AIR pullout claims 500 jobs at Lilly

By Nick Taylor

- Last updated on GMT

Related tags Lilly Eli lilly and company Eli lilly

Eli Lilly plans to cut 500 jobs, mainly in manufacturing, as it
attempts to restructure its operations to mitigate against the
losses from inhaled insulin.

The jobs under threat are at Eli Lilly's home city of Indianapolis, with the company hoping 430 people in manufacturing and 70 in R&D and corporate engineering will accept severance packages. Workers manufacturing insulin products Humalog (insulin lispro) and Humulin (recombinant human insulin), as well as the osteoporosis drug Forteo (teriparatide) are facing unemployment. Speaking to Bloomberg, Lilly spokesman Edward Sagebiel said: "There are a couple of drivers for the cuts: our recently announced decision to terminate AIR insulin and improvements in how we manufacture allow us to meet the demand with lower numbers​. "It's not the case that we're taking these jobs and moving them elsewhere​." This will be of little comfort to those facing unemployment but with Lilly reportedly offering 2,000 employees the severance package with the view that 500 will accept, the company is hoping for an amicable parting. Lilly, like the majority of big pharma companies, has been systematically reducing employee numbers over recent years. This latest development cuts Lilly's 12,000 strong Indianapolis workforce by 4.2 per cent and global employment has been reduced by 5,500, 12 per cent, over the past four years. The company says the majority of this reduction has been through attrition but it is not afraid to wield the axe when deemed necessary. In January 2007 it slashed its workforce at Lafayette by 20 per cent, using an early voluntary retirement offer. The Indianapolis job cut is the first major move by Lilly's new CEO John Lechleiter who took the reigns on April 1. The markets appear to have responded favourably to his move, with Lilly shares gaining 1.9 per cent. Financial analysts said that job cuts were inevitable following inhaled insulin's collapse and these words have also rung true at Lilly's partner for AIR, Alkermes, which has slashed its workforce by 150 people, 18 per cent. The moves by Lilly and Alkermes fit into a broader tapestry of job cuts, which has caused some analysts to predict 2008 will break last years record of over 30,000 layoffs globally by big pharma. A report published in December 2007 by investment advisors Regent Atlantic stated: "This trend should continue for the foreseeable future because thesecompanies must find ways to lower their operating costs to offset theircoming drop in revenues.​" ​It predicted job losses would extend to all strata of the industry, with two CEOs interviewed for the report believing that "an entire generation​" of upper-middle and senior-level executives (as many as 50,000 individuals) will be displaced.

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