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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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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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