Amgen finds humility

CEO Kevin Sharer was trying to put the best face on today's news of a 12 percent to 14 percent workforce reduction - plus the closing of facilities, plus the taking of a $600 million to $700 million restructuring charge, plus a cut in the 2007 earnings estimate. “These kinds of things happen cyclically," he told the WSJ. "Genentech Inc. in 1995 went through their own discontinuity with Roche buying (a majority share). Virtually any company with any scale has gone through this kind of event. It’s our turn.” Well yeah, though he neglected to mention that a big chunk of the company's product line has been the subject of investigations by Congress and the FDA. That doesn't just happen. Amgen plans to cut the jobs through attrition, hiring freezes and some sort of voluntary retirement program. Layoffs will follow. Obviously, there's concern in Thousand Oaks land, where Amgen is based. Here's more from the NYT:

The layoffs would be a huge shock to the company, founded in 1980, which has experienced a virtually continuous rise in sales and profit since its first product, the anemia drug Epogen, reached the market in 1989. Amgen is the world’s largest biotechnology company by sales, with revenue of $14.3 billion last year. But recent studies have suggested that Epogen and Amgen’s newer anemia drug, Aranesp, could be harmful if overused, causing blood clots and heart attacks and perhaps hastening death or making cancer worse. Sales of Aranesp, the company’s biggest-selling drug, fell 10 percent in the second quarter worldwide and 19 percent in the United States alone. Amgen stock price has fallen sharply this year, putting additional pressure on management. Sales are expected to decline even more after a final decision released on July 30 by the agency that runs Medicare. The new policy will sharply curtail reimbursement for use of Aranesp and for Procrit, a drug made by Amgen but sold by Johnson & Johnson.