Lilly freezes hiring, imposes 'strict measures'

INDIANAPOLIS -- Eli Lilly and Company has imposed a company-wide hiring freeze and other "strict measures" as the drug maker continues working to overcome the loss of revenue from its former blockbuster-selling antidepressant, Prozac.\nIn a notice sent Friday to Lilly's 46,000 employees worldwide, the Indianapolis-based drug maker said the measures were effective immediately but that it foresees no employee layoffs or early retirement buyouts.\n"Layoffs always have been and always will be the very last alternative we would consider," Lilly President Sidney Taurel said in a recent memo to employees.\nLilly's austerity plan does not include a salary freeze or elimination of annual bonuses -- two cost-cutting steps Lilly took in 2002 to cope with the loss of its U.S. patent on Prozac in 2001.\nLilly is working to overcome the loss of more than $2 billion a year in revenue from Prozac as competition eats away at the market share of its new No. 1 drug, Zyprexa. The antipsychotic supplied 34 percent of Lilly's sales of $12.6 billion last year.\nThe company also is being challenged by health plans and governments importing lower-cost drugs from Canada rather than paying full price.\nThe company said in a statement that its cost-cutting steps are part of broader efforts to reduce spending "in an increasingly cost-conscious, competitive global marketplace."\nMeasures include the hiring freeze for an undefined time, limiting travel to "business-critical needs," and eliminating or reducing the use of temporary workers, consultants and outsourced jobs that are not critical to the business.\nThe measures also include reducing spending on entertainment, company meals and laptop computers.\nLilly is committed to hiring 7,500 new workers in Indianapolis by 2010 under a 1999 agreement it made with the city and state that granted the company $214 million in economic incentives to help it expand its local operations.\nSo far, Lilly has hired 5,400 new local employees.