Eli Lilly plans 5,500 job cuts to save $1 billion

US pharmaceutical major, Eli Lilly and Company (Lilly) yesterday unveiled a series of changes in its operational structure to speed medicines from its pipeline to patients, and reduce annual costs to the tune of $1 billion by 2011, a statement issued yesterday said.

The company will establish a Development Centre of Excellence in order to accelerate late-stage development of drugs. As part of its reorganisation, the pharmaceutical business will be revamped to five global business units: oncology, diabetes, established markets, emerging markets and Elanco animal health.

Lilly chairman and chief executive officer, John C Lechleiter said: "We remain confident that continued focus on medical innovation is the best way to ensure the long-term growth of our company. The changes we are announcing today will accelerate the progress of the most exciting pipeline in our history, with more than 60 molecules currently in clinical development.''

The company plans to align various functions to support the business with a focus on improved quality and customer service and reduce the headcount by about 13.6 per cent to 35,000 from the current level of around 40,500.

By streamlining the organisation, the drug maker expects to reduce the cost structure by $1 billion by the end of 2011. The company plans to implement the new organisational structure by 1 January, 2010.

Lechleiter said that the changes are required as the global pharmaceutical industry is facing unprecedented challenges: slowing innovation, rising costs, patent expiries, generic competition etc. Lilly's own patents for few block buster drugs will expire during 2011-2013.