Elanco Animal Health plans to eliminate 380 jobs globally amid company restructuring

·3 min read

Elanco Animal Health Inc. plans to eliminate roughly 380 jobs worldwide, including 20% of its senior management, in a plan aimed at simplifying the company's structure and enabling future and planned investment.

The Greenfield-based company – which intends to open a streamlined global headquarters in the Valley, an Indianapolis neighborhood just south of the Indianapolis Zoo – announced the restructuring in a press release Tuesday.

Elanco Animal Health is an animal health company that produces medicines and vaccines for farm animals and pets. According to an SEC filing, Elanco's Board of Directors authorized the restructuring plan on Monday. The company said the change will help reduce organizational complexity, enable investment and increase productivity.

Less than 100 of the impacted employees are in Indiana, a spokesperson for the company via email.

Read more: SEC subpoenas Elanco Animal Health over inventory, sales practices

In a statement, Todd Young, the company's executive vice president and CFO, called the actions difficult but necessary.

“It is imperative that we simplify our organization and focus on delivering customer value to meet our commitments to improve our profitability, even in the midst of increasing inflationary and supply chain costs,” Young said.

The spokesperson added that Elanco has been impacted by increased transportation costs as well as higher input costs at manufacturing facilities. "The transportation bottlenecks with shipping globally has been a headwind this year and will likely continue," she said.

Eliminated management positions include Joyce Lee, executive vice president and president of U.S. Pet Health and Commercial Operations; Racquel Harris Mason, executive vice president and Chief Marketing Officer; and Dirk Ehle, executive vice president and president Elanco Europe.

The three will exit the company on Dec. 31, and Elanco said it plans to name a new leader for an expanded U.S. Pet Health role in the future.

In the same statement, President and CEO Jeff Simmons thanked Mason, Ehle and Lee for the roles they played in integrating Bayer Animal Health into the company. Elanco acquired Bayer for $6.8 billion in a cash-stock deal that closed in August 2020.

Roughly a month later, following the closure of the deal, Elanco Animal Health announced that it planned to eliminate 900 positions, primarily in sales and marketing across 40 countries to help drive synergies after the acquisition. The action, the company was intended to reduce duplication and optimize the company's footprint.

"Their leadership and knowledge helped speed the combination of the companies, quickly putting the business on a path of greater disciplined execution and delivery," Simmons said. "With that strong foundation, we are well positioned to further streamline our structure today and remove additional cost, allowing us to shift resources into areas of greatest opportunity.”

The filing notes that other cost-saving measures include the consolidation of Elanco International and Elanco Europe into one organization, the integration of a centralized marketing organization, simplification of the company’s research and development structure to focus investments on the company Pet Health pipeline, and other organizational adjustments.

Acquired: Elanco acquiring pet biopharmaceutical company Kindred Biosciences for $440 million

The elimination of hundreds of jobs is expected to result in pre-tax severance costs between $86 million and $94 million. The changes also are expected to help offset higher costs pressures and maintain the company's current growth path to 60% adjusted gross margin by 2023.

Elanco said it expects to record a fourth quarter loss in net income of between $65 million and $71 million. Compensation and benefit savings from the workforce reductions are expected to be roughly $60 million in 2022 and around $70 million annually, once fully implemented.

The company expects to reinvest the savings into areas identified for growth. Those include advancing leadership in digital capabilities, product launches and the Chinese market.

Elanco has nearly 800 employees in Indiana and about 10,000 worldwide.

Contact IndyStar reporter Alexandria Burris at aburris@gannett.com or call 317-617-2690. Follow her on Twitter: @allyburris.

This article originally appeared on Indianapolis Star: Elanco plans to eliminate 380 jobs globally amid company restructuring

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting