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Lilly reorganization to cut 5,500 positions over 2 years

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Eli Lilly and Co. will cut 5,500 jobs by the end of 2011 as it tries to cut $1 billion in expenses before it loses the revenue from its bestselling drug, Zyprexa.

Lilly officials broke the news to the company’s 40,500 global employees at 8:30 a.m. Lilly CEO John Lechleiter said he did not know how many of those cuts would occur in central Indiana. But with about 13,000 employees in the Indianapolis area, he acknowledged the largest chunk of reductions would likely come here.

The job cuts represent a 13.5-percent reduction to Lilly’s total work force, which if applied locally at the same percentage would eliminate roughly 1,700 area jobs.

The job cuts will be made after Lilly restructures the company into five business units, with the goal of bringing new medicines to market faster.

Lilly faces the patent expiration of Zyprexa in November 2011, after which it will lose most of the drug’s $4.7 billion in annual sales to cheaper generic versions. Also, patents will expire on four other blockbuster drugs by 2014.

The units will be in animal health, cancer, diabetes, emerging markets and established markets, which will include the U.S and Europe, as well as Lilly’s bestselling drugs.

Lilly will also launch a new drug development initiative, called the Development Center of Excellence, to speed up drug development in its later stages.

The leaders of those new units, which will launch Jan. 1, will be:

— Cancer: John Johnson, CEO of ImClone Systems, which Lilly bought in 2008.

— Diabetes: Enrique Conterno, president of Lilly USA.

— Animal health: Jeff Simmons, who already leads this unit, called Elanco.

— Emerging markets: Jacques Tapiero, president of Lilly’s intercontinental region.

— Established markets: Bryce Carmine, Lilly’s executive vice president of global marketing and sales.

— Development Center of Excellence: Dr. Tim Garnett, Lilly’s chief medical officer, and Thomas Verhoeven, Lilly’s senior vice president for global product development.

Lilly CEO John Lechleiter said the changes would help Lilly get through lean years and respond to the increasing pressures it faces from health care reform and pricing demands from governments and insurers across the globe.

"We're going to see better decision-making, much more opportunity seeking," Lechleiter said, adding that Lilly would be "a company that is more focused and competitive than ever."

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  • Blame Mgmt
    Esta,

    Nice try. This is more a result of economic pressures, competitive landscape, and frankly, Lilly's own mismanagement. The cuts have been taking place slowly for a couple of years. The company is preparing for when their blockbuster drugs are no longer protected from generics, and with no new drugs near market, this puts Lilly in a dangerous place.

    It's fun but ignorant to place blame on a single party. Remember, that Bush started the TARP payments that Obama continued. He also stripped you of some of your basic civil freedoms, so he was hardly a better choice!!
  • Mr. Obama and Ms. Pelosi's health care reform is already working at keeping costs down! Don't mind the 1,700 local families that will be losing their coverage, not to mention their income, or the increased burden on the unemployment system, or the decrease in payroll taxes, or the decrease in incomes taxes, the rich folks will just have to ante up.
  • Dr. Lechleiter's and Lilly's executive committee are having to make some very tough decisions in preparation for health care reform. I support their decision knowing that when the dust settles, Lilly will be there for its employees, retirees, community and loyal customers.

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