Eli Lilly & Co. plans to cut as many as 500 jobs in its home city of Indianapolis after abandoning development of inhaled insulin.
The reductions, through voluntary buyouts, will affect manufacturing of insulin products Humalog and Humulin as well as the osteoporosis drug Forteo, the company said today in a statement. Some research and development jobs also will be cut.
The move reduces Lilly's 12,000-employee Indianapolis workforce by 4.2 percent, Edward Sagebiel, a company spokesman, said today. Lilly has chopped worldwide employment by 12 percent, or 5,500 people, over four years. The company had 40,600 employees as of Dec. 31.
"There are a couple of drivers for the cuts: our recently announced decision to terminate AIR insulin and improvements in how we manufacture allow us to meet the demand with lower numbers,'' Sagebiel said in a telephone interview.
Lilly will take a charge for the reductions in the second quarter, depending on the number of workers accepting buyouts, the company said. Those taking the exit offer will leave within three months, Sagebiel said.
"It's not the case that we're taking these jobs and moving them elsewhere,'' said Sagebiel.
Lilly gained $1, or 1.9 percent, to $52.55 in New York Stock Exchange composite trading at 4:02 p.m.
AIR Demise
Lilly said March 7 it quit developing AIR, its inhaled insulin, and would take a 5-cent to 7-cent charge in the first quarter. The company halted clinical trials and gave the rights to Alkermes Inc., its development partner.
"If you didn't reduce your head count after something like inhaled insulin, then it would start to impact your results,'' said Linda Bannister, an Edward Jones & Co. analyst in Des Peres, Missouri, in a telephone interview today.
Alkermes, based in Cambridge, Massachusetts, said March 19 that Lilly's abandonment of AIR required it to cut 150 jobs, or 18 percent of its workforce, and close a plant in Chelsea, Massachusetts. Pfizer Inc. dropped its inhaled insulin last year after slow sales, and Novo Nordisk A/S gave up on its inhaler this year.
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