Eli Lilly and Co. will close its drug discovery center in Singapore, three years into a five-year, $150 million plan to expand it.

About 130 employees will be affected by the closure, which will take effect as of the end of December, a Singapore-based external spokeswoman who declined to be identified said in an e-mail Monday. Projects developed in the city-state will be transferred to the company’s headquarters in Indianapolis, she said. Dow Jones Newswires reported the news earlier.

Lilly is on track to cut costs by about $1 billion by 2011, Chief Executive Officer John Lechleiter said in September. The company said last year it was reorganizing its research operations to address an “increasingly complex, slow and expensive” drug development process.

The closure “is part of our ongoing business reviews to ensure we are structured to most efficiently bring innovative new medicines to patients,” the spokeswoman said.

Lilly said in 2007 it planned to spend $150 million over five years to expand the center, with a focus on translating basic research into treatments for cancer and type 2 diabetes. The company said it planned to identify two potential drug candidates at the center within five years. The center’s employees will be able to apply for “limited jobs” at Lilly’s headquarters or to take a severance package, the company said.

The announcement comes nine days after Singapore’s government said it wanted to strengthen ties between government-funded scientists and institutes as it seeks to hasten returns on its investment in research and development. Singapore has spent almost S$20 billion ($15 million) over the past decade to become a scientific research hub and plans to spend S$16.1 billion over the next five years, it said.

“We regret Lilly’s decision,” Beh Kian Teik, director of biomedical sciences at Singapore’s Economic Development Board, said in an e-mailed statement.

Novartis AG, GlaxoSmithKline Plc and Roche Holding AG have also set up research labs in the city state. Lilly will continue to operate a clinical trial unit at the National University of Singapore, it said.