other" to make Lilly "one of the major pharmaceutical manufacturers in the world." Eli Lilly and Company enjoyed an effective monopoly on the sale of insulin in the US for almost two years, until the first of the new American licensees, Frederick Stearns & Co., entered the market in June 1924.
The success of insulin enabled the company to attract scientists and, with them, make more medical advances. By the company's 50th anniversary in 1926, its sales had reached $9 million and it was producing over 2,800 products.
In 1928, Lilly introduced Liver Extract 343 for the treatment of pernicious anemia, a blood disorder, in a joint venture with two Harvard University scientists, George Minot and William P. Murphy. In 1930, Lilly introduced Liver Extract No. 55 in collaboration with George Whipple, a University of Rochester scientist. Four years later, in 1934, Minot, Murphy, and Whipple were awarded the Nobel Prize in Physiology or Medicine for their research.
In the 1930s, the company also continued its expansion overseas. In 1934, Eli Lilly and Company Limited, the company's first overseas subsidiary, was established in London, and a manufacturing plant was opened in Basingstoke. In 1932, despite the economic challenges of the Great Depression, Lilly's sales rose to $13 million. The same year, Eli Lilly, eldest grandson of Col. Lilly who had joined the company in 1909, was named as the company's president, succeeding his father, who remained as chairman of the board until 1948. In his early years at the company, Eli was especially interested in improving production efficiency and introduced a number of labor-saving devices. He also introduced scientific management principles, implemented cost-savings measures that modernized the company, and expanded the company's research efforts and collaborations with university researchers.
Thimerosal, developed by chemist Morris Kharasch at the University of Maryland in the late 1920s, was subsequently marketed by Lilly under the trade name Merthiolate as an antiseptic and preservative.
In 1934, the firm opened two new facilities in Indianapolis on the McCarty Street complex: a replica of Lilly's 1876 laboratory and the new Lilly Research Laboratories, "one of the most fully equipped facilities in the world." As part of its research and product development process, Lilly also conducted clinical studies at Indianapolis City Hospital.
Lilly patented secobarbital in 1934 and marketed the barbiturate under the brand name Seconal. Seconal was used primarily as a sedative and hypnotic, but barbiturates were later largely supplanted by benzodiazepines. Lilly continued to manufacture and sell secobarbital until the early 2000s, when its marketing and manufacturing rights were transferred to Ranbaxy Pharmaceuticals.
During World War II, the company expanded production to a new high, manufacturing merthiolate, an organomercury compound, and penicillin, a beta-lactam antibiotic. Lilly also cooperated with the American Red Cross to process blood plasma. By the end of World War II, the company had dried over two million pints of blood, "about 20 percent of the United States' total". Merthiolate, first introduced in 1930, was an "antiseptic and germicide" that became a U.S. Army standard issue during World War II. During World War II, Lilly manufactured products for military use, including aviator survival kits and seasickness medications for the D-Day invasion as well as penicillin. During World War II, Lilly produced penicillin and other antibiotics, "antimalarials," blood plasma, encephalitis vaccine, typhus and influenza vaccine, gas gangrene antitoxin, Merthiolate, and Iletin (Insulin, Lilly). The company was a partner of the U.S. government on large-scale production of penicillin.
International operations expanded even further during World War II. In 1943, Eli Lilly International Corp. was formed as a subsidiary to encourage business trade abroad. By 1948, Lilly employees worked in 35 countries, most of them as sales representatives in Latin America, Asia, and Africa.
After three generations of Lilly family leadership under company founder, Col. Eli Lilly, his son, Josiah K. Lilly Sr., and two grandsons, Eli Lilly Jr. and Josiah K. Lilly Jr., the company announced a reorganization in 1944 that prepared the way for future expansion and the eventual separation of company management from its ownership.
In 1945, Lilly began a major expansion effort that included two manufacturing operations in Indianapolis. The company purchased the massive Curtiss-Wright propeller plant on Kentucky Avenue, west of the company's McCarty Street operation. When renovation was completed in mid-1947, the Kentucky Avenue location manufactured antibiotics and capsules and housed the company's shipping department. By 1948, Lilly employed nearly 7,000 people.
After World War II, patents and research records belonging to IG Farben, which included Farbwerke Hoechst, were confiscated by the Allies. The U.S. Department of Commerce made the expropriated patent rights available to American pharmaceutical companies for $1; Lilly acquired the rights to methadone. In 1947, Lilly became the first distributor of methadone in the United States and marketed it under the trade name Dolophine. Methadone is an analgesic that is also widely used in the treatment of opioid use disorder.
In 1948, Eli Lilly, who had served as the company's president since 1932, retired from active management, became chairman of the board, and relinquished the presidency to his brother, Josiah K. Lilly Jr. (Joe). During Eli's 16-year presidency, sales rose from $13 million in 1932 to $117 million in 1948. Joe joined the company in 1914 and concentrated on the company's personnel and marketing efforts. He served as company president from 1948 to 1953, then became chairman of the board, and remained in that capacity until his death in 1966.
Throughout the 20th century, Lilly continued to expand its production facilities outside of Indianapolis. In 1950, Lilly launched Tippecanoe Laboratories in Lafayette, Indiana, Indiana, and increased antibiotic production with its patent on erythromycin.
In 1949, Eli Lilly went into partnership with the United States Army Reserve, setting up a local Strategic Intelligence Research and Analysis (SIRA) Unit to allow employees to research company data for the scientific logistics and Eurasian fields of study.
In the 1950s, Lilly introduced two new antibiotics: vancomycin, a glycopeptide antibiotic, and erythromycin, a macrolide antibiotic. Lilly also began diversifying beyond human pharmaceuticals into agricultural and veterinary products. In 1954, the company organized its plant and animal science operations into the Agricultural and Industrial Sales Division, which later became Elanco.
In 1952, the company offered its first public shares of stock, which are traded on the New York Stock Exchange. In 1953, Eugene N. Beesley was named the first non-family member to become the company's president, beginning the transition to non-family management.
In 1954, the National Foundation for Infantile Paralysis, now the March of Dimes, contracted with five pharmaceutical companies, Lilly, Cutter Laboratories, Parke-Davis, Pitman-Moore Company, and Wyeth to produce Salk's polio vaccine for clinical trials. Lilly's selection to produce the vaccine was, in part, due to its previous experience in collaborations with university researchers. In 1955, Lilly manufactured 60% of Salk's polio vaccine.
In 1962, the company acquired The Distillers Company and established a major factory in Liverpool, England. In 1968, Lilly built its first research facility outside the United States, the Lilly Research Centre, in Surrey, England. In 1969, the company opened a new plant in Clinton, Indiana.
During the 1970s, Lilly introduced several new pharmaceutical products, including the antibiotic Keflex in 1972, dobutamine, marketed as Dobutrex, in 1977, and the oral antibiotic cefaclor, marketed as Ceclor, in 1979.
In 1971, to further diversify its product line, Lilly acquired Elizabeth Arden, Inc. for $38 million. Although Arden continued to lose money for five years after Lilly acquired it, by 1982, Arden's sales were up 90 percent from 1978, with profits doubling to nearly $30 million. In 1987, Lilly sold Arden to Fabergé for $657 million.
From Wikipedia’s article on Eli Lilly and Company, shared under CC BY-SA 4.0.7