If Thousand Oaks is a company town, there is no question which company is in charge Amgen Inc.
The world's largest biotechnology firm is Thousand Oaks' largest employer, with more than 2,400 workers. And those employees earn an average annual salary of $60,000 more than double Ventura County's average household income of $26,000. As those thousands of relatively fat payroll checks ripple through the economy, and vendors prosper by supplying Amgen directly, all manner of local businesses are being buoyed.
"Amgen has a huge impact on the area's businesses," said Bob Cooper, director of the Ventura County Economic Development Collaborative, a local business group. "It is a principal source of income for much of the business in the area."
If Amgen has been good to Thousand Oaks, it has been equally beneficent to investors. The firm tops the Business Journal's list of the most profitable companies in the San Fernando Valley.
The list for which public companies in the San Fernando, Conejo and Antelope valleys were considered for inclusion ranked the companies based on return on equity averaged over the past five years.
Amgen ranked No. 1 with an average ROE of 33.61 percent, beating out Foundation Health Systems Inc. at 27.31 percent, On Assignment Inc. with 26.58 percent, Superior Industries International Inc. with 24.7 percent, and Newhall Land & Farming Co. with 23.79 percent.
Return on equity is one of the most popular yardsticks used by investors to measure how effectively a company utilizes its investors' capital. The percentage is calculated by dividing net income before extraordinary items by the average shareholders' equity at the beginning and end of a given period. It demonstrates, in essence, how much money the company has made in relation to the total amount of money investors have put into it.
Founded in 1980, Amgen has been fueled this decade by two drugs in which it has a virtual monopoly: Epogen (released in 1989), which fights anemia in patients with kidney disease, and Neupogen (released in 1991), which helps stave off infections such as those contracted by AIDS and cancer patients.
The company's sales and profits grew rapidly in the early 1990s, but they have tapered off recently, as the markets for its two drugs have matured and the market for its third drug a hepatitis combatant called Infergen that went on the market late last year is relatively small.
Amgen's 1997 revenues were $2.4 billion last year, up 9 percent from 1996 but nowhere near the triple-digit growth it was enjoying in the early 1990s. Even more seriously, the company's net income actually slipped a bit in 1997, dipping to $644.3 million ($2.44 a share), compared with $679.8 million ($2.42) in 1996.
While the company's recent slowing has tempered the enthusiasm of Wall Street analysts, the Thousand Oaks business community remains as excited as ever.
That's because Amgen is responding to the slowdown by dramatically beefing up its R & D; staffing levels, hoping to get another hit drug on the market soon.
The company is adding about 400 employees this year and expects to continue adding several hundred a year for the next several years, said company spokesman David Kaye.
Most of those new hires will be highly paid scientists devoted to researching and developing new products. Amgen has nine drugs in clinical development, and Kaye said the company's continued growth depends on the success of these products.
The concentration of highly paid Amgen employees in the Thousand Oaks area has led to significant expansion and creation of commerce in areas like retail business and housing, according to local business people.
There are no data on how much business Amgen's presence actually has triggered, but there are numerous businesses that exist largely or solely because of Amgen, according to Jack Dwyer, vice president and manager of the Westlake office of Capital Commercial Real Estate Services Inc.
"Many of my clients are looking for sites to set up businesses because Amgen is in the area," Dwyer said.
For example, Dwyer is helping a developer find a suitable site to build a hotel in the community, specifically because of perceived demand for such a hotel by Amgen.
Also, within half a mile of Amgen's 2.2 million-square-foot office park, a 750,000-square-foot retail center is now under construction. Dwyer said the project which will include Target and Home Depot stores, among others is largely intended to serve the needs of Amgen employees and their families.
To staff the various businesses catering to Amgen employees, new jobs have been created. In fact, for every new job that is created at Amgen, another 1.5 jobs are created somewhere else in the community, according to a study by the Ventura County Economic Development Association.
That means that Amgen's growth since the end of 1990 when it had 807 employees has led to the creation of about 4,000 jobs elsewhere in the community.
Kaye said construction is one industry into which the company has pumped a lot of money; nearly all the 37 buildings Amgen occupies on its 117 acres of land were custom built. He said there are currently five new buildings under construction on the property, all of which are being built by local contractors.
Area real estate brokers said the housing market also has been bolstered by the influx of scientists and other new employees with specialized skills. Though those employees are often recruited from outside the area, once hired, they become part of the population.
According to Dwyer, there have been enough Amgen transplants to the area to cushion downsizing that hit the market earlier this decade. The increases in Amgen jobs in the early and mid-1990s helped make up for job losses in industries like aerospace during those years, Dwyer said.
"Other areas felt the recession substantially worse than the Thousand Oaks area," Dwyer said.
But one thing Amgen has not brought to the community is other biomedical businesses, a fact that has perplexed onlookers.
"Amgen is like an island unto itself," said Ahmed Enani, executive director of the Southern California Biomedical Council. "You don't see any (biomedical) firms popping up around them or moving to be near them."
Enani said he is surprised the company hasn't been a magnet for others, and said he does not know why none have moved in nearby.
In addition to the benefits the community receives from Amgen's high-salaried employees, Thousand Oaks and other areas profit from the company's charitable activities.
"Amgen is one of the best corporate community members I've seen in a long time," said Penny Bohannon, special assistant to the president of the Ventura County Economic Development Association.
The company contributes about $1 million a year to education, social services, performing arts and environmental causes primarily in Ventura and Los Angeles counties.