Amgen plans to reduce its headcount by 12-14% or 2,200-2,600 staff in an effort to "create operational efficiencies" and support R&D investments. These initiatives, expected to yield savings of between $1 billion - $1.3 billion in 2008, are in part, due to lower Aranesp sales. Restructuring charges are expected to be $600 - $700 million in 2007 and 2008, which includes $289 million for asset impairment and related costs reported in the second quarter.
With the restructuring, the company plans to improve its cost structure by reducing capital expenditures by approximately $1.9 billion during 2007-2008; closing certain production operations and rationalizing other facilities improve efficiencies; and determining the highest R&D priorities for future growth.
"At Amgen we have always been committed to investing in the future while squarely facing the challenges of today," said Kevin Sharer, Amgen's chairman and chief executive officer. "Recent changes in coverage rules and adjustments to Amgen's FDA approved labels for Epogen and Aranesp have and will adversely affect Amgen's revenue. These initiatives respond to that new reality by taking account of reduced revenues and appropriately lowering costs across the company. We will continue to strongly support our research efforts directed at development of new medicines for grievously ill patients. These changes will also position Amgen for success in 2008 and beyond."
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