Expected revenue slump spurs Lilly to cut sales force

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Eli Lilly and Co. will lay off hundreds of U.S. sales representatives between now and July 1 as it prepares for the loss of patent protection on two of its best-selling drugs.

The Indianapolis-based drugmaker said Thursday that the layoffs would number “fewer than 1,000,” with fewer than 20 of those occurring in Indiana.

Lilly’s bestselling drug, the antidepressant Cymbalta, will see its U.S. patent expire at the end of this year. That means the nearly $4 billion in annual U.S. sales of Cymbalta will quickly shift to cheaper generic copies.

Then in March 2014, the U.S. patent on Evista, an osteoporosis drug, will expire, evaporating about $700 million in U.S. sales of that drug.

“We’re just planning and expecting to lose that revenue and have had to make some changes in accordance with that,” said Lilly spokesman Scott MacGregor. He declined to disclose the total size of Lilly’s U.S. sales force, citing competitive reasons.

In addition to those sales losses, Lilly officials told a meeting of its sales professionals in Dallas on Wednesday that they are designing new ways to interact with doctors and hospitals that no longer require as many sales people.

“We’ve been on a journey over the last several years to really change the experience that we have with our customers,” MacGregor added.

Lilly will not reduce its sales force for its cancer drugs and will actually add sales personnel in its diabetes division, to support the launch of two new drugs.

Lilly employs a total of 17,000 workers in the U.S., 11,000 of which are located in Indiana.

Other parts of Lilly’s business continue to grow, offsetting the impact of the patent expirations on Cymbalta and Evista. But Wall Street analysts still expect Lilly’s overall revenue to fall from $22.6 billion last year to as low as $20 billion next year.

Lilly’s revenue already declined from an all-time high of $24.3 billion in 2011, after the patent expirations of its blockbuster cancer drug Gemzar in 2010 and its blockbuster antipsychotic Zyprexa in 2011. Lilly has been furiously trying to launch new drugs to replace the roughly $10 billion it will lose from the patent expiration of these four drugs, but has largely been stymied in that quest so far. 

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