Eli Lilly to cut 5,500 jobs before 2012
By
Lindsey Erdody |
IDS
POSTED AT
12:56 AM ON Sep. 17, 2009
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Eli Lilly and Company announced Monday that it will cut $1 billion from its expenses by the end of 2011 in an effort to accelerate production and deliver medicine to patients faster.
The cut will eliminate 5,500 jobs, and the majority of the layoffs will take place at the Indianapolis headquarters, according to a press release.
A larger group of people will be cut from Indianapolis because that’s where there are a large number of workers, Eli Lilly spokesman Edward Sagebiel said. The company also employs people in Terre Haute.
Layoffs will probably start after the new year, but Sagebiel said the exact dates are still undecided.
“It’s likely we’ll have more details over the course of the next few weeks,” he said.
The plan comes after the company estimated it would be losing 80 to 90 percent of its revenue from Zyprexa in 2015 when its patent expires. Zyprexa is a $4 billion product the company administers.
The company contributes $8 billion to Indiana’s economy and is the sixth largest employer in the state, according to a June IU press release that was conducted by the Kelley School of Business and its Indiana Business Research Center.
Jerry Conover, director of IBRC, said the effect on the state and the Indianapolis economy is unknown at this point and will depend on how Eli Lilly proceeds with the job cuts.
“Anytime you have a large number of workers in a local area, that clearly will have a direct effect on the economy,” he said.
Bruce Jaffee, chairperson and professor of business economics and public policy, agrees.
“It’s certainly not great news,” he said. “It will be a hit for Indianapolis.”
But Sagebiel said the change for the company is coming at the right time, and Lilly won’t abandon the businesses they support.
“We’re still committed to being a strong corporation,” Sagebiel said.
But he said he recognizes money is being cut and spending will be tight.
“We’ll certainly have to live within our means,” Sagebiel said.
Effects of the layoffs will ripple far beyond Lilly itself. Vendors and other businesses that Eli Lilly works with will notice a decrease in sales, and they’ll have to look elsewhere for more business, Conover said.
However, he said he believes the company will remain a large player in the economy.
Conover said the “silver lining to the cloud” is that the company is still its keeping headquarters in Indianapolis. He said he doesn’t think people should worry because the company is making these changes in hopes of becoming more profitable.
“Hopefully they’ll succeed in doing that,” Conover said.