Many news sources have published articles regarding Amgen’s recent announcement that it will undergo restructuring due to declining sales of two of its blockbuster drugs, anemia drugs Aranesp and Epogen. Included in the restructuring is, first, a 12% to 14% cut in the company’s workforce of 20,000, which is a loss of 2,200 to 2,600 employees. Next, capital expenditures will be reduced by about $1.9 million between 2007 and 2008. Further, certain operations facilities will be closed down while others will be reduced in size for efficiency purposes. Also, the adjusted earnings per share guidance has been lowered to between $4.13 and $4.23 per share from previously estimated $4.28 per share. Restructuring pre tax charges are estimated between $600 million and $700 million for 2007 and 2008, but the restructuring plans implemented by Amgen are estimated to save the company between $1 billion and $1.3 billion next year.

Amgen, founded in 1980, has seen a steady increase in sales and profits since Epogen was introduced into the market in 1989. This plan for restructuring is the first one of its kind that Amgen has experienced in its 27-year history as a biotechnology company. The company has grown to employ 20,000 employees worldwide, with 11 of its facilities located in some of the biggest cities in the U.S., including San Francisco, CA; Cambridge, MA; and Seattle, WA. The restructuring plans come in the wake of “payment limits by insurers and safety warnings from U.S. regulators.” FDA approved labels for Amgen’s drugs have undergone changes including the inclusion of a “black box” warning. These warnings coupled with numerous studies into the safety of the drugs have adversely affected Amgen’s anemia drug sales, which have, in turn, caused the company’s restructuring.

Click on the following links to read the full version of the articles which have contributed to this post:

Associated Press (in Forbes): “Amgen to Cut Up to 2,600 Jobs”

Bloomberg: “Amgen Will Cut 2,200 to 2,600 Jobs, Saving $1 Billion”

The New York Times: “Amgen to Cut Jobs, a First for the Biotech Giant”

The Benton Crier: “Amgen to cut up to 2,600 jobs”

Associated Content: “Biotech Firm Amgen Announces Layoffs”