Breakthrough drugs aren't always driven by novel biological targets. Major successes like Humira or GLP-1s often succeeded through a superior modality (a humanized antibody) or a contrarian bet on a market (obesity). This shows that business and technical execution can be more critical than being the first to discover a biological mechanism.

The weight-loss drug market is a duopoly, not a monopoly, because companies cannot patent the underlying biological mechanism (mimicking GLP-1). Instead, Novo Nordisk and Eli Lilly patented distinct molecules that achieve a similar outcome, allowing both to compete directly.

A significant number of Eli Lilly's compelling inventions came from unsanctioned projects. The company intentionally provides budget flexibility and avoids micromanagement at its R&D sites, allowing scientists to pursue their curiosity.

To fix the R&D funding imbalance, the CEO proposes a 'one fair price' system. A drug would have one US price with no rebates, and a price in other developed nations would be indexed to their GDP per capita.

The Orphan Drug Act successfully incentivized R&D for rare diseases. A similar policy framework is needed for common, age-related diseases. Despite their massive potential markets, these indications suffer from extremely high failure rates and costs. A new incentive structure could de-risk development and align commercial goals with the enormous societal need for longevity.

To commercialize curative 'one-and-done' genetic medicines, Eli Lilly is considering a subscription-like model. The procedure could be free upfront, with patients or insurers paying an ongoing fee only as long as it works.

When initiating companies, Greylock targets opportunities with validated market demand but significant execution challenges. They bet that elite founders can solve hard technical or go-to-market problems, which in turn creates a strong competitive moat in an established market.

Companies like Amazon (from books to cloud) and Intuitive Surgical (from one specific surgery to many) became massive winners by creating new markets, not just conquering existing ones. Investors should prioritize businesses with the innovative capacity to expand their TAM, as initial market sizes are often misleadingly small.

To avoid the pitfalls of scale in R&D, Eli Lilly operates small, focused labs of 300-400 people. These 'internal biotechs' have mission focus and autonomy, while leveraging the parent company's scale for clinical trials and distribution.