Eli Lilly to issue lay offs, CEO retiring

Retiring CEO Sidney Taurel. Source: Eli Lilly & Co.

Eli Lilly will issue layoffs, Sidney Taurel, chairman and CEO of Lilly, said, without indicating how many employees are scheduled to lose their jobs or how much money the company would save.

Meanwhile, the Indianapolis-based pharmaceutical giant on Tuesday announced that Taurel will retire as CEO on March 31 after nearly a decade in the position, and he plans to step down as chairman of the board of directors on Dec. 31, 2008. John Lechleichter, PhD, who is the current president and chief operating officer (COO) of Lilly, will assume the role of president and CEO as of April 1, 2008.
 
Taurel said the layoffs as part of a change in the company’s business model. Lilly will reduce its fixed infrastructure while seeking to increase flexibility, lower costs and risks and use six-sigma quality techniques to continuously improve performance, he said.

The Indianapolis Star reported that Lilly has outsourced 40 percent of its information technology, 20 percent of its manufacturing, nearly 20 percent of its U.S. sales force and the bulk of its employee services, such as cafeteria workers, janitors and security guards.

Lilly is pushing to shift up to half of the cost of its research and development, long considered a core mission, onto outside partners by 2010, according to the Indy Star. 

Other pharmaceutical companies have been forced to make similar cuts. Since January 2006, the following industry competitors have announced layoffs, including: Abbott Laboratories 1,200 jobs; Bristol-Myers Squibb 4,300 jobs; Pfizer 10,000 jobs; Merck 7,000 jobs; AstraZeneca 7,600 jobs; Schering-Plough 1,100 jobs; Johnson & Johnson 4,800 jobs; Bayer 6,100 jobs; Amgen 2,600 jobs and Novartis 1,260 jobs.

The company said it will increasingly focus on tailored therapeutics for individual patients. Taurel cited the Lilly’s upcoming FDA submission for its cardiovascular drug prasugrel as an example, “where a tailored dose may provide a more favorable outcome for specific patient subpopulations.” Lilly recently concluded a large Phase III study and plans to apply for FDA approval this month.
Upon Taurel's recommendation, the board of directors has unanimously elected Lechleiter CEO and president. Lechleiter has served as president and COO since October 2005.

Karen Horn, senior managing director of Brock Capital and lead director of Lilly's board, said that “the board is pleased to appoint John to the role of CEO and president. His experiences and personal style equip him well for the challenges ahead, and we are confident that he will build upon the strong foundation that Sidney has built.”