Eli Lilly & Co. said it will cut 3,500 and close some sites as part of an effort to streamline its operations and cut costs.
The Indianapolis-based drugmaker faces continuing pressure in its diabetes business, where competition has driven down the profitability of the drugs. It’s making the cuts to focus on newer drugs in its pipeline, Chief Executive Officer David Ricks said in a statement.
“To fully realize these opportunities and invest in the next generation of new medicines, we are taking action to streamline our organization and reduce our fixed costs around the world,” Ricks said. The company had about 41,000 employees as of June, and the cuts will make up about 8.5 percent of its workforce.
The cuts will save about $500 million a year starting in 2018, Lilly said. It will take charges of $1.2 billion, or 80 cents a share, in the second half of this year. The job cuts will be a mix of early retirements and additional reductions from site closures, the company said.
In recent years, Lilly has cut thousands of jobs as some of its biggest drugs have lost patent protection. Last year, it eliminated 500 positions following the failure of an experimental Alzheimer’s disease drug. It has also trimmed its sales force as some of its biggest drugs have lost patent protection.
Lilly shares rose 1 percent to $81.32 at 9:49 a.m. in New York.