Lilly to Cut 14 Pct of Staff, Trim $1B in Costs

FILE - In this Jan 25, 2006 file photo, The Eli Lilly and Company headquarters in pictured in...

FILE - In this Jan 25, 2006 file photo, The Eli Lilly and Company headquarters in pictured in Indianapolis. Drugmaker Eli Lilly & Co. said Monday, Sept. 14, 2009, that it will eliminate 5,500 jobs, or nearly 14 percent of its staff, and reorganize into five business units in order to slash costs and speed up development of potential new drugs. (AP Photo/Darron Cummings, File)

(AP)

Seeking to cut costs and bring new drugs to market more quickly as its best-sellers go off-patent, drugmaker Eli Lilly & Co. said Monday it will eliminate 5,500 jobs over two years and reorganize into five business units.

The Indianapolis company said it will reduce its work force by nearly 14 percent, to 35,000 from the current 40,500, by the end of 2011. The new total excludes hirings in high-growth emerging markets and Japan.

Lilly hopes to cut annual costs by $1 billion per year over the same time, and will organize itself into the following units: cancer, diabetes, established markets, emerging markets, and Elanco, its animal health business.

The company said its drug development and marketing will be more closely linked after the reorganization. Eli Lilly is currently organized around "functions," with separate U.S. and global marketing operations for each drug.

The company faces a dearth of recently approved drugs, having received approval for only one new drug since 2005. That was the blood thinner Effient, which reached the market in August after an 18-month FDA review.

Meanwhile, key Lilly products like the anti-psychotic drug Zyprexa will lose patent protection starting in 2011, with three other drugs — antidepressant Cymbalta, Humalog insulin and cancer drug Gemzar — losing protection in 2013. CEO John Lechleiter believes the company's best path to profit growth involves focusing on its early and mid stage drug candidates.

Lilly is not planning an acquisition on the scale of Pfizer's $68 billion purchase of Wyeth, or Merck's $41 billion deal for Schering-Plough. But the company bought cancer drug maker ImClone Systems for $6 billion last year to acquire the cancer drug Erbitux and help balance the revenue it would lose when Zyprexa, Cymbalta, Humalog and Gemzar faced generic competition. The products were Lilly's four best-sellers in 2008, with combined revenue of $10.85 billion — more than half the company's total.