Lilly, Eli

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Eli Lilly

American pharmaceutical executive Eli Lilly (1885–1977) spent nearly 70 years with the family company that bears his name. Lilly guided the Indiana business, which had been founded by his grandfather a decade before his birth, through a period of both immense change and immense success over the course of the twentieth century. The scientific advances made during his tenure, combined with the firm's emergence as a marketing leader, helped make Eli Lilly one of the world's leading drug companies.

Company Founded in 1876

Lilly was born on April 1, 1885, in Indianapolis, Indiana. His grandfather and namesake, Colonel Eli Lilly, was a Maryland native whose parents had relocated to Greencastle, Indiana, when he was a child. During the Civil War, the elder Lilly served with a regiment from Indiana that fought on the Union Army side, and after the war's end the "Colonel" settled in Indiana and established himself as a pharmaceutical chemist and owner of a drugstore. He founded the company that bears his name in 1876 with $1,400 in savings, establishing a small laboratory space on Pearl Street.

Originally, the company made pills and the fluid extracts that were popular medicines in the era before doctors dispensed medicines only with a prescription. The Colonel's laboratory soon gained a reputation for producing reliable products that were often markedly better than the standard patent medicines sold over the counter. Many of these potions were ineffective or even dangerous, but the Colonel's business plan aimed to make and sell only formulas that were recommended by physicians for their efficacy. One early bestseller was Succus Alterans, which was reportedly derived from an old Creek Indian formula. It was marketed as a blood purifier and treatment for "syphilitic conditions," rheumatism, and skin problems like psoriasis.

Joined as Junior Bottle – Washer

Lilly's father, Josiah K. Lilly, joined the family business, and assumed its helm when the Colonel died in 1898. Josiah had married a distant cousin, Lilly Ridgely, who became Lilly Ridgely Lilly, and they had two sons: Eli and Josiah Jr. The family lived in an affluent neighborhood in Indianapolis known as the "new north side" at the time, but also spent summers on Lake Wawasee in Kosciusko County, where the Colonel had a cottage. Lilly was close to his grandfather as a child, and his lifelong interest in archeology would be sparked by the tales of Native Americans in the Indiana area that his grandfather regaled him with during summers on the lake.

Lilly began working at the company pharmaceutical plant at the age of ten during the summer months. He began as a bottle–washer, and later progressed to other duties, such as cleaning out hogs' stomachs used in one of the medicinal preparations the company made from scratch, or grinding the foul–smelling pokeroot. After graduating from Shortridge High School in 1904, he went on to the esteemed Philadelphia College of Pharmacy. Three years later, having earned his degree, he joined the family business full–time and wed Evelyn Fortune, whom he had known since childhood. The couple had three children, but two died in infancy—one at the age of one month, the second at seven months. Only their daughter Evie, born in 1918, survived to adulthood, but her life would be touched by later tragedy as well.

Implemented New Management Ideas

Lilly's father was pleased that his son was joining the growing company, but did not wish to give him a job that might have been due as a promotion for a longtime employee. Thus Lilly was installed as head of the newly created Economic Department, and charged with finding ways of to make the company more efficient. Lilly proved a whiz at this, and instituted several new policies and systems. It was his idea, for example, to make multiple copies of manufacturing formulas from blueprinting. The tickets traveled with the product through each of the departments, and helped streamline the manufacturing and shipping process and improve quality.

Lilly was also fan of time–motion studies, and read avidly on new business management ideas gaining currency at the time. He was a particular devotee of Frederick W. Taylor's The Principles of Scientific Management, and the ideas in it found their way into company policy. There was a Methods and Standards Department, and its official manual set forth guidelines for completing nearly every task at the company in the most efficient manner possible—even for polishing the brass entrance doors. The manual advised Lilly employees that "both hands should be busy; if they are not, surely some change can be made to keep them busy all the time," according to James H. Madison's Eli Lilly: A Life.

In 1909, Lilly was named superintendent of the manufacturing division, where he continued to implement new ideas that made the company more efficient and thus more profitable. He devised a new method for filling gelatin capsules, and the Lilly company's automated system even merited a 1917 feature article in Scientific American. By this time his younger brother Josiah had also joined the company, with responsibilities in the human resources department, and Lilly was soon made a vice president with supervision of both the manufacturing and scientific divisions. The World War I years forced the company, along with other American pharmaceutical makers, to find new sources for the plants and extracts used for drug manufacturing. Before World War I, pharmaceutical research was in its infancy still, and remained largely a European effort. The wartime restrictions on commerce forced Lilly to rethink its corporate strategy and invest in research and development closer to home.

Aided Discovery of Insulin

That strategy paid off handsomely. A new Experimental Medicine division, within the Lilly's Scientific Department, was established in the early 1920s, and the two Lilly brothers installed a brilliant British scientist, George Henry Alexander Clowes, as its head. Clowes oversaw the company's first significant breakthrough: insulin. Working with scientists from the University of Toronto, Clowes theorized that extracting insulin from sheep and cattle pancreas and injecting it into humans who suffered from diabetes might yield positive results. Diabetes was a fatal disease at the time, a condition in which the pancreas did not produce enough insulin, the hormone that regulates the body's conversion of food into usable energy. A child born with it had a life–expectancy rate of just one year, while adults sufferers wasted away from the starvation diet, the only remedy doctors believed would help.

The Lilly Company launched insulin on the market in October of 1923, and it proved a historic breakthrough that won two of the Toronto scientists, Frederick Banting and J. J. R. Macleod, the 1923 Nobel Prize. The new treatment was said to have saved the lives of thousands of diabetics in its first weeks on the market alone, and newspaper stories trumpeted the Lilly product around the world. Eager to continue such success, Lilly approved many new research projects, including a liver extract for the treatment of pernicious anemia in 1930. The deadly blood disease afflicted his own mother, but the Lilly formula could not save her in the end, and she died in 1934.

Applied Management Techniques to Personal Life

Lilly oversaw a company that became a world leader in the 1920s, but his strong work ethic took its toll on his marriage, and he and Evelyn divorced in 1926. He married his longtime secretary, Ruth Allison, on November 27, 1927. A year after the death of his mother, Lilly's father, then 73, wed Allison's sister. Father and son grew closer, though when Lilly was younger their relationship was somewhat strained. Lilly had long strived to please his father, and his work schedule and lengthy correspondence with his father proved that. But his second marriage instigated a determination to become a more well–rounded person, apparently, and he decided to change his personality. He even went so far as to author his own "Plan for Developing a Proper Outlook on Life." It recommended the deployment of willpower, the cultivation of a sense of humor, and an expansion of the mind through reading and cultural pursuits.

Despite the divorce, Lilly tried to be an involved parent to his daughter Evie. He wrote her regularly, and she spent several weeks of the year with him in Indiana. The entertainment at her lavish debutant party at her father's home in 1937 included big–band star Benny Goodman. But Evie eschewed college, entered into two ill–advised marriages, and began to drink heavily. She spent time at rehabilitation facilities, but her increasing irresponsibility compelled her father to alter his will by 1948 after realizing she would likely squander any fortune left to her.

From 1932 to 1948 Lilly served as president of the company, which continued to thrive. During World War II it became involved with a joint research effort that led to the discovery and mass production of penicillin, the life–saving antibiotic. It also produced a typhus vaccine and Merthiolate, an antiseptic, for the battlefield. Josiah Sr., his father, died in 1948, and by then Lilly was 63 years old and, ostensibly, nearing retirement age. He became company chair that year and his brother assumed the president's post. After Lilly was appointed honorary chair in 1953 and had no other daily duties at company headquarters, he came to the office three days a week for years and remained a vital force.

An Ardent Republican

During these years Lilly's fortune accrued, thanks in part to the company's work on another medical breakthrough, the polio vaccine in 1955. The immense profits made from the life–saving vaccine, which had reduced deaths by polio some 95 percent in its first six years on the market, aroused government regulatory suspicion. Lilly's company and four others were accused of a price–fixing scheme in 1958, but were exonerated after a long legal battle. Lilly, a staunch Indiana Republican, opposed what he saw as meddling in business, and once dryly remarked that "it takes about fifty percent of the time of our top brass to fight our own government," according to the Madison biography.

Lilly assumed the post of company chair again after his brother died in 1966, and held it for another three years until becoming honorary chair once again. By this time, the interests he had determined to cultivate in order to improve his personality had borne much fruit. He collected Native American artifacts from the Indiana area, and even authored a book on the subject, Prehistoric Antiquities of Indiana. In 1934, he bought and began a long restoration of the William Conner homestead in Noblesville, Indiana. The Conner home dated back to the early 1800s, and was of first two–story brick homes in the entire region. Lilly turned it into a historical and educational landmark. He was also active in the Christ Church in downtown Indianapolis for decades.

Doled Out Raincoats

Lilly was eager to see theories about personality development explored in a more scientific setting, and funded a number of projects that were the work of respected sociologists and other researchers. These efforts were done largely under the auspices of the Lilly Endowment, which he and his brother had established in 1937. Yet he was also a personally generous fellow, and one story claims he once noticed a young woman on a scooter at a stoplight in Indianapolis during a downpour. Rolling down the window of his Rolls–Royce, he offered her his own raincoat, which she warily accepted. He began keeping a stock of plastic raincoats on hand for similar situations.

The Rolls was one of Lilly's few personal indulgences, and he liked to sit in the front with his longtime driver so they could chat. He continued to come into the office three days a week, even on his 90th birthday. His health declined after the death of Ruth in 1973; his daughter Evelyn had died of cancer as well three years earlier. He was diagnosed with liver cancer not long after the company celebrated its centennial anniversary in 1976. Worth over $165 million when he died, he left large bequests of stock to the Indianapolis Museum of Art, Butler University, Wabash College, the Indiana Historical Society, the Children's Museum of Indianapolis, and the Lilly Endowment.