Amgen Inc. said Wednesday that it plans to reduce staff worldwide by 12 to 14 percent and close some production facilities in response to lower sales of its flagship anemia drugs, which have been hit by safety concerns.
The Thousand Oaks company, which has around 18,000 employees worldwide and 8,300 in the Los Angeles area, said it would try to reduce its staff between 2,200 and 2,600 by offering early retirements and not filling open positions, with layoffs as a last resort. Cuts are expected to be across the board, but a company spokeswoman said it will be several weeks before the impact on specific locations would be known.
Sales of Amgen’s top-selling drug Aranesp, which totaled $4.1 billion in 2006, have dropped since December after studies indicated that it had the potential to stimulate tumor growth in cancer patients, its primary patient base. Revenue growth from Aranesp and Epogen, an older drug, also are expected to slow due to cuts in reimbursement rates from federal and private insurers.
Sales of Aranesp and Epogen, which accounted for nearly half of Amgen’s revenue in 2006, were down 20 percent in the second quarter. The company also on Wednesday revised its 2007 guidance downward from $4.28 a share to a range of $4.13 to $4.23, excluding restructuring charges.
The downsizing, which is expected to continue into next year, is projected to yield pre-tax savings of between $1 billion and $1.3 billion in 2008. Cumulative pre-tax restructuring charges are expected to range from $600 million to $700 million in 2007 and 2008.
Research and development may not be as impacted as other divisions, since the company made a point of saying it was committed to growing revenues by developing its pipeline.
“The initiatives announced today respond to that new reality by taking account of reduced revenues and appropriately lowering costs across the company,” said Chief Executive Kevin Sharer in a statement. “We will continue to strongly support our research efforts directed at development of new medicines for grievously ill patients.”
