THOUSAND OAKS, Calif.—Blaming ironically anemic sales of Aranesp, its therapy for anemia, biotech giant Amgen announced it would reduce its personnel numbers by 12-14%, representing more than 2200 staff. To stop the financial bleeding, the company also expects to reduce planned capital expenditures, close specific production operations, and re-evaluate its R&D and operations priorities. Almost all of these changes—expected to yield pre-tax savings of just over $1 billion in 2008—will be completed by the end of 2007.

 

"Recent changes in coverage rules and adjustments to Amgen's FDA approved labels for EPOGEN and Aranesp have and will adversely affect Amgen's revenue," says company Chair and CEO Kevin Sharer. "The initiatives announced today respond to that new reality by taking account of reduced revenues and appropriately lowering costs across the company."

 

Sharer is quick to reassure people, however, that the company will continue to pursue its research efforts to develop new drugs. What makes the announcement particularly interesting is the fact that it comes within a couple months of Amgen's decision to acquire metabolic disease specialists Ilypsa and Alantos Pharmaceuticals for more than $700 million total.

 

The current news comes on the heel of reports that several other large and mid-sized companies in the biotech and pharma sectors will be reducing staff numbers in response to sluggish sales or difficulties with regulatory authorities. At the same time companies like Amgen, AstraZeneca, and Johnson & Johnson look to retrench, analysts across the board have been almost unanimously upbeat about the market prospects of therapeutics for various indications. This inconsistency and volatility suggests there may be a significant disconnect between local realities and global promises, both within the industry and within some companies.