Lilly slashes workforce by 13%

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Eli Lilly and Co. will reduce its global headcount to 35,000 from 40,500 by the end of 2011 as part of an overall reorganization designed to reduce the company's cost structure by $1 billion.

Mark Taylor, manager, corporate communications for Lilly, told MM&M that because the new organizational structure is still being designed, the company doesn't know how the staff reductions will impact specific departments and functions, including sales force personnel. “Headcount reductions will be spread across the company, both in the US and abroad,” said Taylor. “Every function will need to re-evaluate its staffing needs in light of the new organizational structure.”

Lilly unveiled its new operating model and announced a series of changes to speed medicines from its pipeline to patients. Among the new initiatives, the company will establish a Development Center of Excellence designed to streamline and accelerate late-stage development of new medicines, and it will reorganize its pharmaceutical business into four business units that will operate alongside the Elanco animal health unit. The company has set a goal to significantly reduce its cost structure by the end of 2011.

Lilly chairman and CEO John Lechleiter, PhD, said that the company remains confident that continued focus on medical innovation is the best way to ensure long-term growth.

Among the changes that the company announced are:
  • Establishment of a Development Center of Excellence (COE) to help address the challenge of a drug development process that is increasingly complex, slow and expensive.
  • Reorganizing the company around five global business units focused on oncology, diabetes, established markets, emerging markets, and animal health, thereby moving from a predominantly functionally-oriented organization to a business-unit structure.
  • Streamlining the organization and align corporate and general and administrative functions to support the business with a focus on improved quality, strong customer service and reduced costs.
  • Reducing the company's cost structure by $1 billion and lower global headcount to 35,000 by the end of 2011, excluding strategic sales additions in high-growth emerging markets and Japan.
In conjunction with the change to the operating model, Lilly named the leaders of its Development Center of Excellence and its five business units. Tim Garnett, MD, and Tom Verhoeven, PhD, will lead the Development Center of Excellence within Lilly Research Laboratories. John H. Johnson will lead the oncology business unit. Enrique Conterno will lead the diabetes business unit. Bryce D. Carmine will lead the established markets business unit. Jacques Tapiero will lead the emerging markets business unit and Jeffrey N. Simmons will lead Elanco, the animal health business unit, where he currently serves as president.

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