Eli Lilly has announced that it will cut 3,500 jobs in an effort to streamline operations and improve its cost structure.
In a statement the company said it expects to see annualised savings of approximately $500 million that will begin to be realised in 2018 and will be about equally split to improve the company's cost structure and reinvest in the business, including product launches and clinical development for new indications and line extensions.
"We have an abundance of opportunities—eight medicines launched in the past four years and the potential for two more by the end of next year," said David Ricks, Lilly's chairman and chief executive officer. "To fully realise these opportunities and invest in the next generation of new medicines, we are taking action to streamline our organisation and reduce our fixed costs around the world."
Ricks continued, "The actions we are announcing today will result in a leaner, more nimble global organization and will accelerate progress towards our long-term goals of growing revenue, expanding operating margins and sustaining the flow of life-changing medicines from our pipeline."
Lilly expects the majority of the positions eliminated to come from a US voluntary early retirement program, which is being offered to employees who meet certain criteria.
Remaining positions will come from other anticipated workforce reductions, including select site closures. The company will move production from its animal health manufacturing facility in Larchwood, Iowa, to an existing plant in Fort Dodge, Iowa. In addition, a research and development office in Bridgewater, New Jersey, and the Lilly China Research and Development Center in Shanghai, China, will close as the company streamlines its pharmaceutical research and development activities. The company will also further consolidate some work to its existing shared service centers.
Lilly expects to incur charges of approximately $1.2 billion pre-tax or $0.80 per share after-tax,. These charges will be reflected as asset impairment, restructuring and other special charges in the third and fourth quarters of 2017.