Irish eyes fixed firmly on Amgen

Rumours of lay-offs at Amgen’s headquarters in California could have knock-on affects close to home, writes Niamh Hennessy.

ANONYMOUS website postings by employees say it’s a scary time to be at Amgen.

Local car dealerships say the biotech’s employees are canceling orders for new cars. Even the local dry cleaners said they are feeling the pain.

Hyo Shin, owner of Ventu Park dry cleaners on the edge of Amgen’s main campus in California, said sales fell 15% in July compared with a year earlier, to $24,000.

Mr Shin, who estimates a third of his business comes from Amgen employees said people who used to bring in $200 a month are dropping off $150 instead. It adds up.

Amgen, the multinational drugmaker which recently delayed plans for a €1 billion plant in Cork, have been riddled with a bad fortune in recent months and nobody’s feeling it more than the people closest to it. Amgen is the biggest private employer in Thousand Oaks, California.

Its 8,300 local employees are known as ‘Amgenites’ and they make an estimated average annual salary of $162,000 (€118,000).

Its corporate headquarters stands overlooking the city with sweeping views of the Santa Monica Mountains.

The biotech giant has been credited with keeping the economy in the area humming.

But it looks like the party could be ending.

Recent studies have raised safety concerns about two of Amgen’s best-selling drugs, US sales of its most profitable product, Aranesp, fell almost 20% last quarter.

Regulators are issuing new warnings and investors are pummelling the stock, which has lost nearly a quarter of its value since the start of the year and fallen to its lowest level in nearly four years.

This month the US Center for Medicare and Medicaid Services dealt an unexpected and serious blow to the company when the US government announced plans to limit what dosages of anaemia drugs it would pay for under Medicare. Included was Amgen’s Epogen and Aranesp medications, which made up 60% of the company’s profit last year.

This summer, things are increasingly looking glum at the once go-go Amgen.

Daniel Costello of the LA Times said people familiar with the matter believe layoffs are looming at Amgen.

Although plans have not been finalised, the company is expected to announce it is reducing its workforce by as much as 15% in the next several weeks, he said.

And this is the same company which has plans to hire over 1,000 people in Ireland. The company, however, is quick to play-down the matter saying layoff talk is premature. “We have made no announcements regarding staff reductions,” Amgen spokesman David Polk said.

But they have already delayed plans for the plant in Cork and have slowed manufacturing operations elsewhere.

Many contractors and temporary workers have left the company in recent months and employee overtime has been curtailed, said Mr Costello citing again those familiar with the matter.

Mark Shoenenbaum, a biotech analyst at Bear Stearns, said that if pressure on Amgen continued to mount, it might have few choices but to cut expenses further. “There’s likely fat in places they can find,” he said.

Chief executive Kevin Sharer is believed to have left a general message to employees recently on the company’s voicemail system indicating there may be upcoming changes.

Amgen executives have said the company can weather the current pressure on its top-selling products. Executives say several promising products are under development, including late-stage trials for an osteoporosis drug and others that would treat cancer, that could be on pharmacy shelves in the next few years.

Founded in 1980 as AMGen (Applied Molecular Genetics), the company pioneered products based on advances in molecular biology that have enabled scientists to use living organisms manufactured inside living cells to create novel medicines.

It was almost two decades ago that Amgen introduced Epogen, one of the biotech industry’s first blockbuster drugs, and more recently its longer-acting cousin, Aranesp. These anaemia drugs treat nearly a million US patients with chronic kidney disease or cancer each year.

The drugs accounted for half of Amgen’s $14.3 billion in revenue and 60% of its $2.95bn in profit last year.

The company has more than doubled the size of its local staff since the start of the decade, hiring an average of two employees a day. Parking is so scarce on campus, Mr Costello said valets help double and triple park cars on employee lots.

He said Amgen’s recent trouble began when research studies by the company and others raised questions about Epogen and Aranesp in some dosages and patients.

“Fallout from the studies rankled the company, patients and regulators, who appear to be taking an increasingly critical look at these drugs.

Last week, the company released a statement saying the recent Medicare decision has “no scientific basis and... is incompatible with good clinical practice”. It’s appealing the decision.

I guess like the thousands of people in Thousand Oaks, all Cork can do is wait and see.