After signaling a plan to cut R&D last week, Amgen ($AMGN) followed up on Wednesday with a few more of the particulars, including an acknowledgment that it is laying off 380 people from its research division. Wall Street analysts are likely to cheer the move, having frowned over Amgen's numbers as R&D costs as a percentage of revenue crept up to the 20% mark. But it's also yet another sign that job security in large biopharma R&D operations is a thing of the past.
While only 2% of the company's total worldwide staff, the layoffs represent 6% of the R&D workforce. Not surprisingly, the pink slips will be sent out mainly at Amgen's Thousand Oaks, CA headquarters, where 226 research staffers will be asked to brush off their resumes and look for new opportunities. The rest of the cuts will be made in Seattle, South San Francisco and Boston. Reuters also reports that "discussions" are underway in the U.K.
"The reduction in force does not represent an across-the-board reduction in R&D, but rather targeted, strategic reductions," Amgen spokesperson Mary Klem noted to FierceBiotech. "I don't have more details to share at this time, but can tell you that we have not closed any sites or eliminated any therapeutic areas. The changes will be discussed on our earnings call on Monday."
Bloomberg zeroed in on the numbers for its analysis of the situation. In the second quarter Amgen's R&D budget shot up 26% to $808 million. And about half of that increase was required to fuel research on trebananib, ganitumab and OncoVEX, a promising late-stage cancer vaccine Amgen picked up with its $1 billion deal for BioVex.