Business
Amgen cuts work-force reduction plan to 300
01:00 AM EDT on Thursday, October 25, 2007
Drugmaker Amgen Inc. fired 300 of its Rhode Island employees yesterday, by far the biggest layoffs at its West Greenwich complex since the company arrived in the state five years ago.
But the layoffs are significantly smaller than Amgen announced last month. The company had said it would cut its 1,600-member staff here by 450.
That plan changed following an internal analysis of the demand for the drug Enbrel, produced for the North American market at two plants in Rhode Island.
One of those plants is still scheduled to close by the end of the year as part of a company-wide cost-cutting initiative. But the company analysis determined that the planned layoffs in Rhode Island might jeopardize efforts to greatly increase Enbrel production at the surviving plant.
“It was a result of a recent review of Enbrel supply and demand,” Amgen spokesman Larry Bernard said yesterday. “It turned out we needed another 150 people.”
Enbrel sales rose 16 percent in the third quarter, to $821 million, up from $705 million during the same period last year, Amgen announced late yesterday.
That increase reflected growth in sales in both the dermatology and rheumatology markets, according to the company.
The displaced employees were dismissed in conversations with managers yesterday. They were given a severance package that includes at least 24 weeks of pay, a temporary continuation of health insurance and career counseling, Bernard said.
Amgen, based in Thousand Oaks, Calif., has also offered a voluntary buyout package to cull its Rhode Island staff. The company has not disclosed how many employees opted to resign under that program. Those employees will leave Amgen by Nov. 16.
“Our goal is to treat all impacted staff in a manner as respectful as possible,” Bernard said. “I believe we have done that.”
In all, Amgen is laying off 1,500 employees across the country, part of an effort by chief executive officer Kevin Sharer to cut costs by $1.9 billion.
The layoffs in Rhode Island came one day after a favorable ruling in federal court in Boston, where a jury found that rival drugmaker Roche Holdings AG had violated Amgen’s patents for anemia drugs.
That decision, if upheld on appeal, will delay additional competition in that market for six years.
But overall, Amgen is still suffering from sharp declines in sales of its anemia medications, brought on by a study casting doubt on the safety of the medications Aranesp and Epogen. Those drugs make up half of Amgen’s $14.3 billion in annual revenue.
In its third-quarter earnings report, released yesterday, Amgen said sales of Aranesp were down 23 percent, and sales of Epogen had dropped by 5 percent.
Despite increased sales of Enbrel, total U.S. sales of Amgen drugs were down nearly 2 percent.
Net income for the quarter was $201 million, compared with $1.1 billion in the same period last year.
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