On Tuesday, biotechnology firm Amgen revealed it plans to eliminate 2,400 to 2,900 jobs, or about 12-15% of its workforce.
The layoffs are a first step in the company's "Reallocating Resources to Drive Growth," plan. Amgen announced a restructuring plan to invest in continuing innovation and the launch of its new pipeline molecules, while improving its cost structure. Initial efforts include streamlining the organization, reducing layers of management, increasing managerial spans of responsibility and beginning implementation of a revised geographic site plan.
The layoffs will begin later this year and continue through 2015, predominantly in the United States. The company will also close all of its research and manufacturing sites in Washington and Colorado.
"The talented staff members at these locations have made enormous contributions to advancing biotechnology over the years and the surrounding communities have been very supportive, so it is with great reluctance that we acknowledge the need to exit," said Robert A. Bradway, chairman & CEO. "At each site, we are actively engaging in discussions with third-parties about potential future use of the facilities."
The company will expand its presence in the biotechnology hubs of South San Francisco, Calif., and Cambridge, Mass., and retain its headquarters in Thousand Oaks, Calif., with a reduced number of staff consolidated into fewer of the existing buildings. Company-wide, these actions will result in an approximate 23 percent reduction in the Company's facilities footprint.
Amgen reported that its total revenues increased 11 percent to $5,180 million, with 8 percent product sales growth driven by strong performance across the portfolio, particularly Enbrel (etanercept), Kyprolis (carfilzomib), Prolia (denosumab) and XGEVA (denosumab). Adjusted EPS grew 25 percent to $2.37, driven by higher revenues and a significant increase in the profitability of ENBREL. Adjusted net income increased 26 percent to $1,823 million. The company also generated $2.1 billion of free cash flow compared with $1.4 billion in the second quarter of 2013.
These actions will result in pre-tax accounting charges in the range of $775-950 million, primarily incurred in 2014-2015, according to the press release. The combination of these efforts will reduce operating expenses by approximately $700 million in 2016 compared to 2013, although most of the savings will be reinvested to support global launches of new products. Read the full release
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