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Amped-up financial transactions continue to roil the industry as Amgen announces a big layoff
It’s beginning to look like a year to remember among Big Pharma companies; when the dust settles, the picture that is emerging is a higher concentration of biotech companies—and jobs—in the leading regions of the world, and realignments of business interests. Not a change in the industry’s direction, but a change in the leading players.
The latest headline news is Amgen’s announcement of a restructuring that will cost an estimated 2,400-2,900 jobs—10-15% of its global workforce—while closing research and manufacturing centers in Washington State and Colorado. For once, a major layoff announcement like this is not being accompanied by laments over a “troubled” pharma industry, and that might be in part because Amgen simultaneously announced a very good quarter, with sales up 11% and net income by 23%.
This is happening against a backdrop of frenetic M&A and partnering activity among leading pharma companies. Last week, AbbVie announced higher-than-expected sales of Humira, its rheumatoid arthritis treatment, just after getting agreement to acquire the UK’s Shire Pharmaceuticals in a $55-billion deal. In June, Merck was the winner in bid to buy out hepatitis C producer Idenix Pharmaceuticals for nearly $4 billion. The failed mega-merger between Pfizer and AstraZeneca has led both companies into their own deals: Pfizer committed $635 million to buying Baxter International’s vaccine portfolio, and another $260 million to acquiring InnoPharma, Inc., a sterile-injectables generics manufacturer. AstraZeneca has signed an agreement with Almirall for $835 million up front, and up to $1.2 billion more over time, for the latter’s respiratory disease franchise; it also has gone forward with a $500-million plan to build a new headquarters in Cambridge, UK. Nevertheless, there are still rumblings in the investor community that the Pfizer-AZ deal could be revived. Both that and the AbbVie deal were driven, in part, by the attractiveness of “tax inversion,” when the acquiring US company can move its HQ to the acquired non-US company for a tax advantage.
Both the AZ headquarters commitment and the Amgen retrenchment indicate a continuation of more concentration of biotech and pharma activity in the top research locations worldwide. Public statements from AbbVie indicate that its operational headquarters will remain in the Chicago area, and there has been no indication that layoffs will be scheduled directly from the merger.