(by Norm Heikens ibj.com 2-2-10)
Two unrelated announcements last week in Indianapolis continued story lines that aren’t improving with the passage of time.
The biggest eye-opener was Tony George’s sudden shutdown of Vision Racing, the Indy Racing League team. By pulling his car from the league, prospects for fielding a full slate of 33 cars to qualify for the Indianapolis 500 got that much harder.
Earlier the same day, Jan. 29, Eli Lilly and Co. reported a decline in operating profit in the fourth quarter. But the news about its Effient blood thinner was worse. Sales of Effient, Lilly’s newest drug and one of the company’s hopes for surviving an upcoming string of patent losses, plunged and prompted investors to sell Lilly stock.
In isolation, neither event was significant. But bad news out of both Indianapolis Motor Speedway and Lilly is becoming disquietingly common.
The cachet, the “holy ground” aura of Indianapolis Motor Speedway is fading. George’s announcement was the latest in a string of setbacks going back to the early ’90s. Lilly is losing traction, too. The company has unloaded thousands of workers, and its stock is trading at 1997 levels. Analysts continue to question the future of big drug companies as they struggle to find new products to sell.
So, let’s ratchet up the discomfort for the sake of argument. What if both pillars tip further? Or topple entirely?
Several years ago, the notion of even a diminished Speedway or Lilly would have been absurd. Now it isn’t, says Dan Knudsen, an Indiana University geographer who has studied economic development and keeps an eye on Indianapolis.
Knudsen says Indianapolis should brace for the Speedway going out of business within a few years. Open-wheel racing has been losing popularity, and young people in particular don’t seem to care about it. Imagine the track as a type of empty Roman Coliseum, he says.
Lilly’s prospects are brighter, Knudsen believes. The nation will always demand health care, so the company probably will find a way to capitalize and stay in business, if at a reduced scale. “As long as people die—and people don’t want to—Lilly is going to be fine,” he says.
Even if Lilly were to be acquired and broken into pieces, many of the pieces would be snapped up by other life sciences companies. Some Lilly plants in Indianapolis might fall into hands like Cook Group in Bloomington or Illinois-based Baxter Healthcare. So, Indianapolis would lose Lilly’s corporate largess but other companies would latch onto its highly trained employees.
Knudsen goes so far as to say Indianapolis wouldn’t miss the Speedway or Lilly as much as most locals might think. Bloomington bounced back just fine after the RCA television plant closed several years ago, he reminds.
Indianapolis has become highly attractive to professionals, Knudsen says. Downtown is now a sprawling campus, and the downtown is part of a larger campus that is Indianapolis. Indianapolis has done a remarkable job of shifting away from manufacturing to health and information, and the trend will continue well into the 21st Century, he says. The expansion of Indianapolis hospital networks throughout the state is just one sign of the city’s prosperity and influence.
“Indianapolis in essence is extending itself,” Knudsen says.
What do you think about Knudsen’s assessment? Is he too optimistic about Indianapolis? Too pessimistic about the Speedway and Lilly?
What are the odds of the Speedway and Lilly pulling out of their respective downward spirals?