Eli Lilly CEO: Layoffs are Last Resort

" On Eli Lilly the drug maker announcing it will be cutting over 5000. Jobs as part of restructuring plan the company should save it. Or should save the company rather one billion dollars joining us now from eating out. -- CEO John -- glider John it's Brian thanks for coming on which is under better circumstances. Morning Brian what we're actually very excited about the changes we announced today there are among the most. Significant in our history they entail speeding up the development process that we hope brings some of -- sixty. Molecules we now have a development to the market sooner in this nest next decade. We're also moving to a new business unit structure. That will focus on areas like oncology and diabetes that we know are going to be very very important in our in our future. Yes that we are going to do when he got to cut hard but when it went of the pink slips going to start going out John. We're talking about reducing our cost in 2011. Versus projected by a billion dollars. We recognize as you do that many of those -- tied up in our compensation and benefits and there are four. Brian we're going to have to actually continue reducing positions keep in mind. We eliminated 7000 positions. Since the middle 2004 when our headcount peaked at 46000. So. We've been on a productivity journey we're going to be accelerating that and it's another 5000 -- correct on top of the seven you've already done. Today our global headcount is 40500. We aim to get to 35000. By the end of eleven with the exception. Of additions to our sales forces in some of the rapidly developing markets and also when Japan. Only give more to the drug development in a moment but one last point in this will most of these layoffs come through attrition and just not filling those positions. Or will there be active layoffs and if so when will those begin. Brian we sit here all along the layoffs are a last resort that's been our policy as we've reduced our headcount since 2004. We believe we have other tools like retirements and attrition but we cannot discount that we may have to resort to layoffs. Not cracks obviously that's that's the big hit to lowly -- mean what you guys get used to make this out. All we're excited about the launch of -- at which show took place in United States last month. Keep in mind though we have nearly two dozen molecules today that are in some stage either face to -- phase three. Including those two phase three studies for the -- alzheimer's molecules. The whole goal today in making this announcement system is to take the measures that will speed. Forward to commercial status many of those molecules. We know we have a gap to fill. And our efforts are directed to do when that it's a big gap -- sidetracked so what is about a quarter of your sales you're gonna lose a quarter sell off patent in 2011. Now that cracks in the quarter sales week how much do you anticipate. You will lose just for the goes off patent protection doesn't mean you're gonna lose all those sales right what are your estimates don't you. -- keep in mind. That we have launched in some countries already a thirty day what so called depo injection form of slight cracks. That would still be -- A up patented -- product beyond 2011. That's currently under review here in the US by the FDA. Based on our past experience. We expect that wind outside cracks. Goes generic in the US here at the end of 2011. -- a pretty rapid erosion. Yeah out okay you know four point seven billion you know I know you're talking about trying to fill that's a big hopeless you've got some -- And I think it is a -- does this stuff coming off patent protection in 2014. So you've got to look way ahead. John what are your what are your long what are your ten year plans for Lilly to make up that huge potential lost revenue. Brian it's just with respect to those long term plans which we looked -- earlier this year that we're taking these actions. I think right now for example. If anyone including -- would introduce a new medicine to really treat alzheimer's. We're really have no effective therapy available today. One can imagine that could be a potentially very large product. In addition we have molecules in phase two testing. That that may offer us a new approach to treating depression that they offer -- a new approach to treating schizophrenia. Soul I think we have a great pipeline again. What were aiming to do to the measures we've taken -- to move that forward faster we've seen it with bijur we've seen it with Roche and Genentech and -- and and numerous smaller Biotech companies. Have been buying. Growth John are you active in -- and many market right now do you have bankers looking for companies to buy. We did the largest deal in our history about a year ago -- we acquired imclone. That's paying off we think very much along the lines we expected. I think Brian the actions we're taking today do not change our core strategy. We don't believe -- large -- combinations. We think in some cases they allow firms to buy time but they don't answer the central question our business which is how do you discover and develop new medicines that are valued by today's customers we think that's still the best bet we can make. We're staking most of -- okay that's going forward. On the elaboration of our own pipeline one quick question on the political hot spot John if we start to see some of these changes you know very well that are in Washington always by different bills. Will it slow the pace of drug development for companies like -- We've been very clear from the outset both -- our trade association that we support health care reform done right. We think of the essence of any viable healthcare reform legislation ought to be a provision. That helps to enable and helps to sustain the kind of innovation that brought these great medicines to market. There can be no better investment but healthcare is clearly on the agenda were taking an active role and where we're following our principles in the process. John -- CEO Eli Lilly John thank you so much for joining us on Fox Business."