Eli Lilly (LLY -1.91%) recently announced layoffs of roughly one-third of its U.S. workforce. In this video, David Williamson explains why this was both necessary and smart. Several of its key drugs will lose patent protection in the next two years, which represents a third of its revenue and Eli Lilly had to do something to compensate. Most likely, Lilly will expand its workforce once several of its new drugs receives FDA approval. In fact, diabetes drugs are looking like an Eli Lilly forte, with six different drugs in various clinical trials.
So if you have faith in Eli Lilly's product pipeline, don't get rattled by the recent layoffs. Better times are ahead, so let its 3.5% dividend help tide you over.
