In a statement outlining several strategic changes at the organisation, the company's president of manufacturing operations, Scott Canute, said:
"Lilly is continuing to transform its operations to compete and win in a more challenging business environment…[Eli Lilly] is making several changes to its global manufacturing operations to ensure the company has the right capacity in the right places. This requires investing in new growth areas and reducing resources in others."
Part of the restructure involves the cancellation of the planned construction of an insulin manufacturing plant in Virginia. Work at the site will cease immediately, as the company is now confident it can meet expected growth in insulin demand through existing sites and increased capacity at its Sesto, Italy facility.
Although the firm expects worldwide demand for insulin products and insulin delivery devices to grow, the increase is now not expected to be on the scale projected when plans for the new site were drawn up in 2003.
Further changes announced by the company included the creation of a 'voluntary exit programme' offered to up to 250 employees at the company's Tippecanoe, Indiana manufacturing site, in response to excess capacity in small molecule active ingredients at the plant.
Lilly also revealed its intentions to make 'significant new investments' at its Irish manufacturing site so as to be able to fulfil the company's plans to manufacture biotech medicines. And the company said it plans to expand its Indianapolis parenteral operations so that the biotech active ingredients from the Irish site can be converted into final dosage forms.
The estimated asset impairment charges and cost of the entire restructuring process comes to approximately $155m to $185m (€120m to €143m), which will be spread over Q4 2006 and Q1 2007.
The announcement comes only weeks after Lilly announced the closure of its Basingstoke, England manufacturing plant in a move to try and cut development costs from $1.1bn per drug down to $800m.