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Lilly Trimming Up To 500 Through 'Voluntary Exits'

Company Says It Has Too Many Workers For Certain Drugs

POSTED: 11:05 am EDT April 16, 2008
UPDATED: 9:45 am EDT April 17, 2008

Indianapolis drugmaker Eli Lilly and Co. plans to trim up to 500 people from its local workforce in a "voluntary exit program" that will be offered to 2,000 employees, the company said Wednesday.

The workers will be given until May 7 to decide whether to take "enhanced financial incentives" to leave, the company said. The offer will be made to people involved in the production of pharmaceutical ingredients for insulin products Humalog and Humulin and the osteoporosis medication Forteo.

The offer targets mostly manufacturing positions but will also involve some research and development workers.

"The reason behind the announcement today is to get our manufacturing capacity in alignment with what we think the demand for those products will be," Lilly spokesman Phil Belt said.

Lilly said many of the 2,000 are near retirement.

Phillip Powell, an economics professor at Indiana University's Kelley School of Business, said Lilly has been "under a lot of pressure."

"Across the country, we're wanting cheaper drugs, and that's going to hurt Lilly's revenue and that's going to make things tighter," Powell said. "So, this is going to be one reality of having a big pharmaceutical company in town: when there's pressure on the pharmaceutical companies to have cheaper drugs, there's going to be more pressure to lay people off."

Those who accept the offer will leave the company on June 30, Lilly said.

John C. Lechleiter, Lilly president and chief executive officer, said the company has focused for several years on lowering costs and improving productivity.

"This strategy calls for reducing investments in some areas while increasing investments in others, and the streamlining decisions announced today are an example of this," Lechleiter said in a news release.

The company, which earned nearly $3 billion in 2007, said the number of its employees worldwide is down about 12 percent from a peak in 2004.

"These reductions have occurred primarily through attrition, but at times … we have had to take additional measures as we have restructured our operations," Lechleiter said.

Lechleiter, 59, took the helm at the Fortune 500 company on April 1.

The company is trying to get several new medications approved before 2011, when it loses patent protection for Zyprexa, its best-selling drug.


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