Eli Lilly and Company unveiled plans to streamline a portion of its manufacturing operations in Indianapolis. These actions, which affect sites that manufacture active pharmaceutical ingredients for the insulin products Humalog and Humulin as well as for the osteoporosis medicine Forteo, would align manufacturing capacity and engineering support services with the needs of the business.

Lilly is offering a voluntary exit program to employees in selected areas, with enhanced financial incentives for those who leave the company. In total, the voluntary program is expected to reduce Lilly's Indianapolis employment by up to 500 people, predominantly in manufacturing but with a small portion in selected areas of research and development.

"For several years we have focused on strategic efforts to lower costs, increase flexibility, and improve productivity across the business," said, John C. Lechleiter, Ph.D., president and chief executive officer, Lilly. "This strategy calls for reducing investments in some areas while increasing investments in others, and the streamlining decisions announced today are an example of this. We are constantly assessing our manufacturing capacity and taking the necessary steps to align it with the demands of the business. In particular, we must align our production capacity with anticipated customer demands over a time period in which some products will lose patent protection while other new products are launched."

"While these are necessary decisions, they are difficult because they affect our people," said Lechleiter. "From a peak employment level in mid-2004, we have reduced our global headcount by twelve percent, or about 5,500 people. These reductions have occurred primarily through attrition. But at times, including this one, we have had to take additional measures as we have restructured our operations. As we fulfil our responsibilities to all of our stakeholders, we are intent on upholding the Lilly values by treating all employees - particularly those directly affected by these changes - fairly and with the utmost respect."

As a result of these actions the company would be taking an accounting charge in the second quarter of 2008. The amount of that charge has not yet been determined, as it will depend upon the numbers of employees that choose to take the exit package.