Lilly finds buyer for Tippecanoe Labs; jobs, Shadeland saved
In a decision that is drawing rave reviews, a company headquartered in Essen, Germany, will soon be the new owner of Eli Lilly and Co.'s Tippecanoe Laboratories.
Evonik Industries AG has agreed to purchase the entire pharmaceutical manufacturing site in Shadeland -- saving the jobs of workers at the plant and easing fears of what might have happened if the sprawling facility had closed.
"In the room, there was a lot of joy, relief. Lots of applause many times," said Lisa Fallen, manager of plant engineering. She was with about 300 employees Wednesday morning when the news was announced. "There was a very good feeling in the room. Lots of positive energy."
Evonik plans to retain the 700 current, full-time, noncontracted employees at the plant. The employees also will receive a severance package from Lilly when the sale becomes final.
"We're tickled pink that the plant is going to stay open. We hope they prosper. It's good for them and good for us," said Jeff Findlay, president of the Shadeland Town Council, which counts on the property that covers 2,300 acres to generate approximately 90 percent of the town's tax base.
"It would have wrecked the town of Shade-land had they closed the doors. That's just a simple fact of life. We couldn't exist without them."
Terms of the sale, which is expected to close by the end of the year, were not disclosed.
The two companies also have entered into a nine-year supply and services agreement that will allow Evonik to manufacture ingredients for some Lilly products at the Shadeland site.
"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 Klaus Engel, Evonik Industries chief executive officer. "The pharmaceutical market is attractive, economically stable and produces growth rates near the double-digit range every year."
A busy pipeline
Originally built to help Lilly fulfill an expected increase in the demand for penicillin, triggered by the Korean War, Tippecanoe Labs opened in 1954. With the war over, it was first involved in the production of Ilotycin, an antibiotic to treat patients allergic to penicillin.
Since then, the facility has produced the active pharmaceutical ingredients for Elanco animal health products and Lilly products used to treat cancer, osteoporosis, schizophrenia, erectile dysfunction and deficit hyperactivity disorder.
Talks with Evonik began shortly after Lilly revealed in July 2008 that shutting down the 55-year-old facility was one of three options it was considering.
Rising costs, changes in the company's future products and expiration in 2013 of the patent for Gemzar, a cancer drug, forced the company to consider restructuring and continuing operations, exploring opportunities to sell the property, or shutting down operations and closing the plant.
"Tippecanoe Laboratories has maintained a long-standing presence in the Lafayette community and has produced lifesaving medicines for patients and leading animal health products for more than a half-century," said Frank Deane, 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 Lilly and the state of Indiana to continue to benefit from the site's capacity and technical capabilities."
Growth possibilities
Evonik is expected to expand operations at the Shadeland site in the future, as it produces ingredients for Lilly and other pharmaceutical companies.
"With the right opportunities and the right timing, yes, you'll see that," said Joe Seaman, president and chief executive officer of Greater Lafayette Commerce. "Here's what we know for sure -- their largest customer is going to be Lilly."
Larry McShane, vice president of Tippecanoe Laboratories, made the announcement about the plant's future during meetings with workers on Wednesday.
"I want to personally thank the employees of Tippe Labs for their continued focus, high performance and professionalism throughout the course of the strategic analysis that led to today's announcement," said McShane. He will remain in the senior management position following the ownership change. "I'm happy to say Tippe Labs will continue operations in this great community."
