Sept. 7 (UPI) -- Eli Lilly announced Thursday it is cutting 8 percent of its workforce -- 3,500 jobs -- in an effort to streamline operations and focus on developing new drugs to improve its financial situation.
The drugmaker, headquartered in Indianapolis, said the changes will amount to annual savings of about $500 million, beginning next year -- and a $1.2 billion tax write-off in the second half of this year.
"We have an abundance of opportunities -- eight medicines launched in the past four years and the potential for two more by the end of next year," said David A. Ricks, Lilly's chairman and chief executive officer. "To fully realize these opportunities and invest in the next generation of new medicines, we are taking action to streamline our organization and reduce our fixed costs around the world."
Eli Lilly has a total global workforce of about 46,000, including full-time and contract workers. It said about 2,000 jobs will be cut in the United States, some through a voluntary early retirement program.
The company plans to eliminate the remaining positions with anticipated workforce reductions, including select site closures -- and relocating its animal health manufacturing facility in Iowa. Also, research and development offices in New Jersey and Shanghai, China, will close.
"The actions we are announcing today will result in a leaner, more nimble global organization and will accelerate progress towards our long-term goals of growing revenue, expanding operating margins and sustaining the flow of life-changing medicines from our pipeline," Ricks said.
Last year, the company eliminated 500 positions after the failure of an experimental Alzheimer's disease drug. Also, its sales force has been reduced after losing lost patent protection on some of its drugs.
The company has been focusing on diabetes medications, including Humalog, Humulin and Trulicity -- three of its 10 best-selling diabetes treatments last year. However, increased competition from Sanofi and Novo Nordisk has forced Eli Lilly to cut prices.
Founded in 1896 and the first company to mass-produce penicillin, Eli Lilly makes a variety of psychiatric drugs, including Prozac and Zyprexa, as well as the erectile dysfunction drug Cialis, the psoriasis medicine Taltz and cancer drugs.
Lilly had net income of $2.7 billion on revenue of $21.2 billion in 2016, according to its financial disclosure.