Biotech giant axes up to 2,900 jobs
Biologic drug-maker Amgen is to shed 12 to 15% of its worldwide workforce and close four sites, despite reporting stellar second-quarter results that trounced Wall Street expectations.
Amgen, which has more than 500 staff working at its UK sites in Cambridge and Uxbridge, and in Dublin, Ireland, also raised its forecasts for its 2014 profit and revenue, driving up its shares.
The maker of Prolia for osteoporosis and anaemia treatment Aranesp said it was restructuring to free up money needed for investments in the business, particularly marketing and other costs for launching new drugs.
"We began this action with strong confidence in the underlying performance of our business," chief executive Bob Bradway told analysts in a conference call.
The job losses will happen this year and in 2015, eliminating 2,400 to 2,900 of its 20,000 jobs, mostly in the US.
Amgen is the world's biggest maker of biologic drugs, which are produced in living cells, rather than by mixing chemicals, as traditional pills are made. Its international development programme is co-ordinated from the UK, involving patients from across Europe, according to the firm's website.
The company plans to close two sites in Washington state that focus on research and development and two in Colorado, primarily manufacturing plants with 20-year-old technology. It is investing in the latest technology elsewhere.
It said it would streamline the company, reduce management layers and reduce its property footprint by 23%. It will keep its headquarters in Thousand Oaks, California, albeit with a smaller staff.
The company anticipates charges of 775-950 million dollars (£458-£562m) for site closures and severance payments, mostly in 2014 and 2015. It expects modest 2015 savings, but expense reductions in 2016 of about 700 million dollars (£414m), versus 2013 spending.
Most savings will be reinvested, including expanding its operations in the biotech hubs of Cambridge, Massachusetts, and South San Francisco, California.
"We have an unprecedented number of late-stage programmes rolling through at the moment," said research head Sean Harper.
Amgen is awaiting US approval for its chronic heart failure medicine, ivabradine, and its advanced melanoma drug, talimogene laherparepvec. The company has not announced brand names for either one.
It plans to apply in this quarter for US and EU approval of evolocumab, for abnormal levels of blood fats such as cholesterol. It is targeting the second half of the year to apply for US approval of blinatumomab, for acute lymphoblastic leukaemia that has relapsed or not responded to prior treatment.
It is also conducting late-stage patient tests on drugs for psoriasis, recurrent ovarian cancer and a thyroid disorder.
Meanwhile, Amgen posted a 23% jump in second-quarter profit as revenue jumped 11% on strong performances by nearly all of its drugs.
Net income was 1.55 billion dollars (£917m), or 2.01 dollars (£1.18) per share, up from 1.26 billion dollars (£745m), or 1.65 dollars (97p) per share, in 2013's second quarter.
Revenue totalled 5.18 billion dollars (£3bn), up from 4.68 billion (£2.7bn) a year earlier. Analysts were expecting 4.92 billion (£2.9bn).
Amgen says it now expects adjusted earnings per share of 8.20-8.40 dollars (£4.85-£4.97) per share, up from its January forecast of 7.90-8.20 (£4.67-£4.85). It is anticipating revenue of 19.5-19.7 billion dollars (£11.5-£11.6bn), up from 19.2-19.6 billion (£11.3-£11.5bn) and also a low tax rate, 15-16% for the full year.
"We view the restructuring plan and 15% workforce reduction announced as a positive that will help the company improve its cost structure while continuing to invest in the pipeline and key product launches," Citigroup analyst Dr Yaron Werber wrote to investors.