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Friday, Mar 1, 2024

Amgen Announces Big Layoffs

Amgen Inc. announced on Tuesday that it would cut up to 2,900 jobs, close plants and consolidate offices at its sprawling Thousand Oaks headquarters complex. The staff cuts, which could amount to about 15 percent of its global workforce of 20,000, would begin later this year and continue through next year. Amgen already has laid off about 1,200 workers worldwide since 2007. Amgen, which disclosed the layoffs in its second-quarter earnings announcement, said it was restructuring to reduce management and costs as it prepares to launch new drugs. “From a position of strength, we have announced today restructuring initiatives that will allow us to reallocate resources to invest in our upcoming launches and drive growth,” said Chief Executive Robert Bradway, in a prepared statement. The company has several potential new drugs in trial stages but they are years away from realizing revenue. They include Kyprolis, a cancer drug that came with its $10.4 billion acquisition of Onyx Pharmaceuticals in South San Francisco last year. However, the company also faces challenges from rival drug makers that want to get into the production of so-called “biosimilar” copies of its longstanding blockbusters, such as Epogen. Facilities will be closed in Washington and Colorado. Bradway said the company is in discussion with third parties “about potential future use of the facilities.” At the same time, Amgen said it expects to expand in South San Francisco, Calif., where Onyx is located, and Cambridge, Mass. Amgen expects to take a restructuring charge of $775 million to $950 million over this year and next year, while reducing annual operating costs by about $700 million in 2016. The savings are reflected in the company’s 2014 earnings guidance. Kristen Davis, an Amgen spokeswoman, told the Business Journal that employees would receive severance benefits and transition services. “We are offering a voluntary transition program for eligible staff in the U.S. and Puerto Rico,” she said in an email. In its second quarter, Amgen reported net income of $1.5 billion ($2.01 a share) for the quarter ended June 30, compared to $1.3 billion ($1.65) for the same quarter a year ago. Revenue grew 11 percent to $5.2 billion. Analysts on average were expecting earnings of $2.07 on revenue of $4.9 billion, according to Thomson Financial Network. Shares closed up 66 cents, or about half a percent, to $123.31 on the Nasdaq prior to the announcement. Shares were up an additional $4.51, or more than 3 percent, to $127.82 in after-hours trading.

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