Business
Amgen moves backward
10:27 AM EDT on Wednesday, September 26, 2007
PROVIDENCE — Drug maker Amgen Inc. has long eyed its Rhode Island complex as a potential location for the production of a second medication. But a day after the company announced hundreds of layoffs in the state, the prospect that a new blockbuster pharmaceutical will reverse the plant’s fortunes appeared uncertain.
No new drug is slated to be produced in Rhode Island, where Amgen manufactures Enbrel for the North American market.
With sales of Amgen’s top-selling anemia drugs — Aranesp and Epogen — in a free fall, there is suddenly spare capacity in other Amgen plants and less money for retrofitting the facility in Rhode Island.
“If there was a promising candidate for BioNow right now, we’d stay open so we could get it in there,” Amgen spokesman Larry Bernard said yesterday, referring to Amgen’s original Rhode Island plant, scheduled to close by the end of the year.
Amgen also operates manufacturing plants in Colorado, Puerto Rico and California, and it plans to build a facility in Ireland.
In the past, the company has suggested that Rhode Island had a strong chance of being assigned the launch of any new product. But yesterday, Bernard sought to dampen expectations. “We have a vast manufacturing network,” he said.
The closure of BioNow is costing the state about 450 jobs, the most layoffs since June 2006, when Rite Aid Corp. bought the drugstore chain Brooks-Eckerd and fired 615 of its Rhode Island employees.
The layoffs at Amgen, expected to be completed by early November, come after an undisclosed number of its staff in Rhode Island accepted an early retirement package. Many of those employees may also be flooding the local job market.
“Obviously, it’s very disappointing,” Governor Carcieri said yesterday. “These are 450 good jobs. This is a sad adjustment that they’re having to make.”
Yesterday, the Rhode Island Department of Labor and Training began planning “orientation” events for former Amgen employees to learn about unemployment insurance and begin their search for new jobs in advanced manufacturing.
State officials are considering whether to apply to the U.S. Department of Labor for aid to help the displaced workers, Laura Hart, a spokeswoman for the state, said yesterday.
Although Amgen is by far the largest biomanufacturer in the state, Hart predicted that several companies will fight over Amgen’s highly trained workers.
“It’s like when the popular girl breaks up with her boyfriend,” Hart said. “Our experience in the past is that biotech workers are highly desirable. They have transferable skills.”
It is not clear, however, when Amgen itself might be hiring again.
After years of steady growth, the company is now being compared to older pharmaceutical companies that have struggled to develop drugs to replace popular medications that lost patent protection.
Eric Schmidt, a research analyst at Cowen and Co., said Amgen has only one potential blockbuster in its pipeline — a drug called Denosumab designed to reduce bone breakdown caused by tumor cells. The company is also testing whether the medication can be used to treat postmenopausal osteoporosis, a potentially huge market.
“I think Amgen’s pipeline is OK, but it doesn’t seem like it’s top in its class,” Schmidt said. “To be a growth company Amgen’s size, it takes more than one blockbuster.”
Amgen says its pipeline is “robust.” In its most recent annual report, the company listed nine drugs in the final stages of clinical trials, including therapies directed against cancer, diabetes and other illnesses.
But in addition to staff layoffs — including 675 employees at the headquarters in Thousand Oaks, Calif. — Amgen’s recent cost-cutting efforts are targeting research, potentially sapping its ability to dig itself out of its current malaise.
In a statement last month, Amgen’s chief executive officer Kevin Sharer said the company is “making choices about the highest priorities in research and development.”
Investors have not shown confidence in Sharer’s plan. Company stock closed yesterday at $54.88, down 41 cents, or 0.7 percent. The share price has dropped nearly 40 percent from its two-year high of $84.42 in November 2005.
“I think it’s a rough patch that has been a longtime coming,” Anne S. De Groot, CEO of EpiVax Inc., a small biotechnology firm in Providence, said yesterday. “The general sense in the field has been that there’s been a lot of reliance on existing drugs.”
But that drought might not last long, De Groot said. Amgen is pursuing promising studies of potential new uses for Embrel, she said, and it is well along on its next group of blockbuster medications.
“It’s an amazing company,” De Groot said, “and they have a lot of things in the pipeline.”
In brief remarks outside his office yesterday, Carcieri agreed.
“The company is having a tough patch right now. This happens in business,” Carcieri said. “Hopefully they’re as good a company as we think they are and they’ll rebound.”
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