The Big Pharma story at the moment, sad to say, is that Eli Lilly is shedding a lot of employees: 3,500 or so (2000 of them in the US), about 8.5% of their global workforce. Their site in Bridgewater (NJ) is being closed, and interestingly, so is their site in Shanghai, which makes them (if I’m keeping count correctly) the second big multinational drug company (after GSK) to close out a physical presence in China that way.
The company says that it plans to do most of the US cuts by offering early retirement packages, details of which aren’t going to be available to employees until next week (have a nice weekend). Lilly as a whole has been having a pretty hard time of it in recent years, partly due to patent expirations and partly due to a massive lack of success in their massive Alzheimer’s research effort. The days of two approvals a year, as forecast by their CEO in 2010, have never quite arrived. (Tip for drug company CEOs: never tell people in advance how your organization is going to ramp up to X approvals a year – just go get the approvals, and I promise that everyone will be happy).
The company still has a shot or two on goal in Alzheimer’s, but you wonder if, years from now, its history will show a big stretch of hard times in the early 21st century, back during the Alzheimer’s Era. As I’ve said before, I simultaneously admire their nerve in trying this, and remain glad that it’s not me trying to make any of it work.
Lilly’s stock, of course, went up on this news, since layoffs are a direct tonic to the bottom line. And given the company’s state, you know, they may well have too many employees. But at the same time, it sounds like they’re going to be losing a lot of experienced people through that buyout program, and some of that experience is surely valuable. Those effects will be slow and silent (reminding one of Bastiat’s “things that are not seen“), and no one is selling Lilly’s stock on the fear that they’re getting rid of longtime employees who might know a few things. It was ever thus.