Here is a business reality that hundreds of Eli Lilly ($LLY) sales employees are going to have to align themselves with quite soon: They are about to lose their jobs.
With its best-selling drug, the antidepressant Cymbalta, going off patent at the end of the year, the Indianapolis company is preparing to lay off a big chunk of its Bio-Medicines sales force, according to the Associated Press. The group includes neuroscience, cardiovascular and men's health medicines units. Lilly spokesman Scott MacGregor told the news service the cuts would number less than 1,000 full-time employees and happen by July 1. MacGregor also told the AP the unit will become smaller, and more aligned with business realities and the way customers want to interact with the company.
Cymbalta remains Lilly's best-selling drug, but not for long. It brought in just shy of $5 billion last year, $4 billion of that in the U.S., but it will lose patent protection at the end of 2013. It was slated to go off patent June 30, but Lilly last year won a 6-month extension after testing the drug for treating depression in adolescents through the FDA pediatric-exclusivity program. It is estimated the drugmaker will reap an additional $1.5 billion in sales from the extra 6 months of exclusivity.
But once the patent is gone, so will be most of the revenues. Sales for its antipsychotic drug Zyprexa last year fell 83% to $360 million after losing patent protection in 2011 on the former blockbuster.
To replace much of the loss from Cymbalta and other drugs, Lilly has made a huge bet on insulin. It is expanding the sales force in that treatment area. It has four new products in development, including one that could give Sanofi's ($SNY) Lantus a run for its money. To prepare for the growth, this month the company said it had decided to double the capacity of an insulin plant it is building in its hometown. It said it will kick in another $180 million on top of the $140 million investment it announced in November. That will not only allow it to add another line for insulin-filled cartridges, but also to expand an ingredient plant in the city.
- here's the Associated Press story
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