Eli Lilly and Company, of Indianapolis, announced today that they would sell their Tippecanoe Laboratories, in Lafayette, Indiana, to Evonik Industries. Evonik is one of the largest chemical companies in the United States. They plan to keep the plant open and offer jobs to the nearly 700 current employees of Eli Lilly and Company, who currently work at the plant.
In addition to the sale of the property, both Evonik and Eli Lilly and Company have agreed to enter into a nine year supply and services agreement. Evonik will produce active pharmaceutical ingredients for certain Lilly products for both human and animal health. Details of the financial arrangement the two companies reached were not disclosed.
This sale is the result of a strategic review of the Tippecanoe Laboratories site announced in July of 2008. Many of the patents on the drugs produced in the Lafayette plant are coming up on expirations, a key factor in Eli Lilly and Company’s decision to sell. In addition, Eli Lilly and Company has announced its plans to focus on more bio-technical medicines as it leads the way in Indianapolis health.
Eli Lilly and Company’s chairman and chief executive, John Lechleiter Ph.D., had this to say on the sale, “Today’s announcement represents a positive outcome for employees at the site, the Lafayette community and Lilly. We are confident in our decision to sell Tippe Labs to Evonik, as it is a well-established multinational company that will continue to operate the site and more fully utilize its capabilities.”
Lechleiter went on to say, “These actions also support Lilly’s goal to reduce our workforce and cost structure over time. At Lilly, we are taking the steps necessary to ensure our long-term success by becoming leaner, more focused, more customer-oriented and a more competitive company.” The sale is part of a larger plan for Eli Lilly and Company to cut 5,500 jobs in Indianapolis by the end of 2011.
Dr. Klaus Engel, chief executive officer of Evonik Industries expressed his satisfaction at the deal, “The acquisition of Tippecanoe Laboratories enables us to meet the growing demand for intermediates and active pharmaceutical ingredients in the pharmaceutical industry and substantially boosts our global exclusive synthesis business. The pharmaceutical market is attractive, economically stable, and produces growth rates near the double-digit range every year.”
The companies plan for the transaction and turn over of the plant to be complete by the end of 2009. After Eli Lilly and Company hands over operations to Evonik they will record a $0.23 per share charge in the third quarter of 2009. Analysts expect Eli Lilly and Company to report a profit of $1.01 per share in the September quarter.
It seems the Indianapolis business is going strong despite the economic decline. The Circle City depends a great deal on the revenue created by Eli Lilly and Company, as the Eli Lilly Foundation is one of the largest financial supporters of Indianapolis culture including Indianapolis arts, Indianapolis music, and Indianapolis theater.