Wednesday, May 04, 2011

Drug theft goes big - FORTUNE

A few years ago a security expert visited Eli Lilly's vast warehouse in Enfield, Conn., one of the pharmaceutical giant's three U.S. distribution sites, where hundreds of millions of dollars' worth of prescription drugs are stored. The expert was surprised to see the facility lacked a perimeter fence. There wasn't even a $10-an-hour guard stationed outside. But Lilly officials assured the consultant there was nothing to be concerned about. Recalls the expert: "They were very proud to show me. 'We have four-foot-thick walls.'"

He then looked up at the ceiling. "I was like, 'What's up there?'" he says. "There" turned out to be a standard tar roof with no extra reinforcement or fortification. Sometime later, Lilly's security team suggested changes to protect the Enfield warehouse, including installing a fence. But those proposals went unheeded, according to two security experts in a position to know. Bob Reilley, Lilly's chief security officer, says the company had a response in the works. But to listen to him today, it didn't seem that urgent. "That warehouse had been there about 20 years in a nice industrial area," Reilley says, "and was part of the community as well."

Sure enough, Lilly's (LLY) Enfield warehouse became the site of a headline-making heist -- the largest pharmaceuticals theft in history. The burglars struck in the early-morning hours of Easter Sunday last year, as a heavy rain and windstorm knocked down trees and power lines, occupying local police.

Security was so lax that they pulled their tractor-trailer directly up to the loading dock and parked there for hours. Security cameras recorded the image of the truck, but no one was monitoring the cameras. The burglars drilled a hole in the tar roof and slid down ropes into the warehouse. Once inside, they disabled an alarm panel with a sledgehammer.

Another alarm went off at some point during the burglary, say those familiar with the break-in. Staff at ADT, which monitored the system, called the first name listed on Lilly's contact sheet and left a message. By the time a Lilly employee responded, the burglars were gone, along with $75 million worth of cancer, psychiatric, and blood-thinning drugs.

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