Lilly Restructures R&D

In its effort to create a pharmaceutical business based on a network of collaborations, Eli Lilly & Co. is selling its Greenfield, Ind., operations to Covance, the Princeton, N.J.-based drug development services firm.

Covance will pay $50 million for the 450-acre lab site. It also gets a 10-year service agreement with Lilly worth $1.6 billion. The deal expands Covance's responsibilities for handling Lilly's toxicology testing and early-stage drug clinical trials and for supporting its Phase II and III trials.

In related moves, Lilly is transferring clinical trial monitoring in the U.S. and Puerto Rico to Quintiles, a pharmaceutical services company, and U.S. data management to the clinical research firm i3.

The R&D restructuring is designed to increase productivity and reduce drug development costs. "These actions reflect Lilly's determination to take the necessary steps to compete in a very challenging marketplace," Lilly CEO John Lechleiter says.

As a result of the Covance deal, clinical trials at the Lilly Center for Medical Science at the Indiana University Medical Center will be substantially reduced, and the Lilly Center will likely be closed. Its 48 employees will be able to apply for jobs within Lilly or receive severance packages.

In total, the R&D changes will affect nearly 800 people. About 260 Greenfield employees will automatically be offered jobs with Covance, while another 225 will move to Lilly sites in Indianapolis. About 265 other employees can apply for about 100 jobs that Quintiles and i3 will create and another 136 at Lilly.