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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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October 14, 2011

Amgen: Brace Yourselves

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Posted by Derek

Amgen is out today speaking the sort of language that we've all come to fear. It appears that the local Ventura County Star picked up some rumblings from inside the Thousand Oaks headquarters, and when they asked the company about it, they got this:

"We are currently evaluating some changes within our Research & Development organization to improve focus and to reallocate resources to key pipeline assets and activities. . ."

Details to come on October 24th, when earnings are announced. But I have to say, "improving focus" is rarely a sign of good news.

Comments (44) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. Student on October 14, 2011 12:08 PM writes...

But but but they approved a dividend and expanded the board of directors.

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2. Anon on October 14, 2011 12:35 PM writes...

How does it go: toot toot toot, another one bites the dust?

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3. Anon on October 14, 2011 2:21 PM writes...

No of course "improving focus" is only a bebefit when applying to ADD children, not companies.


Do we KNOW this is a euphemism for cutbacks? Or are they placing better focus and bets according to risks and returns? Their pipeline seems to have exploded into many therapeutic areas for P1 (10+) while P2 and P3 have six and three areas, respectively. Sometimes you recognize you don't know what you don't know

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4. HEADS_UP on October 14, 2011 2:44 PM writes...

This is minor news given the mass layoffs so far. It pales in significance to what the US govt will be doing to make the chemistry job market twice as miserable in the next year or so.

As you all are aware there is a massive shortage of chemists in the United States which our politicians feel is undermining the nation's competitiveness. This belief is shared by both republicans and democrats.

Part of Obama's job plan (which he is now moving to pass piecemeal) is the granting of AUTOMATIC green cards to all foreign graduates in the sciences. Both parties want this particular provision.

Given that the academic sector is five times larger than what industry can provide jobs for, this will no doubt destroy the present and future prospects for almost all US chemists.

Get that backpack and wool blanket ready for a life on the street folks!

www.economicpopulist.org/content/what-happens-when-president-outsources-job-creation-multinational-corporate-executives

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5. Anti Heads_Up on October 14, 2011 3:01 PM writes...

Heads_Up: you are full of sh&&. Your link is nothing but another source of misinformation. The presidents jobs plan does not have anything on green cards!!!!!!!!!!!!!!!!!!!!
Will rethug lobbyists try to do this? Probably.

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6. Anon on October 14, 2011 3:04 PM writes...

Woot at #4 I'll be able to get a shot at Battery chemistry and electrochemsitry as a whole while being Canadian

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7. Ex-Amgenite on October 14, 2011 3:10 PM writes...

Roger announced earlier this week that 10% of R&D will be cut with the largest reductions targeting discovery research. All to please clueless Wall Street analysts so that management can further enrich themselves through endless equity grants. This is what the death of a once-great company looks like!

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8. pete on October 14, 2011 3:17 PM writes...

press her in SF mentioned earlier that local Amgen R&D may be in the crosshairs -- One more glum note in the local biotech scene

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9. dearieme on October 14, 2011 4:43 PM writes...

What would be interesting to know is whether this sort of thing is industry-specific - just part of the Gale of Creative Destruction - or country-specific - the end of the American Empire - or is so widespread that it's a sign of a whole civilisation falling into a Dark Age.

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10. pfchemist on October 14, 2011 6:18 PM writes...

"improve focus" is a good euphemism - I once read about someone who was laid off being told they had been "upgraded" to seek new career opportunities! HR speak.

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11. Anon on October 14, 2011 7:47 PM writes...

The "Working as a Chemist" list of despair will probably gain some fresh entries....

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12. anonymous on October 14, 2011 7:49 PM writes...

@#7
By Roger, do you mean Perlmutter?

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13. Anonymous BMS Researcher on October 14, 2011 9:50 PM writes...

Some get the elevator, some get the shaft...

http://www.fiercebiotech.com/story/amgens-sharer-wins-big-peer-benchmarking-drives-ceo-pay/2011-10-04

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14. Ex-Amgenite on October 14, 2011 9:56 PM writes...

@12 Yes.

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15. RD on October 14, 2011 10:41 PM writes...

Get out your labcoat and safety glasses and head to an occupation.

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16. eugene on October 15, 2011 8:22 AM writes...

You must improve your focus on finding an exciting new opportunity outside of Amgen.

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17. KW's hairdresser on October 15, 2011 8:28 AM writes...

@5
I agree that the comments regarding green cards are suspect at best. However, GSK has been bringing in paid "interns" from China on a yearly basis and laying off American chemists from the SAME department. Undoubtedly legal (something like that does not pass corporate legal scrutiny)but unethical in my opinion. But then again what does ethics have to do with anything?

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18. My 0.02 on October 15, 2011 9:52 AM writes...

@5 and 17,

IT companies are "pioneers" in that adventure. Microsoft and Oracle have been leading charge for many years in lobbying the increase in green cards and H1B visas so they can bring more paid "interns" from Chindia. Pharmas just start caught the wind of it.

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19. just another chemist on October 15, 2011 12:52 PM writes...

Trying to get back to the topic of the post, does anyone have a prediction of whether small molecules or biologics will bear the brunt of basic R&D cuts at Amgen?

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20. anonymous on October 15, 2011 1:45 PM writes...

@19 -
Well, we certainly can't call the Amgen small molecule research efforts a raging success now, can we?????

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21. Anonymous on October 15, 2011 2:09 PM writes...

The reality is that we have all gotten to the good old days when you could stay with the same company with job security. Those days are gone! Do not blame your management! Face the reality. For the chemists, why you think you would be entitled to a good job if the need is not there for your services?

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22. Yowsa on October 15, 2011 4:26 PM writes...

Cronyism and greed continues to inhibit Amgen

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23. Fred on October 16, 2011 7:59 AM writes...

And this in a company already noted over the years for a lot of "churn", to put it politely.

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24. anonymous on October 16, 2011 1:26 PM writes...

@ 22

Cronyism and greed continues to inhibit Amgen from inhibiting the right targets...

In terms of small molecules research, it's pretty discouraging.

The number of molecules in the clinic per med chemists is unfortunately not acceptable.

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25. Anonymous on October 16, 2011 4:37 PM writes...

Cronyism /narcissism/bias /favoritism/employee demotivation/labeling/ineffective management/incompetence are the hallmarks of Roche Nutley, NJ Med. Chem. Just ask anyone from Roche Nutley. If you are looking for a job in med. chem. and Roche is hiring, don't even consider it. You'll regret it. The place is going down....

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26. anon for this one on October 16, 2011 5:01 PM writes...

"The reality is that we have all gotten to the good old days when you could stay with the same company with job security. Those days are gone! Do not blame your management! Face the reality. For the chemists, why you think you would be entitled to a good job if the need is not there for your services?"

Yeah, I've been thinking about that lately in light of the last nine months in the world. Sure, chemists may be smart and resourceful and maybe can deal with getting laid off a lot, but most humans aren't. Most humans do expect relative job security and certainty for the future. A lot think they are entitled to it. Don't believe me? Look at Tunisia, Egypt, Syria, Greece, Spain, and now New York. It all sounds fine to say that we need to adjust to the new market, but I'm guessing that in the future the financial industry will have to throw billions at people to keep them in boring, steady jobs with a degree of future certainty just so they don't tear out a banker's throat. Much as Saudi Arabia is doing now by flooding Egypt and Yemen with billions in the futile hope that the hunger and unrest doesn't spread.

I'm sorry, but I don't think humans are evolved enough for today's market. Maybe in a few thousand years... but the instability and uncertain future has obviously risen beyond what the human species as a whole can support with the current gene mix. Too many people want a certain stability on a primitive level. This whole business with the Euro collapsing and the Arab world imploding/exploding will lead to a lot more problems for Pharma (and not only them) in the future.

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27. drug_hunter on October 16, 2011 5:20 PM writes...

ex-Amgenite refers to Amgen as a "once-great company." Is that a widely held belief among those in the know? I'm asking out of ignorance.

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28. bad wolf on October 16, 2011 6:49 PM writes...

#5,17,18--i don't know about the current bill but i've certainly heard from both sides of the aisle--including the NYT's left Krugman and Friedman--that we should offer green cards to all STEM graduates of US schools, or possibly the world. This has mostly been pushed by our friends in the computer world, and if you think your congressman is going to stand up to Silicon Valley lobbying efforts, good luck.

I guess brain-draining other countries to keep US pay rates down and PhD population up might prop up Social Security for a few more years?

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29. Anonymous on October 16, 2011 8:10 PM writes...

25 you certainly sound like a disgruntled current or former Roche Nutley Chemist. Please tell me which place is going up?

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30. Amgen oldtimer on October 16, 2011 9:31 PM writes...

Yes Amgen was a great company. Under George Rathman it was an awesome culture. For about 15 years, early 80's to mid-nineties, almost no one left. Attrition ran less than half industry standard. It was a vibrant, scientist driven culture of innovation. Team culture was strong, people supported one another, careers were nurtured, ethics were everyday stuff, not laminated speaking points. As a young scientist there, I awoke each day early and got off to work because my head was full of anticipation for the day.

The middle period was run by Gordon Binder. A decent man, but he set the seeds for future failure. He ran a tight ship financially, growing the company perfectly to beat estimates steadily, quarter over quarter, year after year. A lot of people got rich, but also complacent and no risks were taken with the revenue other than to support internal research. While that was a good thing, the senior team had lost some steam, and was also stubbornly resistant to the McKinsey minded management movement that was threatening all research organizations. While I think this was wise, lack of performance and suggesting no alternatives other than to do what we've always done led to the next disastrous phase.

Kevin takes over. In comes GE based performance systems, in comes BCG lead restructuring of R&D processes to generate "seamless alignment", incomes an attitude that R only costs money. Team culture evaporates, those that can manage up well shift around from function to function, with success claimed for new initiatives before any measure of impending failure. Scientists who have clarity about the folly, and speak up, are shown the door. New "superstars" are hired that have no track record of success (but amazingly are all friends!), and that is still true now after a decade at Amgen. ESAs are over-promoted, Hematocrit pushed to high and the fall begins.

Management structures bonuses based on revenue, so Amgen buys Immunex and enbrel, which produces a lot of revenue, less margin, pays too much, but pads bank accounts. Stock falls, so management changes incentive at low price to be aligned with shareholders, taking more money out of the company. In the end, company sheds something like 40-50B in market cap, lays off empoyees while the CEO buys 2 corporate jets and takes home about $250MM. Amazing pay for shedding that much company value. Amazing lack of concern for employees and patients. Amazingly different company than George Rathman led.

Great company, once.

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31. anonymous on October 17, 2011 6:40 AM writes...

@32 -
"Greed, for lack of a better word, is good"??????????????

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32. MIMD on October 17, 2011 10:16 AM writes...

"Improving focus" is a great thing when grinding telescope mirrors.

It is not a good thing when grinding employees' faces on the sidewalk.

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33. oldtimer on October 17, 2011 12:32 PM writes...

The cycle turns again. R&D as in the 60's (yes very oldtimer) is seen as an expense not an investment. In the 70s-90's it was seen as an investment. I fear that the wheel is stuck now and it will never be seen in that way again.

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34. goatleggedfellow on October 17, 2011 4:10 PM writes...

"Amgen's executive team has been credited with building sales for the bone drug denosumab,..."

Amazing they managed to do that all by themselves, without any employees actually performing the work. These Amgen execs are incredible!

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35. Anonymous on October 17, 2011 5:08 PM writes...

@29. Do you think handing out rubber chickens to employees is designed to motivate or demoralize? Hummm...I think the answer is clear, anywhere is going up relative to Roche....

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36. Anonymous on October 17, 2011 6:22 PM writes...

HR TROLL ALERT @ 29.

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37. MIMD on October 17, 2011 6:42 PM writes...

#29 I hope you get a really mean boss and then have a nice layoff yourself. Then you can come back and tell us all what a happy experience it was!

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38. Texarkana on October 17, 2011 6:48 PM writes...

#35: I've got to ask. What do you get a rubber chicken for?

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39. Anonymous on October 17, 2011 7:07 PM writes...

@38 Who knows...disagreeing with the queen bee or some other non-sense. The bottom line is that immaturity is active at roche...

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40. Just wondering..... on October 18, 2011 4:50 PM writes...

Anyone know how things are at Genentech since being taken over by Roche?

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41. Anonymous on October 19, 2011 9:16 PM writes...

40. Very good :-)

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42. Truth in complexity on October 19, 2011 10:03 PM writes...

Currently, the major problem facing industrial chemistry R&D is the notion that synthetic organic chemistry is a mature subject, and as such, is ultimately a commodity to be OS'd. The simple stuff certainly is! Low cost markets ultimately = simple chemistry.
While you can't change what the CEO's, the Board of Directors and their Hedge Fund puppet masters do, you can direct your individual chemistry efforts to harder targets that will likely prove to be better drug candidates. It would be interesting to see just how well the OS model works if, as individual chemists, we adopted a high complexity model in our day to day chemistry. My guess is it will fail with the current level of expertise.
So, next time you go to make a potential new blockbuster, ask yourself 'could this be made in China?' If the answer is yes, raise the bar.

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43. Iridium III on October 20, 2011 8:52 AM writes...

According to my inside and outside sources, it's been confirmed that as of yesterday AMGEN has eliminated ~ 380 jobs in its R&D restructuring plan.

http://www.fiercebiotech.com/story/amgens-will-axe-380-rd-staffers-it-trims-rising-costs/2011-10-20

http://www.xconomy.com/national/2011/10/19/amgen-confirms-380-layoffs-in-r-cuts-coming-to-seattle-sf-boston/

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44. anonymous on October 22, 2011 3:56 PM writes...

An excerpt from the Ventura County Star:

The world's largest biotechnology company has been criticized for its spending on research. This year, Reuters cited a research note by Baird analyst Christopher Raymond: "Amgen significantly outspends its peers on an absolute basis when it comes to R&D — in fact, no other biotech comes close. We think streamlining R&D could give Amgen's P&L (profit and loss) a nice face-lift."

Face it, scientists, you are part of the 99% that is subject to the whims of the financial robber-barons. Like duplicated chromosomes being pulled to opposite poles of a mitotic cell, more and more people are gravitating away from the middle class. Unfortunately, more people getting pulled towards the lower end of the socio-economic spectrum.

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