8-KFinancial Events

ELI LILLY & Co 8-K Report, Exit or Disposal Costs (Oct 14, 2009)

Filed October 14, 2009For Securities:LLY

Summary

Eli Lilly & Co. announced on October 14, 2009, the sale of its Tippecanoe Laboratories manufacturing facility in Lafayette, Indiana, to Evonik Industries AG. This strategic divestiture includes a nine-year supply and services agreement, where Evonik will continue to produce active pharmaceutical ingredients (API) and specialty chemicals for Lilly. Approximately 700 Lilly employees at the facility will be offered employment by Evonik, ensuring operational continuity for the site. The sale is a result of a strategic review initiated in 2008, driven by projected declines in the facility's utilization. Factors contributing to this include upcoming patent expirations for key products manufactured at the site, Lilly's shift towards purchasing late-stage chemical intermediates, and the company's increasing focus on biotechnology medicines. The transaction is expected to close by the end of 2009, subject to customary closing conditions.

Key Highlights

  • 1Sale of Tippecanoe Laboratories manufacturing facility to Evonik Industries AG announced.
  • 2Nine-year supply and services agreement with Evonik for API and specialty chemical production.
  • 3Approximately 700 employees offered employment by Evonik.
  • 4Strategic decision driven by projected decline in site utilization, patent expirations, and shift towards biotechnology.
  • 5Expected to incur third-quarter 2009 charges of $0.23 per share after-tax, including $355 million in pre-tax non-cash impairment and other charges, and $38 million in severance charges.
  • 6Transaction planned to close by the end of 2009, subject to closing conditions.

Frequently Asked Questions

Eli Lilly is selling the Tippecanoe Laboratories facility due to a projected decline in its utilization. This is influenced by upcoming patent expirations on medicines manufactured at the site, Lilly's strategic shift to purchasing rather than manufacturing many late-stage chemical intermediates, and a broader evolution of Lilly's pipeline towards more biotechnology medicines.

Lilly will incur charges in the third quarter of 2009 totaling $0.23 per share after tax. This includes pre-tax non-cash asset impairment charges and other charges of $355 million, and $38 million in severance-related charges.

No, production is expected to continue smoothly. Lilly has entered into a nine-year supply and services agreement with Evonik, who will manufacture active pharmaceutical ingredients (API) and other products for certain Lilly human and animal health products. Evonik will assume control of the site's operations upon closing.

Approximately 700 current full-time, non-contracted employees dedicated to the site will be offered employment with Evonik Industries AG, ensuring continuity of operations and employee transitions.