Lilly to cut 5,500 jobs in restructuring

Eli Lilly is joining the restructuring parade. The drugmaker will reorganize into five business units--oncology, diabetes, emerging markets, established markets and animal health--and cut costs by $1 billion by the end of 2011. And that means job cuts. Some 5,500 jobs will see the scythe, a 13.5 percent swath of Lilly's 40,500-strong workforce.

The overhaul is designed to shore up Lilly's defenses as it nears the end of exclusivity for its Zyprexa antipsychotic. Zyprexa goes off patent in 2011, and it's a big contributor to the Lilly revenue stream with $4.7 billion in 2008 sales. "[W]e will soon enter the most challenging period in our company's history," CEO John Lechleiter (photo) said in a release. "This calls for strong measures to speed our output of new medicines, better meet the changing needs of our customers and reduce our costs."

The idea is to switch to the new structure on January 1. To that end, Lechleiter tapped managers for the five new units to take their new slots November 1. John H. Johnson, who's been CEO of Lilly's ImClone Systems subsidiary, will take over the oncology business unit. Enrique Conterno will head up the diabetes unit; he's been serving as president of Lilly USA. Bryce Carmine, who has been EVP of marketing and sales, will take over established markets. Jacques Tapiero will lead emerging markets; he has been president of Lilly's intercontinental region. And Jeffrey Simmons will lead Elanco, the animal health unit, where he's currently president.

This is the fourth big pharma-management overhaul to be announced in the last couple of weeks. Merck and Pfizer unveiled their new, post-merger structures and named post-merger management. And Roche rejigged its management, now that its integration with Genentech is well underway. Who's next?

- read the Lilly release on the management changes
- get Lilly's release on the restructuring
- see the Reuters news