UPDATED: Amgen axing up to 2,900 staffers, shuttering R&D campus in revamp
|Amgen's Helix campus|
Bracing for an expensive round of late-stage studies and prodded by analysts for lackluster numbers, Amgen ($AMGN) reported Tuesday evening that it plans to ax up to 15% of the company's workforce, shutting down all of its facilities in Colorado and Washington state as it slashes up to 2,900 staffers.
Big research and manufacturing sites in Seattle and Bothell, WA, and Boulder and Longmont, CO, are all on the chopping block, including the sprawling 750,000-square-foot Helix research campus in Seattle with 610 staffers. And while it plans to keep its headquarters in Thousand Oaks, CA, the Big Biotech says it will consolidate a smaller headcount among fewer buildings, shrinking its corporate footprint. Altogether the company, which has 20,000 employees, expects to slash 12% to 15% of its staff roster.
The layoffs are expected to get underway later this year and extend into 2015, according to the company. The retreat from Washington and Colorado will be complete, while Amgen says it expects to concentrate more of its work in biotech hubs in Cambridge, MA, and South San Francisco. A spokesperson for Amgen tells FierceBiotech that the company currently has approximately 660 staffers in Washington, including a small facility in Bothell.
In a call with analysts Tuesday evening, CEO Robert Bradway emphasized that while the research and manufacturing cuts are being concentrated heavily in Washington and Colorado, "the changes we announced today are company-wide changes." Translation: The ax will fall throughout the global organization. He added that execs plan to elaborate more on the full slate of planned changes at an upcoming business review session.
The company says that it decided to make these cuts following an "intensive review" of its operations by various company teams. The cumulative pretax restructuring charges associated with the restructuring plans are expected to be between approximately $775 million and $950 million.
Cuts like these following some recent dealmaking by Bradway were greeted with considerable enthusiasm among Wall Street analysts. Shares for Amgen were up close to 5% by mid-morning Wednesday.
The cutbacks are a major setback for Seattle, which has been struggling to hang on to its rep as a significant, though second-tier, biotech hub. Amgen, though, is following a trend that's already well established in biopharma. Big companies around the globe have been abandoning outlying research facilities and concentrating heavily in the top hubs while scaling back in R&D. Pfizer set out to do that four years ago. Sanofi has been focusing heavily on its Boston research activities and Novartis has been tailoring its R&D division to align more closely with the big hubs as well.
Amgen has already been trimming staff, but not at these levels. Back in January the company said it was cutting 200 positions at its manufacturing operations in Colorado, where the company makes the aging anemia drug Epogen. And back in 2011 it cut into its R&D operations in Seattle and Bothell, laying off dozens of workers.
The move comes after Bernstein's Geoff Porges has prodded Amgen repeatedly to join the Big Pharma breakup party, complaining that Amgen's stock price has languished as other companies of a similar size have done much, much better this year.
Porges says Amgen has performed particularly poorly compared to star biotech performers like Biogen Idec ($BIIB), Gilead Sciences ($GILD), Celgene ($CELG) and Regeneron ($REGN)--which have seen a slate of major approvals combined with much smaller R&D budgets. Porges also isn't too keen about the prospects for a turnaround. Amgen has a portfolio of aging legacy products looking at biosimilar competition and a "scattered" pipeline that cobbles together such experimental drugs as T-Vec, blinatumomab and trebananib along with the newly acquired programs at Onyx.
Amgen reported today that it spent $979 million on R&D in the second quarter, a 4% jump over what it spent in the same period last year. That's close to 20% of company sales. That's considered a high figure for a big player, and in the past the company has trimmed research spending to help rein it in. Amgen noted that the increase in R&D spending was at least partly as a result of the $10.4 billion Onyx buyout a year ago.
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