Drug making company Eli Lilly & Co. (NYSE:LLY)is planning on cutting 8.5% of their workforce and wants to close some facilities as the company is struggling with cost on some of their biggest products.
The company has about 41,000 employees as of June and the 3,500 job cuts will come from early retirements. These cuts will save the company about $500 million annually starting next year and Lilly will take charges of $1.2 billion equaling to 80 cents a share in the second half of this year. 2,000 of the job cuts will be in the U.S. while the company focuses on new drugs in their pipeline. A research facility in Bridgewater, New Jersey is also planned to be closed while some manufacturing operations at their animal health unit is to be consolidated.
3 of Lilly’s 10 biggest products are made up of diabetes drugs and the company has been focusing on the disease as other big drugs have lost patent protection, but treatments for diabetes have faced cost pressure due to heated competition, leading to thousands of job cuts in recent years. 500 positions were eliminated last year after a failure of an experimental Alzheimer’s disease drug.