david: this is my kitchen table and also my filing system. over much of the past three decades i have been an investor. the highest calling of mankind

is private equity. then i started interviewing. i've learned from doing my interviews how leaders make it to the top. >> i asked him how much he wanted, he said 250, i said fine, i didn't negotiate and did no due diligence. david: i have something i would like to sell. and how they stay there. you do not feel inadequate being the second most -- one of the most transformative drugs on the market is anti-obesity drugs. one of the leading manufacturers of those is eli lilly. it has transformed itself over the last five years to a company that is now one of the most valuable pharmaceutical companies in the world. i sat down with dave ricks to talk about this anti-obesity phenomenon and how it's transforming america. let's talk about the phenomenon that's changed the world to some extent, which is the anti-obesity drug. now make sure everybody is on

the same page, what is the name of your anti-obesity drug. dave: so the name is zepbound. the active ingredient is called tirzapetide. david: who comes up with these names? where do you get these names? dave: not me, david. we can't have names too close to each other because doctors make prescribing errors. we can't have names that make claims about what the drugs do, and can't have drugs that are only good in english. so we end up with strange names. david: was that the intention when the drug was being developed? dave: pretty early on. we launched the first gp-1 medication in the world in 2005. it was a twice daily injection indicated for people with diabetes. that was the effort. first on the cover of our next report is a woman using the drug. she said my diabetes is under control and i'm losing some weight. actually it was 2006. the cover of the annual report. we had to improve the medicines to really make them effective

for weight loss. one big improvement was to make them weekly. that's a convenience benefit, but even more important, the action of the medicine flatter, meaning more consistent through the day and night. when we had it twice a day there were ups and down. one effect of glp-1 medications, they cause nausea and other g.i. distress. that is a function of the up and down in your system. when we made it weekly, it was flatter and we could does higher and the changes were flatter, so made it better for weight loss. that was an accidental breakthrough of trying to make a convenient form. david: there's another company in sort of the same business, novo nordisk. which is in denmark. they have a similar product. they have a product that does the same thing. one is for obesity -- anti-obesity and one is for diabetes. is there really in difference in terms of the drugs? dave: there are. there's no difference between

the drugs nature diabetes and obesity for either company. that's for insurance reasons. tirzepatide is one of them. it has two modes of action. right now, because you just ate lunch your g.i. tract is communicating with the rest of your body. it is communicating with hormones and protein, saying you have been fed and need to absorb nutrients and other things that are essential to life because food is essential to life. what we're doing is boosting some of those signals with these medications. they're boosting the signal that you're full. boosting the signal that you no longer want to eat more. boosting signals that you should absorb nutrients you have consumed. ours does that with two different hormones. one called glp-1 and another called g.i.p. ozempic or semaglutidejust uses glp-1. david so does it tell your body : that you are full or maybe not as full as he used to be? dave: it tells your body you are full.

it does it to the brain, a sense of say 80. -- saity. it gives your sense of full. we have learned over time our sense of fullness becomes conditional, so as people eat more habitually that signal kicks in later and later. that is a cause and consequence of obesity. is does other things too. it make yours stomach fuller. because it slows gastric motility. it slows down your nutrients, which is -- seems counterintuitive. when you eat -- when our ancestors were alive 10,000 years ago meals were rare. you wanted to absorb all the nutrients out of it. so, that signal set absorb the nutrients. david: i do not want to confuse people. there are four different names people should know for the drugs. you have an anti-obesity drug. which is called what? dave: zepbound. david: and a diabetes drug. which is called --? dave: mounjaro. same medicine, different names. david: there was a study that said one-on-one, comparing the two your anti-obesity drug loses weight more rapidly for people

than the other product. is that right? dave: more rapidly and more. 47% more. after a year and a half, people on our drug lost 17 more pounds than on wegovy. david: why do people need to lose so much weight in this country? our country has 75% of the people are overweight and 42% of people in this country are obese. when did we become so obese? dave: if you look at the epidemiology charts, it seems to have started in the 1960's, growth in overweight and obesity in the country. and it really accelerated in the 1980's and 1990's. what are the reasons? how we live is one of them. energy expenditure has to be part of the story. what we eat though is probably a more important reason. not just the quantity, which has risen modestly through that period of time, but actually what's in our food has changed. and i think that's also attributed to this. david: back to the drug. when you realized you can lose

weight, did you get the f.d.a. to say, yes, it can be prescribed for losing weight or you cannot that prescribed for you? dave: as of last year it's for weight loss. david: do insurance companies reimburse people for the cost of these drugs? dave: some do. more should. [laughter] as of today, the federal government actually has a prohibition on reimbursing any of these drugs. which is a problem, i think. although the biden administration just issued advanced rule making to change that. that's good news. we hope the next administration will continue that process. david: if losing weight makes you healthier, why would people who care about insurance reimbursement not insist on paying for this, because it would make you healthier and therefore you do not have other diseases that they have to reimburse you for? dave: i think in four or five years we'll look back and say yeah that's what should have happened. it's silly we don't pay for what is already known to be a primary

contributor to poor health, which is excess body weight. but, you know, people have different motives and incentives. maybe your employer has a stronger interest in your long-term health. that's probably why many stepped forward. and then evidence. our job is to make the evidence, produce the evidence that we're not just having people lose weight but losing weight with our medicine causes improved health. we have many studies out this year that are demonstrating that. david: to take this medicine you have to inject yourself. why not just go to a pill? dave: great idea. [laughter] we are working on that. the injection -- you have to inject because it's a protein. and if we orally take proteins your body think it's food and , breaks up proteins. so you cannot really take these drugs orally. you have to bypass the g.i. track and go right to the bloodstream. but we are working on a pill. we'll have some data as early as next year for -- it's a glp-1 only, single acting, won't be as good as tirzepatide or zepbound. it'll be about as good as ozempic, we hope. and this would be a once daily pill.

david: some say if you go on this drug you have side effects that are not completely desirable. is that true? dave: all drugs that work have side effects, and sometimes untoward effects. we have to warn against those. that's why we do controlled studies and measure them carefully. many people have mild to moderate g.i. distress when we start. that is why we titrate. we start at a low dose and go up slowly. almost everybody stays on the drug and goes through that. usually by the third or fourth month you don't have any more effects at all. david: suppose you take the drug and say i lost weight. i'm happy with my body now. i'm going off the drug. some people say there are -- it's difficult to not regain the weight. dave: that's right. science tells us that there's a reason for that. some people do maintain the weight reduction or stay in that range. they have to change a lot about how they live. burn more energy. eat different foods. so we can all try that. i think we should all try that actually.

but some people cannot. and there's a recent paper in "nature" that told us why. which is that once you have become obese, your fat cells learn that that's their new state. they defend that state. and so they are wanting more energy. and that sends signals to your brain and so forth. once we as adults gain weight and have that on for a while it's very, very difficult to , reset your thermostat if you would. to reset that level. so for now, we do recommend if people cannot maintain weight loss off the drug to go back on the drugs and use them chronically. ♪

david: let's talk about eli lilly itself. when was this company started? dave: 1876. it was started by a colonel, eli lilly, who served in the civil war. he was a pharmacist by training, led an infantry and artillery company. was a prisoner of war in alabama actually. he saw firsthand the atrocities

of medical care in the civil war. he started a company with a pledge to say, everything that is in this is on the label. if it's in there, you know about it. transparency. matt then evolved into a company that embraced the scientific method and began to really adopt the methods of the modern industry, which is taking natural products which is what most medicines were in 1876 and refining them into what we think of as medicine now. david: when eli lilly evolved over the years in the 20th century, what were the big products? dave: insulin was the birth of the modern company. this was obviously a terrible condition, type one diabetes and , we were part of commercializing that breakthrough around the world. invented the manufacturing method and created that business. that was followed by penicillin. so during world war ii, lilly was commissioned as one of the manufacturers of antibiotics for the army. from there we iterated for 40 years antibiotics, including still some that are used today,

including one that's the last line of defense for the worst infections. prozac we're famous for, which really brought modern psychiatry into the fold. and now mounjaro and zepbound. david: what human problems are you working on now? alzheimer's is one of them? dave: absolutely. we use the scientific method to create medicines and solve tough problems. we are not really interested in niche problems. we're doing things that we think we are here as a big company to do hard problems that are scalable. that is what makes her business work and that is the big thing to have the biggest human impact. we select diseases that are common and tough. you mentioned alzheimer's. neurodegenerative conditions are the most flightenning people think about. parkinson's, als, alzheimer's. and the science, we've been investing there for 30 years. we just launched our first medicine. so now we're getting revenue after 30 years on that project. we're working on a prevention study for that same medicine which could really transform alzheimer's. we think other neurodegenerative

conditions like parkinson, als, etc. are becoming more tractable with science. you will see us invest heavily in that area going forward. david: are you concerned about the new administration coming into power? have you met with president-elect trump to talk about your issues? dave: health care is always a topic, so then our role in it and medicine affordability is a key area. i think everyone would like the u.s. to have a strong biopharma industry that invents amazing medicines like eli lilly does but at the same time we want things to be cheap and accessible for all. ok. that is hard to solve for all those things. we can make progress. when he symbol is we were known , for the insulin pricing challenges we had and insulin was overpriced in the u.s. according to the critics. and we were able to bring that price down. i think there are solutions. and by engaging we can find them. david: have you met with anybody in the new administration? dave: yeah, i think it was reported last week. we had dinner down in florida. david: did they serve up fattening food? they don't do that with you? [laughter] dave: probably shouldn't say too much about it. it was all you can imagine and a

little bit more. [laughter] david: let's talk about your own background. where were you born? dave: i was born in bloomington, indiana. a hoosier by birth. my dad was a grad student at i.u. at the time. we quickly left and moved to california. my mom was from california. i grew up in the bay area. followed in their footsteps and went to purdue university back in indiana. david: what did you study there? dave: i started studying business and engineering. ended up with a degree in industrial management that combines those. went to work for i.b.m. in new york. i joined, the stock was at an all-time high, when i left it was at an all-time low. they had a tough time in the early 1990's. david: you joined eli lilly in what your question mark dave: i left ibm to follow my girlfriend, now my wife, who was going to medical school at indiana university. again back to indiana. , i needed something to do there. i decided to enroll in the mba program. i got an mba. medicine is a four-year degree,

mba is two and i still needed something to do in indiana so i joined lilly. david: what was your position in the beginning? dave: i was in the department that looked at m&a transactions. the finance and business. it was a great introduction. david: did you ever say i'm going to be the c.e.o. someday? dave: not then. i really was thinking i'll be here for two years and then off to chicago or san francisco and do something different. but i fell in love with the company. i mean, it's an amazing place. it's a very humanistic culture. but yet very rigorous and scientific. so it's demanding, smart people but people are nice to each other. it's the midwest. and i fell in love with the mission. what could be better than making medicine for people? i worked on a medicine to collaborate and bring into the company for diabetes. right as i was leaving that job my mother was diagnosed with diabetes and she was put on that medicine. sort of the point of what we do, just became super salient for me i said this is not a bad way to spend my time. i said to my wife, let's stay here.

david: when did you realize you you are on track to be the ceo? was it five years? dave: much later. so i worked in that job. then i had some jobs running markets. i ran our canadian business, i went to china for two and half years and ran our chinese business. i was suddenly called back from china by the ceo who was a new ceo. he said you need to come run our u.s. business. i said don't you want me to finish the job? he said, you need to come back. i think that was the point where i was sort of being cultivated for something bigger. david: you now have three children? dave: yeah, for a while i've had three children. [laughter] yes. they're young adults now. david: ok. all right. are any of them interested in weight reduction programs or things like that? not really? dave: so my son, he's an ai consultant, so not so much. my daughter is getting a masters in cell biology, so she is thinking about medicine and medical science.

we talk a lot about the weight loss drug. my youngest son is a geology student at purdue. we will see what he does. david: what do you do for relaxation, to stay in shape? you're not on one of these drugs because you look very fit, exercise a lot. dave: thank you. i'm not but i would never hesitate to be on one if i needed it. but the best medicine is prevention. and so, you know, paying attention to exercise, something i've always cared about. it's a way i reduce stresstoo. -- stress too. however running. now i don't run any more but i do other things. i like hiking. i love love backcountry skiing and the outdoors. play golf. being outside is is where i find both fitness and peace. david: you've had outstanding success at eli lilly. suppose a president of the united states said you should be secretary of hhs or something like that. what would you say? dave: the company, as you pointed out graciously is doing really well. but, you know, we really have a strong desire to do even more. we're just at the beginning of this weight loss story.

you know, right now there's six or seven million americans who are taking these medicines. there are 110 million with obesity. we need to build more plants. develop more data. get better insurance coverage. and then there's the whole world to cover. it is projected in five years there'll be a billion people on the planet who have obesity. and it's going to become a much bigger problem in the developing world than it ever has been in america. we have a lot of work to do to make the biggest impact we have. -- we can. we had to stop the study, people were losing too much weight to stay in it. at first this was seen as an alarming thing. but of course we began to process that as, wait a minute this could be something very special. ♪ david: in the pharmaceutical world the image is not always so wonderful with the public. how do you respond to the idea that drug companies are charging too much and very often people in the united states say i am going to cross over to canada and get the same drug for a

lower price? dave: obviously, it's something we want to change and fix. we think what we do is valuable. for an artifact of history and how health care insurance evolved in this country, people are largely shielded from surgery costs and hospital costs. about 3% of total cost in this country are paid by consumers. for medicine it is close to 20%. people think the medicines are a larger part of the health bill because they're exposed to more of that versus services. the second thing is, you know, foreign country, it is true, our prices are lower in those places. we would like to correct that as well. our idea is that basically the cost of a medicine is the cost of the r&d to produce more so than the manufacturing. obviously manufacturing costs , are similar everywhere. right now there's an imbalance. -- imbalance in who covers that r&d cost. we need to correct that. but the answer isn't just lower u.s. to canada's pricing. we wouldn't have a pharmaceutical industry if we did that. they don't pay for any of the r&d costs. we have to raise developed

countries what they pay and lower the u.s. i think that's a policy argument we'll hear about soon with the new administration. and we're happy to engage in it. but we need to do both at the same time. ♪ david: when you have drugs that are very, very popular, you have people that make counterfeit or copy cat drugs. what about for this? do you have to worry about counterfeit drugs coming in the trying to say the same thing? dave: it's a terrible problem.

i think consumers don't really know the dangers or the difference. today the fda and the government has allowed this to sort of grow. of course, a weight loss medicine that's effective would be a popular thing for people to go around the health care system and seek treatment on their own. but the data we have is that 80% of these medicines coming out from china from unapproved, unregulated sources. we recently with borders and customs seized a big batch that was shipped in dog food. people then reformulate them and sell them locally in med spas and other outfits. but you really don't know what's in that vial. we buy them and test them. we find bacteria plant material, , virus, fungus. you don't want to be using it. david: but how much more expensive are your drugs than the counterfeit ones? in other words if somebody wants , to use your product, zepbound, how much does it cost a month? dave: you can buy zepbound direct from lilly for $399.

for the starter does. david: $3.99? dave: no. [laughter] this is a valuable innovation, david. $399 a month. which is about $100 a week. i know that is a sacrifice for many. that's without insurance. with insurance, most people pay $25 a month. so that's the importance of insurance. that is why we buy insurance to to shield us from health costs. the only once are as cheap as -- ones are as cheap as $100. these are companies that want all the benefits of being a drug pane but bear none of the responsibles. david: let us talk about the company today. how many employees do you have question mark dave: 44,000. david: and you're headquartered in indianapolis. dave: that is correct. david: where do you manufacture your drugs? mostly in the u.s.? mostly overseas? dave: mostly in the u.s., a large majority in europe as well. in the u.s. we're building a lot of plants right now, mostly to support zepbound and mounjaro. david: when did you realize this was so transformative you will

become the most valuable pharmaceutical company in the world by a factor of four or five times question mark dave: it is hard to know. in 2016, i was named incoming ceo. that fall one of our scientists in the diabetes group called me about some early results they were receiving from singaporean site we had that was doing a phase 1 study with the ingredient in zepbound. we had to stop the study because people were losing too much weight to stay in it. and at first this was seen as an alarming thing. but of course we began to process that as, wait a minute, this could be something very special. so we sped to the next stage of development, phase2. where you try to show safety and efficacy in a bigger study. i remember in a kind of a moment, i was showing my daughter around at colleges. we were at cal berkeley standing outside the lawrence hall of

science and i got a phone call. team just got off the plane, got the results. showed that people were losing over 20% body weight in a longer study. that was in april of 2018. we disclosed those results later that year. you could probably argue a lot of the run-up in lilly was just execution from that moment forward. david: did you take the credit for this? are you the person responsible for this happening or not? dave: of course as a ceo you have a role, but it would be overstating the role to take credit. the credit goes to scientists. we have a lot of incumbent capabilities. like how do you take a protein like glb-1, which in a natural body last a few seconds and make it into a weeklong injection? that's a pharmacology question. -- exercise that is difficult. we have people that can do that, and people who can do the clinical trials that see the opportunity and go for it. we have people who make it every day. we run our factories 24/7. it's a giant team sport. david: where do you want to take your company now? you can't find any drug more successful than what you have. is this -- you're going to keep

promoting this drug? dave: within the obesity metabolic health space, there are two things i am excited about. one is we have mounjaro and zepbound on the market. we have 11 other pipeline projects aimed at the same problem but in different ways. we have a triple acting medicine that is in phase three for those who have higher body weight or more severe weight problems, the oral project, nine others beyond that. we think this will be a very large segment with many different types of medicines for different conditions and different situations people might find themselves in. we're going to exploit that fully. the second thing is, we've talked a lot about cardiovascular health, diabetes conditions we think about with , people being overweight. these medicines, we think, we want to prove, can be useful for other things we don't think of connected to weight. these are often called anti-hedonics, they are reducing the desire cycle. next year you'll see lilly start large studies in alcohol abuse,

in nicotine use, even drug abuse. beyond that we need to make important medicines for the long haul. we're an old company, plan to be here another 150 years plus. and i mentioned my excitement about brain health. i think that's the next frontier. ♪

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jennifer: welcome to the best of the earthshot prize innovation summit 2024. i'm jennifer zabasajja. founded by his royal highness prince william, the earthshot prize is a global environmental challenge that aims to repair