Lilly Announces Plan to Realign Puerto Rico Manufacturing Operations

Eli Lilly and Company (NYSE: LLY)today announced plans to conclude production and pursue a sale of one of itsthree manufacturing plants in Puerto Rico. The manufacturing site, located inGuayama, Puerto Rico, will remain in operation until the end of 2015. All ofthe approximately 100 full-time non-contracted employees currently working inGuayama will be offered employment at Lilly's Carolina (Puerto Rico) location."The decision to conclude operations at Guayama is based upon the evolution ofthe company's pipeline, which includes a growing insulin and biologicsportfolio, coupled with a less capacity-intensive small molecule portfolio,"said Paul Ahern, Ph.D., senior vice president of Global Active PharmaceuticalIngredient and Dry Products Manufacturing. "The utilization of the site hasbeen impacted by patent expirations on the medicines produced there. As weassessed our long-term capacity needs, the company made the business decisionto conclude manufacturing at the site.""Our employees at Guayama have demonstrated strong, sustained performancethroughout the years and have produced lifesaving medicines for patientsaround the world," said Maria Crowe, president for Lilly's GlobalManufacturing Operations. "For nearly 50 years, Puerto Rico has served as amajor manufacturing location for Lilly, and it will remain so in the future.We have talented and experienced colleagues in Puerto Rico, and we are pleasedto be able to maintain employment opportunities for the Lilly employeesaffected by this decision."As a result of this action, the company expects to record a charge ofapproximately $170 million (pre-tax) or approximately $0.16 per share (aftertax) in the fourth-quarter of 2014.While Lilly will initiate efforts to sell the Guayama site, the company willcontinue to invest in two manufacturing plants at Carolina. In November 2013,Lilly announced a $200 million investment to increase capacity in itsCarolina-based insulin active ingredient manufacturing plant. In July 2014,Lilly announced an additional $40 million in investments to increasecapabilities at its Carolina-based drug product site as part of a rebalancingof Lilly's oral solid dosage network.Lilly began manufacturing operations in Puerto Rico in 1965 and employsapproximately 1,600 employees on the island.