On Thursday, Eli Lilly and Co. announced that it would be cutting up to 8% of its workforce as the pharmaceutical company, which has been hit with recent setbacks the past year in developing two possible blockbuster new drugs, works to lower its costs.
Lilly announced that it would be cutting approximately 3,500 positions across the globe, resulting in a savings annually of nearly $500 million starting next year.
Eli Lilly said it expects that the majority of job cuts would come from its voluntary program of early retirement that it offers employees who are located in the United States.
The pharmaceutical giant also said it would be closing a plant located in the state of Iowa and offices for research and development that are located in New Jersey as well as China.
Lilly is expecting charges to be in the range of $1.2 billion prior to taxes, or 80 cents per share after taxes. Shares of the pharmaceutical company were up 48 cents equal to 0.6%, to $80.98 in early Thursday trading.
In July, Lilly outlined a delay that could reach several years for baricitinib an experimental drug for rheumatoid arthritis after the United States Food and Drug Administration did not give its approval of the medication, calling for more clinical study to be carried out.
That delay came after a failure of a trial during November of last year of the company’s experimental treatment for Alzheimer’s known as solanezumab, which Lilly had been hoping would become the first medicine the FDA had approved to slow the degenerating and deadly disease’s progression.
Eli Lilly said there are two new medicines in the pipeline to potentially be launched before the end of next year. The DFA currently is reviewing a treatment the company has for advanced breast cancer known as abemaciclib.
Officials at Lilly did not make comments to messages sent through emails and left at their offices.
An increase in the amount of competition and the loss of patent protection for several blockbuster medications has created problems for several pharmaceutical companies the last year.
The generic drugs have pushed down prices and margins on several medications which in turn have hit the bottom line for many of the large companies in the industry.
Companies have also had some problems with having new medications approved by regulatory agencies both in the U.S. and abroad adding to problems of revenue growth and profits.