Eli Lilly to cut 5,500 jobs as Big Pharma winter approaches
It's no secret drug companies have been bracing for hard times. There are several factors at play, but none more serious as the growing number of drugs set to go off patent in the next two to four years, including several blockbusters. As the pharmaceutical companies prepare to face increased generic competition, they have very few new drugs in their pipelines to replace the lost sales. Many companies have had no choice but to resort to restructuring to cut costs, including massive layoffs by the tens of thousands. Unfortunately, this coincided with the worst recession since the Great Depression. Since 2007, one company after another kept announcing job cuts, and today Eli Lilly & Co. (LLY) added another 5,500 people to the ranks of the unemployed.
Just like Pfizer, which has taken similar steps recently, half of Lilly's revenue will become exposed generic competition between 2010 and 2013 as four of its five top-selling drugs, including Zyprexa, face patent expiration. Lilly's sales of these drugs, which totaled nearly $11 billion last year, can decline by 80 percent. And just like the rest of the industry, Lilly doesn't have enough in its pipeline to offset the lost revenue.
John C. Lechleiter, chairman and CEO sounded confident though and said the changes "will accelerate the progress of the most exciting pipeline in our history, with more than 60 molecules currently in clinical development." He further explained, what hasn't really been news -- that the global pharmaceutical industry is facing unprecedented challenges - slowing innovation, rising costs, patent expires and increased generic competition, demands from payers to deliver greater value, and health care reform. These forces are reducing industry growth rates and profitability.
While the number sounds alarming, Lilly's is just the recent in a wave of layoffs in the industry that mostly took place in 2007-2008, but included some recent ones.
- In January, Pfizer Inc. (PFE) announced its plan to reduce its workforce by approximately 10 percent, about 8,000 workers, also due to its merger with Wyeth (WYE). Estimates put the total layoff figure post merger at 15 percent at both companies, for a total of 19,500 jobs. And this was already after announcing different scale job cuts consistently since 2004, and again since 2007.
- Last September, Schering-Plough Corp. (SGP) axed 5,500 jobs in its cost cutting drive. When it merges with Merck & Co., Inc. (MRK), 15 percent of their combined workers are also expected to see the door, or 16,000.
- Medtronic (MDT) said in May it's going to slash 1,500 to 1,800 jobs.
- Even Johnson & Johnson (JNJ) announced in April 2009 it was eliminating 900 positions.
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Reader Comments (Page 1 of 1)
9-14-2009 @ 6:42PM
Bill said...
You can thank your elected Representitives for this financial chaos, from both sides. They have out spent the US Treasury, and continue to write "bad" checks. This country is bankrupt!!! They have allowed this country to be "invaded" by illegals, who, by the way, have better benefits han I do. They have allowed hundreds of thousands of high paying jobs to move off-shore.
But the zinger, They have allowed TRILLIONS of dollars of American Worker sweat equity to be transfer out of this country right under our noses. Equity that will NEVER be recovered. Yes, your hard woking Rep's in Washington. All they care about is fleecing your wallet like an ATM, and hooking up with the next "Bimbo", on your dime, of course.
We are al the point were having a job at McD's is a coveted high paying career. It's time to flush our Rep's down the "crapper" at the next election, if we can hold on that long!
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9-14-2009 @ 6:16PM
Paul said...
Just part of the 3 Million saved jobs. good job Mr. President without YOUR leadership the country may have already righted the ship. These Private companies now have to CUT employees to make a profit. Sure the Stock Market is going up at the expense of Millions of workers.
Those of you claiming companies are doing better need to educate yourself. These companies are cutting jobs because they know when Government raises tax's on them and shoves this health care on them they will NOT be able to stay in business.
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9-14-2009 @ 6:22PM
Paul said...
this should show everyone what will happen if the dems get away with passing new laws so Unions can come in and intimidate workers to create more Union jobs. Most remaining non union companies will be forced to close up and move all there jobs overseas.
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9-14-2009 @ 6:42PM
Willy said...
I wonder how long our "friends" in other countries are going to keep letting us write I.O.U's? If they demanded payment on the I.O.U.'s they already have, we would be in foreclosure right now. Maybe they are going to want some collateral, like say, California!!
I was thinking of buying some rickshaws (chinese taxi cabs), to get a head start on them. It won't be long before they come knocking looking to get paid. Our ecomony is like a house of cards right now. The next big wind (Katrina), and we're toast.
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9-14-2009 @ 7:30PM
jeans said...
The article says the reason is because of generic drugs.
It just happened to coincide with the recession. It's not always Obama or the democrats. Can't you people read?
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9-14-2009 @ 8:15PM
LIONEL said...
so i guess that means the price of their dope will be going up over the 2000 % profit they alread y have ? i don`t suppose their ceo`s will be taking any less exorbitant raises and bonuses and stock opps. right ?
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9-14-2009 @ 8:14PM
Tami said...
Yes, they must need to cut back. Seniors no longer filling prescriptions or cutting back their doses. The unemployed have no expendable income for things like medications as they fight to keep a roof over their head and food in the cupboards. I bet these drug companies had huge profits, paid kickbacks to those MD's who prescribed their product, paid out large bonuses to sales reps, ceos not to mention the occassional junket to some posh resort, etc. Yeah they gotta be really hurtin.
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9-14-2009 @ 8:51PM
kim said...
ARE SICK OF THE CHANGE YET ??? WHAT IS NEXT ON THEIR LIST FOR DISTRUCTION !! MORE LOST JOBS ? I THOUGHT WE WERE IN RECOVERY , THEY LIED TO US AGAIN!! LIARS!!!
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9-14-2009 @ 10:44PM
Frank said...
What a choice, elect Bush and the rich get richer and the middle class loses. Elect O'Bama and disadvantaged and the unions make out like bandits, and the middle class loses. When do we win?
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9-14-2009 @ 11:06PM
jose said...
what u think we gonna get saved...thats funny.....the rich get
richer and the poor get even worst.....where we gonna go.......bush was bad and obama even worst......u ceo's and politics only think about ur selves and if u only knew that our taxes pay ur stupidity...............
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9-15-2009 @ 12:37AM
tom said...
Now we know why the republicans are spending so much money on political ads. They have to hammer the republicans enough times until they believe what the GOP is saying. The rest of us can think for our selves.
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9-15-2009 @ 4:03AM
Doug said...
One good thing I'll say about the drug companies is that at least they didn't hop on the bail-out band wagon. But other than that, they are guilty of inflation and overpriced medical care as much as Doctors and Hospitals are. They claim the high cost of their products is to bankroll further research and developement. BOSH! They just want to get every cent they can out of a product before their patent ran out. If an audit was done on a major drug company, it would be found that they have enough profits to carry research into the year 2100!
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9-15-2009 @ 6:56AM
MrDoughnut said...
If the companies are cutting costs in the manner they have been then their just cutting the consumer's paychecks resulting in a continued economic decline.
How good is your math?
These companies have created a mess. Their waiting for who to buy their products? They must be waiting for the Great Pumkin like Charlie Brown!
Still think there is no Depression. If this were a recession we it would of been over by now! Sad they claim they prevented a Depression.Yeah right~
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9-15-2009 @ 7:08AM
MrDoughnut said...
They have been dragging out this down turn since 1987. They kept cutting jobs and paying low wages using fraud loans to shield the housing industry as long as they could.
Retail leases can not survive these continued cuts. Probably 50% of the leased retail properties will have to be boarded up to reduce capacity.
I find it hard to believe that all this commercial space is needed.
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