Lilly to Streamline Indianapolis Manufacturing and Engineering Operations

Lilly to Streamline Indianapolis Manufacturing and Engineering Operations

 Company taking steps to transform its business; employment to be reduced by up to 500

INDIANAPOLIS, April 16 -- Eli Lilly and Company today announced a streamlining of a portion of its manufacturing operations in Indianapolis. These actions, which affect sites that manufacture active pharmaceutical ingredients for the insulin products Humalog(R) and Humulin(R) as well as for the osteoporosis medicine Forteo(R), will 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., Lilly president and chief executive officer. "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."

Added Lechleiter, "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 fulfill 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 will 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.

About Lilly

Lilly, a leading innovation-driven corporation, is developing a growing portfolio of first-in-class and best-in-class pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in Indianapolis, Ind., Lilly provides answers - through medicines and information - for some of the world's most urgent medical needs. Additional information about Lilly is available at http://www.lilly.com/ [1].

This press release contains forward-looking statements that are based on management's current expectations, but actual results may differ materially due to various factors. Management cannot predict with certainty the number of employees that will elect to participate in the voluntary exit program or whether this program will meet its business objectives. For additional information about the factors that affect the company's business, please see the company's latest Form 10-K filed February 2008. The company undertakes no duty to update forward-looking statements.

Forteo(R) (teriparatide of recombinant DNA origin injection, Lilly) Humalog(R) (insulin lispro injection of recombinant DNA origin, Lilly) Humulin(R) (human insulin of recombinant DNA origin, Lilly)