Lilly To Cut 5,500 Jobs, $1 Billion in Costs

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Indianapolis-based Eli Lilly today announced major cuts to compensate for revenue risks over the next several years:

Eli Lilly & Co. LLY said Monday it plans to reduce its work force by nearly 14%, or 5,500 employees, and revamp its operating structure to help brace for a challenging decade ahead in which it will face heavy competition from generic drugs.

Between 2010 and 2013, more than half of Lilly’s current revenue will become exposed to generic competition due to U.S. patent expirations on four of its five top-selling drugs including the blockbuster antipsychotic Zyprexa. Sales of those drugs – nearly $11 billion last year – can be expected to decline by as much as 80%. Lilly currently doesn’t have enough firepower to offset the lost revenue, having had some notable failures in recent weeks in efforts to bring new drugs to market.

via UPDATE: Lilly To Cut $1B In Costs, 5,500 Jobs In Next 2 Yrs – WSJ.com.

This will likely mean heavy losses in my hometown of Indianapolis. Not just in the jobs sector, but in the civic sector as well. Lilly builds museums, parks and hospitals all over the city; in return, Indianapolis looks the other way on Lilly’s storied history of corporate malfeasance (see Lilly’s $1.4 billion corporate criminal settlement in January — the largest of its kind in history — for illegal marketing practices). Without a doubt, when Lilly loses, so does Indianapolis.

Sort of makes you wish Lilly had saved that $1 billion by avoiding huge criminal settlements instead.