Lilly to cut 170 manufacturing jobs by year’s end

Eli Lilly and Co. will cut 170 jobs—mostly in Indianapolis—from its manufacturing and quality division by the
end of the year as it continues its efforts to slim down before losing revenue from patent expirations on its bestselling
drugs.

The Indianapolis-based drugmaker’s latest move will cut nearly 5 percent of its 3,600-person manufacturing work force
in the United States.

It has factories in Indianapolis and Clinton, Ind., where the cuts will take place, affecting manufacturing support workers,
wrote company spokeswoman Janice Chavers in an e-mail.

To reach the 170-job target, Lilly will ask for voluntary departures, but it will also eliminate the jobs of others involuntarily.
Some jobs have already been eliminated through attrition.

Chavers did not specify how many manufacturing employees would have their jobs eliminated involuntarily. But those that do
will be eligible to apply for open jobs within Lilly, including some that might be vacated by those taking a voluntary buyout.
All employees who depart will be offered a separation package, which is based on pay grade and time served at Lilly.

Lilly has announced nearly 2,000 job cuts toward its goal of 5,500 cuts, which the company set in September. The company
is also trying to eliminate $1 billion in annual expenses by the end of 2011. At that time, it hopes to have a worldwide staff
of about 35,000. It currently employs 12,400 in Indiana.

Job cuts so far have come in nearly every area of the company, including sales, marketing, communications, information technology
and manufacturing.

Last year, Lilly sold off its Tippecanoe manufacturing facility to Germany-based Evonik Industries AG, which affected 700
workers. Nearly all were offered jobs with Evonik.

Lilly’s bestselling drug, the antipsychotic Zyprexa, will face competition from cheap generic copies when its U.S.
and European patents expire in October 2011. In the following three years, Lilly will watch patents expire on four other bestselling
drugs, threatening to steal nearly 60 percent of its $22 billion in annual revenue.

Internally, Lilly calls that time span “Years YZ.”

“All this is being done so that the organization can right-size ahead of YZ,” Chavers wrote in an e-mail. “The
organization is continually evaluating how it can operate more efficiently and more productively, and adjusts operations accordingly.”