In an effort to appease all parties involved, Elan announced on Monday that it had restructured its agreement with Johnson & Johnson, knocking $100 million off the price tag of the blockbuster MS drug Tysabri, and eliminating any mention of the drug from the fine print.

Back in June, J&J offered to pay $1 billion for 18.4 percent of Elan’s corporate shares and $500 million for control of Elan’s Alzheimer’s pipeline. As part of the deal, J&J would get a chance to purchase rights to Elan’s half of Tysabri-a 50/50 partnership with Biogen Idec. What J&J hadn’t banked on was that Biogen Idec-Elan’s partner on Tysabri-would object to the deal and enforce a clause that would revert 100 percent control of the drug to one partner company if the other firm was sold. 

"It appears to the court that Elan has designated an obligation it has to Johnson & Johnson by taking direction from Johnson & Johnson on the purchase price negotiations," Manhattan federal court judge Deborah Batts said in a report from Reuters earlier this month. “[Biogen] is within its rights [to give Elan] the opportunity to cure that breach.”

On Monday, Elan stated in a release that it had “cured” the breach of contract and that it had revised its deal with J&J to leave out any mention of Tysabri. In other words, it’s going to be business as usual for Elan and Biogen-and J&J can’t touch Tysabri. 

Elan, however, had to renegotiate the price tag on the J&J bid, which dropped from $1 billion to $885 million. As part of the deal, J&J will get access to all of Elan’s Alzheimer’s treatments, which will be managed under the newly formed Janssen Alzheimer Immunotherapy. Elan will have a 49.9 percent stake in the new company, and will share profits and receive milestone payments.

No word on whether Biogen Idec is content with the final outcome.

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Elan was forced to trim $100 million off its billion-dollar deal with J&J due to a 50/50 agreement with Biogen Idec involving co-ownership of MS drug Tysabri. Now J&J is out a major drug, Elan is out a good chunk of cash, and Biogen Idec is pondering its next move.

J&J Slims Down Elan Offer sans Tysabri

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.

	Tim Garnett and Tom Verhoeven were named heads of the Developmental Center of Excellence.

	Current ImClone CEO John H. Johnson was named head of the oncology unit.
 

	Lilly USA President Enrique A. Conterno will run the diabetes unit.
 

	Bryce D. Carmine, presently the vice president of global marketing and sales, will run the established markets unit.
 

	Lilly’s President of the Intercontinental region will lead the emerging markets unit.
 

 Current animal health president Jeffrey Simmons will stay put as head of the animal health business unit. 

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."

Eli Lilly announced this morning 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.

Pharmaceutical Executive-09-17-2009

J&J Slims Down Elan Offer sans Tysabri

Lilly Shuffles Staff, Cuts Thousands of Jobs