Lilly's Asset Management Program

Eli Lilly & Co.'s recent explosion of dealmaking in the seemingly disparate areas of combinatorial chemistry and drug delivery are in fact closely linked by Lilly's approach towards asset management. With its combinatorial technology, originally acquired with its 1994 Sphinx Pharmaceuticals Corp. acquisition [See Deal], now spread throughout its discovery organization, Lilly is turning its attention to recouping its cash investment-and enlisting other companies in the process of improving it. And as for drug delivery: Lilly's three recent deals are in effect attempts to both broaden and protect its world-leading therapeutic protein franchise at a time when it expects competition from a host of genomically originating products.

Lilly's latest drug delivery move, a development deal with Emisphere Technologies Inc., reflects Lilly's willingness to gamble, as well as...