Lilly Embarks On Reorganization

Eli Lilly & Co. is embarking on a reorganization that will result in the establishment of five business units and the elimination of about 5,500 jobs, a cut of nearly 14%, by the end of 2011. Lilly employs some 40,000 people worldwide.

The new business units--oncology, diabetes, established markets, emerging markets, and Elanco animal health--will be in place by the end of the year. The reorganization is intended to reduce the company's cost structure by $1 billion by the end of 2011.

At the same time, the company is establishing a "development center of excellence" that will impose common operating practices and priorities in all its drug development areas. Lilly says the center, unique in the drug industry, will help it accelerate the launch of important molecules over the next decade.

"We remain confident that continued focus on medical innovation is the best way to ensure the long-term growth of our company," says Lilly CEO John C. Lechleiter. Lechleiter, an organic chemist who took the top office at the drug firm last year, says the announced changes are aimed at accelerating development in a new drug pipeline with 60 molecules currently in clinical development.

Lilly, which is facing the 2011 expiration of the patent on its top-selling schizophrenia drug, Zyprexa, joins other major drug companies, including Pfizer and Merck & Co., that have launched streamlining plans this year. Merck announced a similar regrouping of businesses that will take effect following its pending acquisition of Schering-Plough (C&EN, Sept. 7, page 29).

"While our financial performance during the past few years has been strong, we will soon enter the most challenging period in our company's history," Lechleiter says. "This calls for strong measures to speed our output of new medicines, better meet the changing needs of our customers, and reduce our costs."