Eli Lilly & Co. (NYSE:LLY) is digesting its acquisitions of ImClone Systems Inc. for $6.5 billion and Monsanto Co.'s dairy cow hormone for $300 million, and it is preparing for tough times ahead when some major patents will face generic competition.
Along with cutting 5,550 jobs, the company is undergoing a restructuring like Pfizer Inc. (NYSE:PFE)
announced in April and like Merck & Co. (NYSE:MRK)
announced in August. The Indianapolis company will reorganize into
five global business units by January: oncology, diabetes, established markets, emerging markets and the Elanco animal health unit.
Enrique Conterno will lead diabetes, Bryce Carmine will head established markets, and Jacques Tapiero will lead the emerging markets business unit.
The Elanco business, beefed up by Monsanto's controversial hormone, is led by Jeff Simmons, a 20-year vet of Eli Lilly.
Leading the onco unit is former ImClone CEO John Johnson. That sector has experienced a lot of
dealmaking of late, and we've been keeping an eye on them. For example, Bristol-Myers Squibb Co. (NYSE:BMY) recently
completed its
acquisition of Medarex Inc. for $2.4 billion.
Industry watchers had thought Bristol-Myers would make a good merger candidate with Eli Lilly, but Eli's CEO John Lechleiter (pictured) quashed the idea calling for an end to the
megamerger madness. Lechleiter told the Financial Times the big drug mergers of the spring were "driven more by weakness" and are short-term fixes that fail to address long-term productivity problems. He said he's focused on improving Lilly's internal development and making smaller-scale buyouts.
Including the jobs cuts, Eli Lilly hopes to reduce its cost structure by $1 billion by 2011. Dow Jones
notes that between 2010 and 2013, because of patent expirations on four of its top five drugs (including blockbuster antipsychotic Zyprexa), the nearly $11 billion in sales of those drugs last year can be expected to decline by as much as 80%. The company says its new operating model will speed medicines from its
pipeline to patients. -
Baz HiralalSee the restructuring announcementAnnouncement on speeding medicines to patientsSee the Dow Jones story
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