Lilly Sells API Site to Evonik

Lilly has sold its Tippecanoe Laboratories manufacturing facility to Evonik Industries AG. The manufacturing site, located in Lafayette, IN, will remain in operation with a focus on producing high-quality APIs and specialty chemical and animal health products.

The two companies will also enter into a nine-year supply and services agreement, in which Evonik will manufacture final and intermediate step APIs for certain Lilly human and animal health products. Approximately 700 current Lilly employees, representing all full-time non-contracted workers dedicated to the site, will be offered employment with Evonik. Financial terms of the deal were not disclosed.

The decision to sell the site is based upon a projected decline in utilization of the site due to several factors, including upcoming patent expirations on certain medicines made at the site, Lilly’s strategic decision to purchase, rather than manufacture, many late-stage chemical intermediates, and the evolution of the Lilly pipeline toward more biotechnology medicines, according to a Lilly statement.

“Today’s announcement represents a positive outcome for employees at the site, the Lafayette community and Lilly,” said John Lechleiter, Ph.D., Lilly’s chairman and chief executive officer. “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.”

“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,” said Dr. Klaus Engel, chief executive officer of Evonik Industries. “The pharmaceutical market is attractive, economically stable, and produces growth rates near the double-digit range every year.”

“Tippecanoe Laboratories has maintained a longstanding presence in the Lafayette community and has produced lifesaving medicines for patients and leading animal health products for more than a half-century,” commented Frank Deane, Ph.D., president of Lilly manufacturing operations. “We are pleased to reach an attractive outcome that allows the site to remain in operation, maintains employment opportunities for almost 700 affected employees and allows both Lilly and the state of Indiana to continue to benefit from the site’s capacity and technical capabilities.”

The transaction will close by the end of 2009.