WASHINGTON (BLOOMBERG) - Eli Lilly plans to cut 8.5 per cent of its workforce and close some facilities as the drugmaker deals with pressure on the price of some of its biggest products.

Some of the 3,500 job cuts will come from early retirements. Lilly also plans to close a research facility in New Jersey, and consolidate some manufacturing operations at its animal health unit. The company had about 41,000 employees as of June.

Diabetes drugs make up three of Lilly's 10 biggest products, and the company has increasingly focused on the disease as other big drugs have lost patent protection. Yet diabetes treatments have faced increasing price pressure, thanks to heated competition.

"That was on the mind as they made these changes," spokesman Mark Taylor said in an interview. The cuts will save about US$500 million (S$675.6 million) annually starting in 2018, and the company will take charges of US$1.2 billion, or 80 cents a share, in the second half of this year. 

About 2,000 of the job cuts will be in the US, and the reductions will let Lilly focus on newer drugs in its pipeline, chief executive officer David Ricks said in a statement.

"To fully realize these opportunities and invest in the next generation of new medicines, we are taking action to streamline our organization and reduce our fixed costs around the world," said Mr Ricks, who took over as CEO in January.

In recent years, Lilly has cut thousands of jobs as some of its biggest drugs have gone off patent. Last year, it eliminated 500 positions following the failure of an experimental Alzheimer's disease drug. It has also trimmed its sales force as some of its biggest drugs have lost patent protection.

Mr Taylor said half of the US$500 million in savings would be invested in R&D. The rest will help help Lilly reach its promise to investors to bring down operating expenses to 50 per cent of revenue or less by 2018.  Lilly shares rose less 0.6 percent to US$81.01 at 10:19 a.m. in New York.