Amgen seeks to ease investor concerns as staff cuts loom
The biotech said that private insurers are unlikely to reduce coverage for its anemia drugs among elderly and disabled cancer patients, as Medicare has done, Reuters reports. The conference call came just days after CEO Kevin Sharer announced a plan to pink-slip 14% of the workforce and slash capital spending amid a sales decline.
CMS lowered its payments for erythropoiesis-stimulating agents (ESAs), including Amgen's Epogen and its top-seller Aranesp, last month, due to concerns about safety and overuse. With Medicare accounting for 40% of its anemia business and insurers the other 60%, yesterday's call was a chance for Amgen to reach out to investors nervous about a further slide.
James Daly, SVP of Amgen's North American commercial operations, said
The safety concerns arose earlier this year after FDA recommended a new black-box warning for ESAs. That put a crimp in revenue: Aranesp generated global sales of $949 million in the second quarter, down 10% from a year earlier. In the
Under Sharer's plan, he hopes to save more than $1 billion in 2008 with job cuts numbering as many as 2,600. While the CEO has publically rejected analysts' calls for a sales force consolidation, stating the force was already lean enough and was warranted due to its specialization in nephrology and oncology, all areas appear to be on the table.
“At this point, it's premature to say what the impact will be on staffing levels,” an Amgen spokeswoman told MM&M. “We hope to minimize the number of staff impacted across the company through the use of attrition, hiring freezes and the voluntary transition program, which offers eligible staff members the opportunity to apply to leave Amgen and receive a severance package.”
The company also said it is expecting lower earnings this year.Amgen is not the only drugmaker feeling the ESA fallout. Johnson and Johnson saw sales of biologic Procrit skid 14% to $449 million in the June quarter, prompting a similar move to trim staff. Amgen , though, relied on its anemia business for nearly half of its $14.3 billion in 2006 sales.
European Commission regulators anticipate reaching a decision on a possible ESA label change by year's end, Reuters reports.