Sector News

Lilly powers ahead with plant investment even as it cuts 3,500 jobs

October 23, 2017
Life sciences

Even as pricing pressure on its diabetes portfolio led Eli Lilly to cut 3,500 jobs by year-end, the drugmaker today said it is moving forward with a $72 million upgrade to its insulin manufacturing, part of an $850 million outlay it had expected to make this year on capital projects.

Lilly will replace an existing insulin vial filling line at its site in Indianapolis, where it has its headquarters. It said the project will help it meet demand for Humalog, Humulin and other insulins, and put in place new technology for pipeline projects.

“As technology and science continually advance, it is important that our manufacturing facilities are recapitalized and modernized regularly to ensure we can continue to provide a reliable supply of safe and high-quality medicines to people around the world,” Maria Crowe, president of Lilly global manufacturing operations, said in a statement.

Lilly CEO David A. Ricks today said that the investment is “part of $850 million in anticipated U.S. capital investments which Lilly announced in March…” Those upgrades were to manufacturing sites, research laboratories and general and administrative areas, for both its human and animal drug operations, and include both new projects as well as some there were in progress.

But the drugmaker more recently announced a sweeping cost-cutting endeavor. Last month, Ricks said Lilly would cut 3,500 jobs, about 8% of its global workforce, by the end of the year as it shoots to achieve $500 million in annual savings. He said Lilly expected most of those departures to come from a juiced up early retirement program, but that it would also shutter research sites in New Jersey and Shanghai and consolidate work at an animal health manufacturing site in Iowa.

The company said the closures, severance expenses and the retirement program will cost $1.2 billion pretax, 80 cents per share after tax, impacting EPS guidance for the year. Half of the savings will go toward improving the drugmaker’s cost structure, while the company plans to reinvest the other half in product launches and R&D.

Like its peers Sanofi and Novo Nordisk, Lilly has had to cough up deep discounts on its diabetes medications as payers play drugmakers against each other to secure better pricing. Earlier this year, it released a transparency report that showed an average 14% list price hike in 2016 for its medicines amounted to a net 2.4% increase after discounts. Across its portfolio, Eli Lilly said it is cutting drug prices in half in behind-the-scenes negotiations.

Not all of Lilly’s insulin news is bleak, however. Lilly’s Trulicity has captured 42% of the new-to-brand market-share recently, Credit Suisse analyst Vamil Divan wrote to clients last week. Trulicity’s $480.2 million in second-quarter sales, was more than double the $201.3 million it posted in the same period last year.

By Eric Palmer

Source: Fierce Pharma

comments closed

Related News

June 24, 2022

Echosens and Novo Nordisk announce partnership to increase awareness and advance early diagnosis of NASH

Life sciences

Echosens, a high-technology company offering liver diagnostic solutions, and Novo Nordisk A/S, a leading global healthcare company, announced a partnership to advance early diagnosis of non-alcoholic steatohepatitis (NASH) and increase awareness of the disease among patients, healthcare providers and other stakeholders.

June 24, 2022

argenx receives positive CHMP opinion for Efgartigimod for the treatment of adult patients with Generalized Myasthenia Gravis in Europe

Life sciences

Positive opinion based on Phase 3 ADAPT trial showing efgartigimod provided clinically meaningful improvements in strength and quality of life measures. If approved, efgartigimod will be the first neonatal Fc receptor (FcRn) blocker for the treatment of adults in Europe living with rare neuromuscular disease generalized myasthenia gravis (gMG).

June 24, 2022

Galapagos finally takes M&A plunge, spending $251M for 2 biotechs in CAR-T push

Life sciences

Galapagos CEO Paul Stoffels, M.D., has finally taken the plunge on M&A. The newly minted chief executive has signed not one but two deals in an attempt to right the ship, bringing two small biotechs aboard for a combined 239 million euros ($251.4 million).