Eli Lilly and Company to cut 3,500 roles in a strategic overhaul
Global healthcare company Eli Lilly and Company has shocked its staff by cutting over 3,000 positions and enabling voluntary early redundancy in a bid to streamline its services. The decision will further enable Eli Lilly and Company to develop new medicines and improve its overall cost structure.
Set to be completed by the end of the year, the move will see the company deliver annual savings of up to $500 million in workforce savings for the next forthcoming year and improve efficiencies throughout its operations whilst it reinvests in the business.
"We have an abundance of opportunities—eight medicines launched in the past four years and the potential for two more by the end of next year," said David A. Ricks, Lilly's chairman and chief executive officer. "To fully realize these opportunities and invest in the next generation of new medicines, we are taking action to streamline our organization and reduce our fixed costs around the world.
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"The actions we are announcing today will result in a leaner, more nimble global organization and will accelerate progress towards our long-term goals of growing revenue, expanding operating margins and sustaining the flow of life-changing medicines from our pipeline."
The company expects the majority of positions will be taken up through its voluntary early retirement program, eligible for those who meet certain criteria, from which they will also receive enhanced retirement benefits. Remaining positions will come from further reductions and site closures. The reductions will see a cut in eight percent of the company’s total workforce.
Consequently, to further provide sufficient cost savings, the company is moving its production from its animal health manufacturing facility in Larchwood, Iowa, to an existing plant in Fort Dodge and is shutting its research and development offices in Bridgewater, New Jersey and Shanghai, China.
The company has been going through a number of difficult periods, laying off 500 employees at the start of the year and has had to deal with a large number of patent expires, creating increased competition in the drug market for medicines to treat depression, cancer and schizophrenia, amongst others. Additionally, a delay in its new rheumatoid arthritis drug has also represented a number of challenges.
However, it is set to launch two new treatments in 2018, one for migraines, and the other for breast cancer, according to Reuters. The treatments are currently under review by the Food & Drug Administration.
“Around the world we have pricing pressure and I think it’s understandable,” Chief Executive Officer David Ricks has said. “Patients and health-care systems, governments, want us to be more efficient. This is a step toward efficiency. It gives us flexibility and latitude to respond to events that may put pressure on our prices in the future.”