Lilly juggles jobs for emerging-markets growth

If you want to know what a company's really doing, don't read the earnings numbers. Read the fine print. Take Eli Lilly, for instance. As the Wall Street Journal Health Blog finds, Lilly has been hiring so far this year.

The company has said it will slash its workforce to 35,000 by the end of 2011. Yes, that's two years away, so there's plenty of time. Lilly also said the cuts would come in mature markets; in emerging markets the company intends to expand, particularly in sales. Japan is targeted for sales expansion, too.

And that's evidently why Lilly's workforce actually grew to 40,800 from 40,450 during the third quarter. It's not a change in strategy; the company still plans to cut more than 5,000 jobs and $1 billion in costs. Just witness the recent agreement to sell its lab in Tippecanoe, shedding 700 jobs in the process. That would take the company's payroll down to 40,100, leaving just 5,100 cuts to come. Or 4,750, if you net out the 350 new hires that are supposed to be "exclusive" of the 35,000 payroll goal.

Emerging markets are increasing in importance for Big Pharma, as pricing pressures and generic meds grow elsewhere. So the hiring-while-cutting combo isn't such an oxymoron. And if you look at the nature of emerging drug markets, the need to cut costs by $1 billion while staffing up in fast-growth areas makes even more sense. The developing world just can't support the high prices paid in affluent countries. So emerging markets may promise big growth--but at high volumes of low-priced meds. Thinner margins require better cost control, no?

- read the Health Blog post
- check out the article from Eye on Pharma