Drugmaker Eli Lilly Eliminates 2012 Pay Raises In Cost-Cutting Move

Eli Lilly pay raisesAnyone 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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lifehub

I'll bet the ranch that the top executives will still get their over-the-top salaries and perks while their subordinates will get slashed.

February 07 2012 at 5:15 AM Report abuse rate up rate down Reply
Freddy De Joint

OH WOW, THE CEO WON'T GET HIS RAISE, I GUESS HE'LL HAVE TO MAKE DUE ON 16.4 MILLION, WHAT A SHAME, WHAT A SHAME, THAT MEANS INSTEAD OF GETTING NEXT YR ROLLS, HE'LL HAVE TO SETTLE FOR A JAGUR, PITTY!!!!!!!!!!!

February 07 2012 at 1:52 AM Report abuse rate up rate down Reply
shaunril

we should be investing in our industry not pharmasuitcals that kill people make them think they sick the drug comapnies are the root of evil in the united states.

February 07 2012 at 1:02 AM Report abuse +1 rate up rate down Reply
jalanandmruth

while I hate to see the employees suffer, drug companies have made enormous profits in the domestic market. Somehow its hard to feel sorry for them (the company). In many industries, folks have been taking pay CUTS, and getting laid off. Many of us havent seen a pay raise in years. Hope things improve for everyone

February 06 2012 at 11:19 PM Report abuse rate up rate down Reply
underwater1964

"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."
I find this hard to believe... all drug companies know that when a drug goes generic, its sales will tank immediately.

February 06 2012 at 10:41 PM Report abuse +1 rate up rate down Reply
myplenny

Bought lipator for 4 buck today, last month paid 80 with insurance. Dramatic price fall. Hooha

February 06 2012 at 10:18 PM Report abuse +1 rate up rate down Reply
2 replies to myplenny's comment
jalanandmruth

which begs the question, if they can sell it for $4 why was it priced at $80? they sold alot of this drug, and while I understand they have to make a buck and recoup development costs, the huge price disparity between name brand and generic smacks of abuse.

February 06 2012 at 11:26 PM Report abuse +1 rate up rate down Reply
jalanandmruth

which begs the question, if they can sell it for $4 why was it priced at $80? they sold alot of this drug, and while I understand they have to make a buck and recoup development costs, the huge price disparity between name brand and generic smacks of abuse.

February 06 2012 at 11:29 PM Report abuse +1 rate up rate down Reply
Gentle Ben

I take Actos for diabetis.It's coming out in a generic in a few months. In the last 3 months ,each month when I get a refill ,the price has gone up,quite a bit. When the generic hits the pharmacies,I will be taking it.

February 06 2012 at 10:05 PM Report abuse +2 rate up rate down Reply
xgomazx

Two qotes to note
1-"The company elected to not increase employees' base pay"
And
2- "No change was made in the way in which bonuses are structured"

Translation=
1- Your average 9-5 employee making $10- $17 per hour will not be getting any raises
2- Department heads and execs get to keep getting their bonuses

February 06 2012 at 9:53 PM Report abuse +2 rate up rate down Reply
raguu52

Just another feel good story by a large uncaring company. Several readers have it right. Drug companies don't make drugs to help mankind like they did in the past. It is all about the dollar. So the CEO comes out and says Look at us-no pay raises. Pretty easy to say when you make in excess of 16 million a year. I would like to try and srape by on that. Why don't you interview the janitor at one of the facilities who makes 16 thousand a year and see what they say. Why doesn't the CEO spread his pay over the lowest paid employees so they at get a raise and let him get by on, say 10 million a year.

February 06 2012 at 9:49 PM Report abuse +4 rate up rate down Reply
belldn3

Stop over paying the fat cats, now that's a concept.

February 06 2012 at 9:04 PM Report abuse +4 rate up rate down Reply

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