Eli Lilly & Co. (LLY) plans to lay off about 1,000 sales representatives in the U.S., in a major restructuring that aims to cut the drug maker's costs in preparation for generic competition to two of its biggest-selling products, according to a person familiar with the matter.
The lay-offs will affect about 30% of Lilly's sales force across the U.S., and include a combination of full-time Lilly employees and contract workers, the person said.
The sales representatives pitch Lilly drugs treating a range of heart, neurological and other medical conditions. Sales of these drugs, bolstered by the sales calls of the representatives, helped propel Lilly over the past several years.
But Cymbalta, an antidepressant, loses U.S. patent protection in December and then osteoporosis treatment Evista starts facing generic competition next March. Together, the two drugs accounted for 43% of Lilly's $11.8 billion U.S. sales last year.
The drug maker, which reported $22.6 billion in world-wide revenue last year, has tried to find new medicines to make up the slack, but sales of newer products like the blood-thinner Effient haven't met the expectations of Wall Street.
Also, the influence of sales representatives has shrunk, as many physicians no longer have the time to take the calls and some doctors refuse to see pharmaceutical representatives out of concern about improper promotions. Growing numbers of doctors prefer digital marketing.
Lilly's U.S. sales force "will move to a smaller structure that's more directly aligned with our business realities--along with the realities our customers face, and the way they want to interact with us," a spokesman said.
In the fourth quarter last year, the company took a $64 million global severance charge that includes the expense of the U.S. sales cuts, the spokesman said.