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Monday, Apr 15, 2024

Amgen to Lay Off 450, Citing Inflation, Prices

Thousand Oaks-based pharma giant Amgen Inc. said it would lay off approximately 450 employees, or nearly 2% of its workforce, the second such layoff round this year.

In announcing the layoff round, Amgen cited the threat of moves in Washington D.C. to limit increases in, or even cap, drug prices, as well as continuing inflation.

“We made these changes to realign our expense base in the face of intensifying pressure on drug prices and high levels of inflation so that we can continue to deliver value for our patients, staff and shareholders,” Amgen said earlier this month in announcing the move.

Under federal law for any layoff round exceeding 50 employees, Amgen was required to give 60-days’ notice to both the affected employees and state authorities, meaning the actual layoffs won’t occur until mid-May.

In mid-January, Amgen announced it was laying off roughly 300 employees – mostly on the commercial side of its business; at that time, the company said it made the move “to better manage against industry headwinds.”

An Amgen spokeswoman gave no details about which parts of the company’s business the current round of layoffs would be concentrated in.

According to Amgen’s annual 10-K filing with the Securities and Exchange Commission, the company reported having a total of 25,200 employees in more than 50 countries worldwide as of Dec. 31. The spokeswoman said the current workforce remains “above 25,000” even after the first round of layoffs.

Amgen has not been alone among major drugmakers in announcing layoffs. Workforce reductions have also taken place during the last few months at Basel, Switzerland-based pharma giant Novartis and New Brunswick, New Jersey-based Johnson & Johnson, among several others.

Last month, Amgen completed one of the largest corporate bond offerings in history, borrowing $24 billion to help fund its $28 billion acquisition announced in December of Dublin, Ireland-based Horizon Therapeutics, which had focused on developing drugs to treat autoimmune diseases. That acquisition is still in process, pending regulatory approvals in the United States, Ireland and other European countries.

Although Amgen didn’t reference this directly in its layoff announcement, the recent sharp rise in interest rates has meant increased borrowing costs for bonds, bank lines of credit and other forms of corporate financing. That means it will cost more for Amgen to pay back the bond package, which has put even more pressure on the company’s bottom line.

Amgen shares fell 2% on March 17, the first full trading day after news of the second round of layoffs. And Amgen shares have fallen 11.5% since the beginning of the year, even as the Nasdaq composite index has risen 12% in that period. (Amgen trades on the Nasdaq exchange.)

In January, Amgen reported fourth-quarter earnings of $1.62 billion on revenue of $6.84 billion, down 15% and 0.6%, respectively, from fourth-quarter 2021. For all of 2022, Amgen reported net income of $6.55 billion on revenue of $26.3 billion, up 11% and 1.3%, respectively, from 2021.

Looking ahead, despite the two rounds of layoffs announced so far this year, it’s possible Amgen could finish the year with more employees than it began. Besides any other hiring the company might do in other areas, most of Horizon Therapeutics’ approximately 2,100 employees could be added to Amgen’s payroll should the deal clear all regulatory hurdles and be finalized before the end of the year.

Hannah Madans Welk
Hannah Madans Welk
Hannah Madans Welk is a managing editor at the Los Angeles Business Journal and the San Fernando Valley Business Journal. She previously covered real estate for the Los Angeles Business Journal. She has done work with publications including The Orange County Register, The Real Deal and doityourself.com.

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