Eli Lilly and Company founder
On May 10, 1876, Lilly opened his own laboratory in a rented two-story building at 15 West Pearl Street that has since been demolished, and began to manufacture drugs. The sign for the business said "Eli Lilly, Chemist".[9][22][23] Lilly's manufacturing venture began with $1,400 ($0 in 2020 chained dollars) in working capital and three employees: Albert Hall (chief compounder), Caroline Kruger (bottler and product finisher), and Lilly's fourteen-year-old son, Josiah, who had quit school to work as his father's apprentice.[3][20]
Lilly's first innovation was gelatine-coated pills and capsules. Other early innovations included fruit flavorings and sugarcoated pills, which made medicines easier to swallow.[3] Following his experience with low-quality medicines used in the Civil War, Lilly committed himself to producing only high-quality prescription drugs, in contrast to the common and often ineffective patent medicines of the day. One of the first medicines he began to produce was quinine, a drug used to treat malaria, that resulted in a "ten fold" increase in sales.[24] Lilly products gained a reputation for quality and became popular in the city. At the end of 1876, his first year of business, sales reached $4,470 ($0 in 2020 chained dollars), and by 1879 they had grown to $48,000 ($0 in 2020 chained dollars).
As sales expanded rapidly, he began to acquire customers outside of Indiana. Lilly hired his brother, James, as his first full-time salesman in 1878. James, and the subsequent sales team that developed, marketed the company's drugs nationally. Other family members were also employed by the growing company; Lilly's cousin Evan Lilly was hired as a bookkeeper and his grandsons, Eli and Josiah (Joe), were hired to run errands and perform other odd jobs. In 1881 Lilly formally incorporated the firm as Eli Lilly and Company, elected a board of directors, and issued stock to family members and close associates.[23][25] By the late 1880s, Lilly had become one of the Indianapolis area's leading businessmen, with a company of more than one hundred employees and $200,000 ($0 in 2020 chained dollars) in annual sales.[9][22]
To accommodate his growing business, Lilly acquired additional facilities for research and production. Lilly's business remained at the Pearl Street location from 1876 to 1878, then moved to larger quarters at 36 South Meridian. In 1881, he purchased a complex of buildings at McCarty and Alabama Streets, south of downtown Indianapolis, and moved the company to its new headquarters. Other businesses followed and the area developed into a major industrial and manufacturing district of the city. In the early 1880s the company also began making its first, widely-successful product, called Succus Alterans (a treatment for venereal disease, types of rheumatism, and skin diseases). Sales of the product provided funds for company research and additional expansion.[23][26]
Believing that it would be an advantage for his son to gain a greater technical knowledge, Lilly sent Josiah to the Philadelphia College of Pharmacy in 1880. Upon returning to the family business in 1882, Josiah was named superintendent of the laboratory.[10][20] In 1890, Lilly turned over the day-to day management of the business to Josiah, who ran the company for thirty-four years. The company flourished despite the tumultuous economic conditions in the 1890s.[17][9] In 1894, Lilly purchased a manufacturing plant to be used solely for creating capsules. The company made several technological advances in the manufacturing process, including the automation of capsule production. Over the next few years, the company annually created tens of millions of capsules and pills.[27]
Although there were many other small pharmaceutical companies in the United States, Eli Lilly and Company distinguished itself from the others by having a permanent research staff, inventing superior techniques for the mass production of medicinal drugs, and focusing on quality.[28] At first, Lilly was the company's only researcher, but as the business grew, he established a research laboratory and employed others who were dedicated to creating new drugs.
In 1886, Lilly hired his first full-time research chemist, Ernest G. Eberhards, and botanist, Walter H. Evans.[23] The department's methods of research were based on Lilly's. He insisted on quality assurance and instituted mechanisms to ensure that the drugs being produced would be effective and perform as advertised, had the correct combination of ingredients, and had the correct dosages of medicines in each pill. He was aware of the addictive and dangerous nature of some of his drugs, and pioneered the concept of giving such drugs only to people who had first seen a physician to determine if they needed the medicine.[29][30]
