Eli Lilly announced, on Monday, that it would eliminate approximately 5,500 positions as part of a massive reorganization strategy that’s expected to net the firm reduce $1 billion in costs by 2011.
This move will drop the company’s headcount from approximately 40,500 to 35,000. The company hasn’t revealed where the cuts will come from or how many will be real layoffs and how many will simply be reduced positions.
The Big Pharma also revealed plans to follow the lead of companies like Pfizer and Johnson & Johnson and segment its pharmaceutical model into four business units and created a central developmental program to boost production of late-stage drugs.
"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,” stated Lilly CEO John C. Lechleiter, in a press statement. “These changes will also ensure that we meet the changing needs of our customers and operate our business in a manner consistent with an increasingly challenging environment.”
Lilly will restructure the company into five different business units responsible for diabetes, established markets, emerging markets, oncology, and animal care. The company also appointed leaders for each unit this morning.
Lechleiter stated that this plan is being put in place in anticipation of several patent expirations beginning in 2011. By reallocating teams into separate business unit, Lilly is banking that the new units will expedite approval of new molecules in the pipeline.
"While our structure and approach served us well in the past, we must take measures now that will make us leaner, more focused, more customer-oriented, and more competitive," Lechleiter stated. "The changes we're making will simplify our organization, clarify accountability and authority, and speed decision making."