Amgen has announced a restructuring plan that will initially include streamlining the organization, reducing layers of management, increasing managerial spans of responsibility, and beginning implementation of a revised geographic site plan. As a first step, the company will reduce staff by 2,400 to 2,900, beginning later this year and continuing through 2015, predominantly in the US. This represents approximately 12% to 15% of Amgen’s global workforce. The company will also close its facilities in the states of Washington and Colorado. At each site, the company is in discussions with third-parties about potential future use of the facilities.

At the same time, Amgen said it will expand its presence in the biotechnology hubs of South San Francisco, California and Cambridge, Massachusetts and retain its headquarters in Thousand Oaks, California with a reduced number of staff consolidated into fewer of the existing buildings. Company-wide, these actions will result in an approximate 23% reduction in the company’s facilities footprint.

These actions will result in pre-tax accounting charges in the range of $775 million to $950 million, primarily incurred in 2014-2015. The combination of these efforts will reduce operating expenses by approximately $700 million in 2016 compared to 2013, although most of the savings will be reinvested to support global launches of new products. The savings from these actions are reflected in the company’s 2014 guidance; 2015 savings are expected to be modest due to the timing of these actions during the calendar year. Amgen estimates that full-year 2014 revenues will be in the range of $19.5 billion to $19.7 billion.

As a next step, the company is evaluating additional efficiency initiatives, particularly in the area of shared services and other external expense categories to support its growth objectives. Amgen said it plans to review these initiatives, together with an estimate of resulting cost savings, pipeline progress, commercial plans, and performance against its strategic priorities during a business review meeting in the fourth quarter.

Source: Amgen