Restructuring will see three sites close as company comes under pressure to streamline R&D, despite successes

Amgen is to cull up to 15% of its global workforce by the end of next year. Most of the 2400–2900 job losses will be in the US, predominantly at the former Immunex research facility in Seattle and two biologics manufacturing sites in Colorado, all of which are slated for closure. However, chairman and chief executive Bob Bradway was keen to stress that the cuts are company-wide, and will also involve reducing layers of management and increasing managerial spans of responsibility.

‘We see opportunities to concentrate more of our research and process development activities in our sites in South San Francisco and Cambridge, Massachusetts, two key biotechnology hubs,’ Bradway told an analysts’ conference call. ‘We will retain our headquarters in Thousand Oaks, albeit with a reduced number of staff, and overall we anticipate a 23% reduction in our facilities footprint as part of this first step in our restructuring.’

The company has always bet on such high risk projects, and generally this has done quite well for them

The anticipated $700 million (£416 million) in annual savings will largely be reinvested in launch activities for new products that are close to market, such as the monoclonal antibody evolocumab to treat dyslipidaemia, the small molecule drug Procloralan (ivabradine; already approved in Europe for chronic heart failure), and the oncolytic virus talimogene laherparepvec for metastatic melanoma.

The cuts were announced against a backdrop of Amgen hitting its revenue targets, and experiencing good growth. ‘If you’re going to do any cost cutting, it’s better to do it when everything is going well, and you can do what you want to do, rather than what you have to do,’ says Kevin Bottomley, managing director at Results Healthcare. ‘The portfolio is biased towards high risk products, but the company has always bet on such high risk projects, and generally this has done quite well for them.’

If you put scientists together in these huge biotech megacities, you may get more innovation, but do you just get more of the same?

However, Amgen’s R&D spend has risen by about 25% in five years, he says, against a backdrop of 8% for the US pharma industry overall. ‘At 20% of revenues, it’s certainly not the highest, but it’s clear there is a lobby in the US that Amgen R&D is not very efficient, and there are better ways of unlocking shareholder value,’ Bottomley adds.

The announcement also shows that Amgen is joining the herd mentality that’s concentrating pharma R&D in South San Francisco and the Boston–Cambridge area. ‘Long-term, I do wonder whether it’s a good thing to have much of the world’s pharma research concentrated in a limited number of hubs,’ Bottomley says. ‘If you put scientists together in these huge biotech megacities, you may get more innovation, but do you just get more of the same?’