Lilly Buyout and Restructuring Could Spark Rep-on-Rep Deathmatch

(MoneyWatch)  Eli Lilly's buyout program and planned restructuring in November have the potential to start a rep-on-rep war throughout the company, as pharmaceutical sales people vie to prove they have the "expertise" to remain in their jobs.

Lilly said yesterday that 4,000 employees will be offered a buyout, but the buyouts will only actually be given to about 300 people. Reuters said the buyouts presage a restructuring required by the patent expiration of its $5 billion a year Zyprexa brand in 2011:

Lilly employees have been notified that the restructuring, to be announced in November and begin in January, will reduce the size of its sales territories.

"Restructuring" is generally a corporate euphemism for non-voluntary layoffs. Here's who Lilly wants to keep in those smaller territories, per Dow Jones Newswires:

Under the restructuring, Lilly's sales force will be divided up into smaller territories, each with one rep who has "deep therapeutic expertise." Currently, territories are larger with multiple sales partners, Lilly said.

You can see where this is going. Facing a need to shed virtually all its Zyprexa sales force in 2011, Lilly is testing the water today. But 300 exits will not be enough. Hundreds more must go if Lilly is to maintain its margins as Zyprexa's revenues plummet.

In the meantime, Lilly wants to retain those who are most respected by doctors, the ones with the "deep therapeutic expertise."

So between now and November -- and then until 2011 -- reps have some crucial decisions to make. Should they take the buyout now or risk getting laid off with a less attractive severance deal later? And are they the most expert rep in their territory?

Reps on the Zyprexa sales force will find themselves in the most brutal zero-sum game, as their expertise becomes irrelevant in 2011.

The sales force is already fighting it out on CafePharma. Here's a selection of the less inflammatory comments:

To all you guys with 10 years or so, get in line. There is no guarantee that you will get the package. There are quite a few older reps with 20 plus years that will clean up on this. After that, I would have to believe that there are enough folks with 15-20 years that will fill the difference. If you only have between 5 and 10 years, forget it, it's not going to happen. The real problem with this is that if you're not chosen for the program, the cutting in November will be fast and furious. Sorry. This offer most likely will not trickle down to you. Do the math.

The newer Rep's not only make much less, but are better looking. A key to success that you cannot ignore. Old Lilly Rep's (Pharm D or not) are THEEE most devalued dinasours on the pharma planet, and this company has finally woken up to that fact. It was more clear than ever on Conterno's call that old, underperforming, OVER PAID pieces of garbage will be eliminated.

I don't think many will take the VEP. Its a great job and it'll take a lot for someone to leave "voluntarily". Where else can you work for a great company, drive their car, and be autonomous for the most part? It may come down to the dreaded "lay off" if they really don't give much more criteria and maybe those reps that may be at risk for the decision time by the fall. Something pharma companies have been doing for years. Thank heavens Lilly is finally waking up to that fact.

Great opportunity for those low tenured to get out of industry all together because there's little vested on their part and it will only be more difficult in the future to justify headcount in the primary care/retail office based setting. Regardless, 300 will not be enough to offset layoffs come November. An educated guess suggests they'll be that many or more reallocated with no job available. Offer next time around may not be as sweet...

It's about time Lilly change. I believe DMs can have 20 reps per district. Way too many ride alongs when they only have 9 reps to manage! Way too much micro management!!!!

• Previously:
• Lilly's Zyprexa Costs Reach $3.3B; 6% of Revenues Since '06
• Suit: Lilly Touted Zyprexa for Alzheimer's Knowing It Was Ineffective; Sales Reps Had $10K Off-Label Promo Budgets
• Eli Lilly Promoted Zyprexa for Patients Who Were Badly Dressed
• Lilly Q1: Price Rises, End of Zyprexa Woes Boost the Numbers
• Lilly Apologizes for Wrongful Zyprexa Promotion; Still Shovelling Cash Into Settlement Furnace
• More Zyprexa Trouble for Lilly as Insurers Want Money Too
• In Zyprexa Settlement, Lilly Fritters Away 7.2 Percent of Revenues
• How Eli Lilly Waved Goodbye to $3.1 Billion
• FDA to Allow "Off-Label" Unapproved Drug Promotion
• FDA: J&J's Risperdal and Lilly's Zyprexa Are Over-Used in Kids