Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, October 12, 1993 TAG: 9310120046
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: INDIANAPOLIS LENGTH: Medium
The move was the latest effort to slim down by the pharmaceutical business, once one of the most profitable American industries because of the high price of drugs. But the advent of health reform and pressure for lower costs has forced drug makers to cut their expenses.
"We believe a slimmed-down Lilly will be even better positioned to take advantage of its many global opportunities during this time of fundamental change in its markets," said Randall L. Tobias, who became chief executive officer in June.
(Eli Lilly formerly was parent of Elizabeth Arden Inc., the New York based cosmetics maker that operated manufacturing facilities in Roanoke. Lilly sold the Arden company in 1989 to Unilever Plc. of London and Rotterdam.)
Lilly said about 2,000 jobs, or 10 percent of its global work force, were expected to be eliminated by voluntary early retirements, normal attrition and "very selective hiring."
Another 2,000 consultants and other temporary workers also would be cut, the company said.
The news was welcomed by investors, who saw it as a sign that Lilly's profitability would strengthen. Lilly stock surged $3.50 a share to $53.62 1/2 on the New York Stock Exchange.
"As Lilly operates its businesses more efficiently, many additional employees will be redeployed from their current positions in order to perform tasks that are most critical to the company's success, including some now being done by non-Lilly personnel," the company said.
Lilly said it was sharply cutting staff at its London headquarters and Vienna regional office, but would continue to expand drug operations in Europe and elsewhere.
Lilly also said it was getting out of in-vivo imaging and therapeutics at Hybritech Inc., a subsidiary of its Medical Devices and Diagnostics Division.
"These actions are the first in what we expect to be a series of decisions that will help us achieve stronger long-term growth," Tobias said.
Kristine Bryan, vice president of S.G. Warburg & Co., an investment bank in New York, said the Lilly decision is similar to downsizing elsewhere in the industry because of slowing sales.
"It's time for all pharmaceutical companies to do this," she said. "With the appointment of Tobias as chairman, one would expect there to be some changes.
"The pharmaceutical industry was built in an era of prosperity from the mid-1980s to the '90s. You end up having a relatively high head count, compared to what's needed."
by CNB