Lilly to cut workforce 10% in bid to save $1bn by 2011

By Staff Reporter

- Last updated on GMT

Related tags: Schering-plough, Eli lilly

US drugmaker Eli Lilly plans to cut 5,500 jobs by 2011 as it prepares to enter what CEO John Lechleiter said will be “the most challenging period in [the] company’s history.”

In common with most of the Big Pharma firms that have restructured over the last 18 months, Lilly said the move is designed to minimize the impact of patent loss and subsequent generic competition for several of its key products.

Although it was not named specifically, the antipsychotic Zyprexa is one of the drugs that Lilly is most concerned about given this it is its biggest seller and due to lose patent protection in 2011.

The restructuring move, which Lilly hopes will cut costs by $1bn (€683m) over the next two years, is also intended to “accelerate the progress of the most exciting pipeline in our history”​ which, Lechleiter added, has 60 molecules in development.

To aid this process Lilly will set up a “Development Center of Excellence (COE)” that is claimed will be distinguished from its peers through the adoption of “one common set of priorities and a singular focus to streamline the development of new medicines​.”

Further details of the COE have not been announced, however, Lilly’s focus on R&D suggests that the job cuts will be primarily focused in other areas of its business.

Wider restructuring

In an approach similar to that unveiled by rival US pharma major Merck & Co last month, Lilly also said that it will restructure its operations into five global units: oncology; diabetes; establish markets; emerging markets; and animal healthcare.

The key difference between the two strategies, other than Merck’s need to accommodate Schering Plough, is the emphasis Lilly has placed on emerging markets.

While full details of the job cuts have not been released, the firm said that "strategic sales additions in high-growth emerging markets," are likely.

Related topics: Markets & Regulations

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