Eli Lilly freezes pay to save €306m as patents expire on key drugs
DRUG manufacturer Eli Lilly, which employs more than 700 people in Ireland, will freeze workers' pay next year.
The company is attempting to save $400m (€306m) over the next two years as patents expire on some of its most important drugs and generic competition hurts its sales.
The pay freeze will affect most of the company's 38,000 workers around the world, including executives.
Bonuses based on 2014 performance will also be reduced. Employees will only become eligible for pay increases in 2015.
''This action is necessary to withstand the impact of upcoming patent expirations and to support the launch of our large phase III pipeline,'' chief executive officer John Lechleiter told employees.
"The current situation requires us to take the appropriate action now to secure our company's future.
"We can't allow ourselves to let up and fail to make the tough choices," he said.
Mr Lechleiter's pay has not increased since 2010.
The company's Irish employees work in biopharmaceutical manufacturing, animal vaccines, financial services, marketing and sales. It has had operations in Ireland for more than 30 years and has two major manufacturing plants in Sligo and Kinsale – one of its most important facilities – as well as a Dublin sales and marketing operation and a financial services centre in Cork.
It expects global sales to drop by a fifth in 2014 because of the expiry of US patents on osteoporosis treatment Evista and depression pill Cymbalta. Cymbalta is its biggest seller. Evista, the majority of which is produced in Kinsale, is also strategically important to the company. It generated revenues of more than $1bn last year.
Eli Lilly has already has cut costs by laying off thousands of employees since 2009, but said that "while we've taken many actions to reduce costs and become a leaner organisation, we must do more".
Shares in the manufacturer fell less than 1pc to $50.67 yesterday at close of business in New York. Eli Lilly is scheduled to report second-quarter earnings on July 24.