Amgen to cut as much as 14% of workforce

08/15/2007

By Daniel Costello,
LA Times Staff Writer
August 15, 2007


Biotech giant Amgen Inc. of Thousand Oaks said today that it would cut 2,200 to 2,600 jobs as part of a sweeping plan to save more than $1 billion next year, in an unprecedented retrenchment for the typically buoyant biotech industry.

The cuts, which amount to 12% to 14% of the company's workforce, follow a string of recent clinical and regulatory setbacks for the company, particularly involving Aranesp, its top revenue-producing biotech drug in the United States last year, with sales of $4.1 billion.

Although specific cuts were not part of the initial announcement, the company said it would close certain production operations and reduce the size of other units to become more efficient.

More than half of Amgen's employees work at the company's Ventura County headquarters, and analysts said the cuts were likely to have a significant effect on the local economy, which has boomed in recent years with Amgen's success.

The company has more than doubled the size of its local staff since the start of the decade, hiring an average of two employees a day. But in recent weeks, layoff rumors have shaken employee morale at headquarters.

"The initiatives announced today respond to that new reality by taking account of reduced revenues and appropriately lowering costs across the company," Chief Executive Kevin Sharer said. "We will continue to strongly support our research efforts directed at development of new medicines for grievously ill patients. These changes will also position Amgen for success in 2008 and beyond."

Mark Schoenebaum, biotech analyst at Bear Stearns Cos., called the move difficult for employees but "undoubtedly the right thing for the company to do."

Aranesp sales fell 19% to $578 million in the second quarter after U.S. regulators put strict safety warnings on anemia drugs made by Amgen and Johnson & Johnson and the Centers for Medicare and Medicaid Services began restricting instances in which they would pay for their use by cancer patients.

Amgen shares rose 77 cents, or 1.5%, to $51.36 in extended trading after the company's report. The stock had fallen 73 cents to $50.59 in regular trading.