Despite a consensus-beating earnings report in July, investor pressure for stronger financial results has been unrelenting as Eli Lily approaches one of the steepest patent cliffs in the industry. An FDA advisory committee lent the company a ray of hope Thursday. It voted 8 to 6 in favor of recommending its blockbuster antidepressant, Cymbalta, be approved for the treatment of some types of chronic pain. But a string of disappointments preceding that result has turned up the heat.

Some of Lilly's best-selling drugs, including Zyprexa for schizophrenia and Actos for Type 2 diabetes, will soon lose patent protection. Those expirations will put nearly 60 percent of the company's annual revenue in peril. Furthermore, two of its medicines, Strattera for attention deficit disorder and the cancer drug Gemzar, lost key patent protection battles over the summer.

One of the company's most promising experimental Alzheimer's compounds turned out to be worse for patients’ cognitive well-being than a placebo. That news, though particular to the compound Lilly was testing, rippled through the research community as a bad omen for other experimental drugs using similar mechanisms.

Lilly took out a full-page newspaper ad in The Indianapolis Star to rally its troops at headquarters amidst the gloom. But shares of the 10th largest pharmaceutical company in the world continue to slump, even as it strives to cut $1 billion in annual costs to weather the slowdown.

In addition to its troubles at home, Lilly is facing the same pressures on government pharmaceutical expenditures as its rivals in Europe, a phenomenon that forced down the prices it could fetch for its medicines there by 3.9 percent in 2009 and 1.9 percent in 2010.

The company has no shortage of drugs in its pipeline, with nearly 70 molecules currently in clinical development. But too few are close to approval for the tastes of investors it seems, and some have called for the company to become more acquisitive, suggesting it should use some of its $5.2 billion in cash to buy companies with compounds that are closer to approval than those in Lilly's pipeline.

Lilly did make a small acquisition of Alnara Pharmaceuticals and its pancreatic disease drug in July. But Lilly CEO and chairman John Lechleiter has dismissed the idea of making larger buys.

“I think on M&A, our position really hasn't changed,” he told analysts during the company’s second quarter 2010 conference call. “We’re not interested in large-scale combinations. We think that the key to growth for Lilly and for this industry is innovation, and we're focused on reinventing our innovation engine here.”

To drive that, the company has promised to boost its R&D spending. But even if that extra expenditure does manage to produce an approvable product, weak sales of the blood thinner Effient, Lilly's most recent R&D success, show that victory could be far from easy to attain.