Eli Lilly targets sales force for job cuts in wake of Alzheimer's failure

When Eli Lilly's much anticipated Alzheimer’s prospect solanezumab failed a key trial last month, it also put a set of sales jobs on the chopping block.

The Big Pharma had staffed up in anticipation of a solanezumab approval, planning to hit the streets with information on the potential blockbuster as soon as it could be launched. The drug had been a hotly anticipated new treatment for Alzheimer’s, a disease that is growing rapidly in the U.S. as the population ages.

With solenazumab’s trial failure, that expanded force and the associated costs were no longer warranted, the company said. Lilly has also decided to stop promoting other meds nearing patent expiration, including the erectile dysfunction treatment Cialis, the ADHD med Strattera and the blood clot-fighter Effient.

The job cuts will affect field sales reps across the U.S., Lilly spokesman Mark Taylor said via email.

“As we stated two weeks ago when we announced the disappointing solanezumab news, this outcome will cause us to reevaluate staffing decisions made in anticipation of positive results,” Taylor said. “We informed employees earlier this week that we would be reducing the size of our U.S. Bio-Medicines sales force in the first quarter of 2017 to better meet our future business needs."

Taylor wouldn’t specify how many jobs would be lost. The Indianapolis Business Journal said hundreds of reps would be laid off, citing anonymous sources inside Lilly.

The employees’ current jobs will wrap up Dec. 31, and they will have three months after that to apply for other jobs within the company. At the end of March, any who haven’t found another job at Lilly will receive a severance package, Taylor said.

Lilly had been hoping solanezumab would help build up sales as Cialis, Strattera and Effient began to decline on generic competition. Analysts had pegged it as a blockbuster, with Barclays expecting $1.7 billion by 2020. Analysts at Morgan Stanley and Leerink Partners lowered their price targets for Lilly shares and cut long-term sales estimates for the company.

Lilly does, however, have other potential performers in its portfolio and pipeline. On the pipeline side, analyst Tim Anderson has pointed to its rheumatoid arthritis prospect baricitinib and its breast cancer candidate abemaciclib, though the latter recently missed a chance to stop a late-stage trial early.

Plus, Lilly’s next-gen psoriasis med Taltz, the second-to-market in the anti-IL-17 class, has been giving Novartis’ Cosentyx a run for its money. And despite pricing pressure that has investors understandably worried, Lilly’s new GLP-1 drug Trulicity has been grabbing share from the market leader, Novo Nordisk.

Perhaps more important, its SGLT2 med Jardiance, shared with Boehringer Ingelheim, just last week grabbed a new indication that will allow reps to tout its ability to reduce cardiovascular risks, including the risk of CV-related death. That FDA nod is expected to put Jardiance on an “upward trajectory,” Credit Suisse analyst Vamil Divan said in a note to investors. Morgan Stanley hiked its sales estimate on the drug to $1.1 billion by 2020, with consensus at $1.4 billion.

Meanwhile, Lilly’s biosimilar version of Lantus, Sanofi’s $7 billion insulin, is set to launch later this month as well. That drug, also shared with Boehringer, won favorable formulary spots for 2017, as payers sought to save money by using biosimilars rather than the original brands.

Still, that’s small comfort for Lilly employees unable to find other jobs within the company. They might be able to take heart in the fact that they’re not alone: A slate of pharma companies have announced job cuts this year, including Mylan, which said Wednesday it would cut “less than 10%” of its worldwide workforce of 35,000-plus. Diabetes rival Novo Nordisk said previously that it would cut 1,000 jobs in the face of U.S. market pressures.