Drugmaker Eli Lilly Eliminates 2012 Pay Raises In Cost-Cutting Move
Anyone employed in the pharmaceutical industry knows it's been a tough few years for large drug companies. With few new blockbuster drugs coming down the pipeline and patents expiring on the current crop of profitable ones, many well-known drugmakers have taken strong medicine to cut expenses, including merging with competitors, consolidating operations and laying off scores of workers.
At Eli Lilly & Co., austerity arrived this year in the form of pay freezes. In a recent regulatory filling, the Indianapolis-based company disclosed that at its operations in most countries employees won't receive raises, Pharmalot reports.
The company elected to not increase employees' base pay "in light of patent expirations we're facing now and the financial challenges we're going to have," spokesman Mark Taylor told Dow Jones Newswires.
The pay freeze extends all the way up the corporate ladder to include corporate officers. "In light of the business challenges facing the company," Lilly says in the filing, CEO John Lechleiter "requested that he receive no increase in base salary or incentive targets in 2012."
Still, as the newswire service notes, Lechleiter total yearly compensation was valued at $16.4 million last year.
No change was made in the way in which bonuses are structured, Lilly spokesman Mark Taylor told Bloomberg through an e-mail. The company employs about 38,000 people, according to the news agency's data.
Lilly's best known products in recent years have been Cymbalta, an anti-depressant medication, and Cyalis, a treatment for male erectile dysfunction.
But it's Zyprexa, an antipsychotic drug, that has been filling the company's coffers -- until recently. Lilly has seen sales of its former No. 1 drug fall faster than expected after generic versions of the drug began hitting the market last fall. Revenue derived from sales of the drug fell 44 percent in the three months ending December to $750 million.
Further, Bloomberg notes, Lilly's own profit forecasts for 2012 failed to meet analyst expectations when they were released last month.
Lilly hopes to boost its fortunes by marketing a treatment for Alzheimer's disease. Known as, solanezumab, the drug, currently in clinical trials, would have big commercial potential if it proves to be safe and effective, Dow Jones notes.
Lilly employees, no doubt, hope the drug will boost the company's flagging fortunes and put pay raises back on the table.
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David Schepp has spent more than a dozen years covering business news for the electronic and print media, including Dow Jones Newswires, BBC News, Gannett Co., and most recently at AOL's DailyFinance. Nearly 10 years ago, he started writing a weekly People@Work column, looking in depth at issues facing workers in today's workplace. The syndicated column appeared in newspapers and websites nationwide before it made its debut on DailyFinance in 2010. Schepp now continues that tradition at Aol Jobs, covering the jobs beat and providing readers insight and analysis into the nation's challenging employment scene.
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