Lilly to close UK manufacturing site but retains R&D operations

Pharmaceutical company Lilly is to close its UK manufacturing facility in Basingstoke with as many as 300 employees expected to be made redundant, and a further 100 eligible for early retirement.

The planned closure of the plant is part of a global cost-cutting programme by the company, which says it has over-capacity in its worldwide manufacturing of  tablets and other dry products

The company says its pipeline has also become increasingly weighted toward injectable medicines, and a re-fit of the Basingstoke plant to manufacture these products is not feasible.

The bad news for the UK is tempered by Lilly reaffirming its commitment to maintaining its R&D facilities in Windlesham in Surrey - in contrast to research sites in Belgium and Germany which face closure.

About 150 employees work at the German site in Homberg, while 330 work in Mont-Saint-Guibert in Belgium, both of which look set to close in 2007 following the statutory consultation periods for workers.

Philip Belt, a spokesman for the Indianopolis-headquartered company said some of the research work could be transferred to either the US or to the UK.

The cutbacks are part of Lilly's plan to cut its average R&D spending per drug launched from the current  $1.1 billion to around $800 million.

These figures take into account the money spent on drugs never reaching the market, which remain a large proportion of research pipelines across the industry despite advances in R&D technology.

Commenting on the cost-saving programme, Belt said: "We've got to be a lot more productive and efficient in research and development and the proposed closure of these two sites [R&D] is part of our overall strategic effort to increase productivity."

Lilly says it is committed to its other UK sites, which includes the research facility in Erl Wood, Windlesham, Surrey, its bulk biotechnology manufacturing facility at Speke on Merseyside and its UK Headquarters at Lilly House in Basingstoke.

The company is currently in the second phase of a major investment to upgrade its research facilities in Erl Wood, an investment worth over 60 million pounds between 2003-2007.

Andrew Hotchkiss, Managing Director of Lilly UK said the proposal to close the Basingstoke manufacturing plant had been a hard decision to make.

"Proposing this site closure has been extremely difficult as we are reluctant to lose the highly-skilled, highly-motivated people who work at the site.

"Lilly has a clear strategy, a strong medicines portfolio and pipeline, and no major patent expiries until after the end of this decade. However, as the environment for the pharmaceutical industry becomes more challenging, we must take difficult business decisions to allow us to realise our vision and long-term growth potential," he concluded.

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