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Eli Lilly reorganizes, cuts expenses and staff, reaffirms diversity commitment

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Indianapolis’ largest employer, Eli Lilly and Company, announced Monday a massive effort to reduce costs and employees, while restructuring its business to better compete in the second decade of the 21st century.

Lilly CEO Dr. John C. Lechleiter announced the changes to Lilly employees, customers and investors Monday morning.

The changes are four fold.

First, Lilly will better focus their worldwide business by creating five business units each focusing on specific lines of Lilly’s pharmacutical business. The units would focus on oncology (cancer), diabetes, established markets (such as the United States, Western Europe, Australia), emerging markets (such as China, Eastern Europe, Africa) and the current Elanco animal health unit.

Second, Lilly is creating a Development Center of Excellence which will help each of the five business units move to streamline and accelerate the launch of important medicines to market over the coming years.

To support the Center of Excellence and the five business units, Lilly will streamline and align the company’s corporate and general administrative functions.

Finally, Lilly will, by 2011, reduce current expenses by $1 billion dollars and lower their worldwide workforce to some 35,000.

In meeting with Indianapolis media, including the Indianapolis Recorder, Lilly CEO Lechleiter stressed that despite moving to specific business units, Lilly would remain committed to its values, “including diversity.”

“Lilly’s intent is to maintain the essential elements of our culture”, said Lechleiter.

“Our commitment to diversity is not up for grabs,” Lechleiter told the Recorder. “Lilly will continue to stress our corporate culture including integrity, respect for people, commitment to diversity and concern for safety.”

Lechleiter is convinced that the company’s reorganization will result in “more commitment” to Lilly values from its employees. “We think it will unleash our people, strengthen our management and employees.”

Lechleiter and Lilly Senior Vice-President and former Indianapolis Mayor Bart Peterson stressed that the changes will not lessen Lilly’s commitment to Indianapolis and Indiana. Both men stressed that Lilly will continue as an independent company and will continue their many contributions to the economy and quality of life here.

Peterson couldn’t say exactly how many of Lilly’s 13,000-plus employees in Indianapolis and Central Indiana might be affected by the expense and personnel reductions. He said personnel decisions wouldn’t be made until sometime next year. And Peterson and Lechleiter said affected employees would “be treated with respect.”

Lilly executives stressed that the reorganization and cost of staffing reductions will make the company better able to withstand the pressures and changes in the pharmaceutical business. Changes that include potential income losses when some Lilly medicines lose their patents in the next few years; the pressure by governments around the world for pharmaceutical companies to reduce the prices of their products and increased global competition.

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