Eli Lilly to cut 5,500 jobs amid restructuring

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Eli Lilly has issued a restructuring plan, which involves lowering the global headcount to 35,000 by the end of 2011—a 14 percent reduction—and reorganizing the company around five global business units, as well as the management of each new division.

The Indianapolis-based company expects that its 14 percent staff reduction will cut the company's cost structure by $1 billion. Also, Lilly is adding strategic sales staff in high-growth emerging markets and Japan. The five global business units will now be: oncology, diabetes, established markets, emerging markets, and Elanco animal health, thereby “moving from a predominantly functionally-oriented organization to a business-unit structure.”

John C. Lechleiter, PhD, Lilly’s chairman and CEO, noted that the global pharmaceutical industry is facing “unprecedented challenges - slowing innovation, rising costs, patent expirations and increased generic competition, demands from payers to deliver greater value and healthcare reform. These forces are reducing industry growth rates and profitability.” He added that the company is facing these and other “challenges, including a series of patent expirations for key products beginning in late 2011.”

The company also is establishing a Development Center of Excellence (COE) to help address challenges in the drug development process that is “increasingly complex, slow and expensive.” The goal of the Development COE is to accelerate the launch of company molecules over the next decade.

According to Lilly, activities are currently under way to put the new operating model in place, with the goal of transitioning to the new organization on Jan. 1, 2010. On Dec. 10, at the company's annual investment meeting in New York City, company leaders will present additional details.

Along with the structural changes, the company appointed these new leaders:

  • Tim Garnett, MD, and Tom Verhoeven, PhD, will lead the Development COE within Lilly Research Laboratories. Garnett will have responsibility for medical, regulatory, global product safety, translational medicine and global health outcomes. Verhoeven will have responsibility for the clinical development organization, product R &D, toxicology/ADME and project management.
  • John H. Johnson will lead the oncology business unit. Johnson currently serves as CEO of ImClone Systems, a wholly-owned subsidiary of Lilly.
  • Enrique A. Conterno will lead the diabetes business unit. Conterno currently serves as president of Lilly USA, the company's U.S. business operations.
  • Bryce D. Carmine will lead the established markets business unit. Carmine currently serves as Lilly's executive vice president of global marketing and sales.
  • Jacques Tapiero will lead the emerging markets business unit. Tapiero currently serves as Lilly's president of the intercontinental region.
  • Jeffrey N. Simmons will lead Elanco, the animal health business unit, where he currently serves as president.

Appointments for each of the four pharmaceutical business unit leaders and the two leaders of the Development Center of Excellence will become effective on Nov. 1.