AP
Amgen to Cut Up to 2,600 Jobs
Wednesday August 15, 8:03 pm ET
By Gary Gentile, AP Business Writer
Biotechnology Company Amgen Plans to Cut Up to 2,600 Jobs, Lowers Profit Guidance

LOS ANGELES (AP) -- Biotechnology company Amgen Inc. said Wednesday it will cut up to 14 percent of its work force and has lowered its profit guidance because of slimmer than expected sales of its anemia drug Aranesp.

The company said it plans to reduce its work force by 12 percent to 14 percent, or between 2,200 and 2,600 positions, and will get hit with a restructuring charge between $600 million and $700 million.

Amgen also reduced its adjusted earnings per share guidance for the full-year to between $4.13 a share and $4.23 a share from previous guidance of $4.28 a share.

The Thousand Oaks-based company said it would also reduce capital expenditures by $1.9 billion.

Amgen said it will continue to concentrate on research and development but would reduce expenditures there to represent about 20 percent of sales, down from 23 percent in 2006.

"This has not been an easy year or the one we expected," Kevin Sharer, Amgen's chairman and chief executive officer, told analysts and shareholders in a conference call.

Amgen signaled problems last month when it reported that worldwide sales of its anemia-treating drug Aranesp dropped 10 percent to $949 million in the second quarter in reaction to the Food and Drug Administration finding the drug should carry a stronger warning label when used in cancer patients with anemia.

The warning label addition called for doctors to use the lowest possible dose of the drug.

On Aug. 1, Medicare released new rules restricting reimbursement for the class of drugs known as erythropoiesis-stimulating agents, or ESAs, which also includes Johnson & Johnson's Procrit and another Amgen drug, Epogen. They are used to treat anemia in patients with kidney failure and in cancer patients undergoing chemotherapy.

The additional warnings and later calls for more studies focused on safety were damaging to Amgen.

Aranesp was the company's best-selling drug last year, with $4.12 billion in sales.

The Centers for Medicare and Medicaid Services decided to limit reimbursement for Aranesp when used to boost hemoglobin levels. Use of the drug was restricted to less than the FDA-recommended dose.

The company said Wednesday it believes the decision, which Amgen is fighting, will mean cancer patients will need more transfusions in the future, a result that could drastically reduce the nation's blood supply.

"We believe the national coverage determination issued by CMS is arbitrary ... without apparent clinical or policy rationale and most importantly bad for patients," Sharer said. "We are a company and a management group that faces reality and deals with it, and we have a new reality to face today."

Sharer did not detail plans for cuts but said he did not believe Amgen's sales staff needed to be pared. Cuts would most likely come from research and development and manufacturing efforts, he said.

The company said it would continue a previously announced stock buyback plan in an effort to boost the lagging share price.

Amgen's shares have fallen nearly 35 percent from a 52-week high of $77 last October. The shares fell 73 cents to $50.59 in regular trading Wednesday, then lost another 29 cents in after-hours trading.