Eli Lilly ($LLY), languishing in the doldrums of its long-expected "Years YZ," has frozen the salaries of many of its staffers, including those of top management. As Pharmalot reports, the company disclosed in a recent Securities and Exchange Commission filing that employees in "most countries" around the globe "will not receive base pay increases in 2012." And for the third year in a row, CEO John Lechleiter (photo) has asked for no increase in salary or incentives for 2012.
The proxy statement attributes these moves to "the business challenges the company faces." These challenges aren't inconsiderable. Lilly's fourth quarter results showed that losing patent protection on its big-selling Zyprexa antipsychotic pill has hurt more than expected; sales already dropped by 44% to $749.6 million. Its Q4 profits fell by 27%, and earnings for 2012 are expected to take a big hit.
Lilly's patent-cliff "YZ" years were destined to be lean, but some R&D projects haven't panned out as hoped. The employees' hope for raises in 2013 could well depend on two ongoing trials of a potential Alzheimer's treatment. That data "is going to be the biggest thing they are going to report this year," Morningstar's Damien Conover told Bloomberg last week.