What Are the Different Methods of Corporate Downsizing?

Amgen was founded in 1980 by a group of scientists and venture capitalists. George B. formerly worked at Abbott Laboratories. Dr. Rathmann was one of the company's founders and served as the first chairman and CEO.

Amgen Corporation

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The company began operations in 1981, with venture capitalists and two other major investment companies raising a total of $ 19 million as startup capital. The company address is located in Thousand Oaks, California, which has a strong academic atmosphere, which is close to

The Empire Ballroom at the Hyatt Hotel in Midtown Manhattan is often used for serious and dreary luncheons. People don't usually say much at such luncheons, and they always snore. But on a Tuesday in late March, when Amgen CEO Kevin Sharer stepped onto the ballroom podium, the scene in front of him was like a rock concert. That day was the first time that this biotechnology leader held a "R & D Day" event. Nearly 500 investors and analysts flooded into the lobby. They and other participants scrambled to seize the position, looking forward to applauding the rally.

Schaller has done many things that have stirred these people's curiosity. Since assuming office in April 2000, he has been working on a major transformation of the company in Thousand Oaks, California, without touching the foundations of its highly regarded biotechnology company. It was a difficult balancing act that created new pressure while solving the company's diarrhea. The transformation involves all aspects of the company's business, including the introduction of new talent, new partners, and new production methods. For example, in the past three years, Schaller has recruited many senior executives from established pharmaceutical companies such as Merck and Eli Lilly. Roger Perlmutter, the head of research and development, is one of the most outstanding new recruits. He is very savvy. He borrowed the system of a large pharmaceutical company to establish a command and control process for drug research. The free creativity of technology companies combines with the more traditional and prudent approaches of its pharmaceutical competitors.

This is a new model that is being tested every day. But Amgen had no choice but to change. This biotechnology company has been developing well for most of the 1990s. In the early 90's, it launched two heavyweight drugs-the injectable protein drug Epogen (erythropoietin) and Neupogen (leukopoietin), with nearly $ 17 billion in sales. In 2003, Epogen had sales of $ 2.4 billion and Neupogen had $ 1.3 billion. With a very high profit margin, Amgen turned a large proportion of its turnover into cash, but its R & D expenses rarely translated into the new products needed to drive the slowing growth.

The entire pharmaceutical industry is currently struggling to restore production growth. Right now, Amgen's transformation from a beloved biotechnology company to a complete pharmaceutical company has received close attention from the entire pharmaceutical industry. According to the UK's Centre for Medicines Research, total drug R & D spending has doubled in the past decade, while the number of new drugs released has fallen by a third. Pharmaceutical companies such as Merck and Pfizer, carrying layers of bureaucracy, are desperately trying to replace heavyweight drugs that have lost patent protection.They have now become large and inactive marketing and Sales business. Biotechnology companies have been suffering from the downturn in the market for the past three years, and funding sources have gradually dried up. The scale of dozens of companies has shrunk, and some have even completely disappeared. In 1994, Millennium Pharmaceuticals, a biotechnology company, boasted that "everything is possible" on T-shirts issued to employees. After 7 years, the words on T-shirts became "focused execution" . Where is this like a slogan!

In recent years, some industry observers have determined that Amgen will be the biggest hope for the pharmaceutical industry to reverse the decline. This is even more true when Schaller is actively responding to the challenge to manage this huge and creative company. The reflection of these high expectations in reality is that Amgen currently has a market value of up to $ 83 billion, which is more than all pharmaceutical companies except the industry giants Pfizer, Johnson & Johnson and Merck. However, with the rapid expansion of Amgen ($ 8.4 billion in sales and $ 2.3 billion in profits last year), analysts have different opinions. The difference is whether Amgen has the potential to continue to guarantee a speculative biotechnology stock premium at a 30% annual increase in earnings per share. The recent target price of Amgen's stock has fluctuated between $ 62 and $ 90, which also reflects people's confusion. Some analysts have also significantly reduced their earnings forecasts recently.

Because of these circumstances, investors and analysts can't wait to rush into the ballroom of the Hyatt Hotel to hear what product information Amgen CEO can bring. They had high expectations, but they were disappointed. Schaller did not provide better prospects for profit, and more importantly, he did not bring news that surprised them, and did not announce a new heavyweight drug that would be very popular in the market. After the end of the day, Amgen's stock price fell more than 2 US dollars to close at 57.83 US dollars, which was 20% lower than the high price of 72 US dollars in July. A few days later, Schaller really brought important news. He announced that he had invested $ 1.3 billion to acquire a 79% stake in cancer professional biotechnology company Tularik. The market was largely unmoved. Some have expressed skepticism that mocking Amgen has become a big pharmaceutical company; others have criticized it as losing its vitality. However, the company's leadership remains confident in its ability to withstand skepticism and resolve criticism. "We just want to prove that a $ 80 billion company can still maintain that (biotech company) identity," Permut said.

Kevin Schaller held the top position when the market turned into a downturn. He is the new CEO of Amgen, but not a new employee of the company. He has been the chief operating officer of the former CEO Gordon Binder for eight years. During this time, he quickly became familiar with the biotechnology industry. He knew nothing about the industry until Binder recruited him from long-distance telephone operator MCI in 1992. He had previously headed MCI's $ 6 billion business marketing unit, but left the company after confirming he wasn't eligible for the top job.

After retiring from the Navy, aspiring Schaller started his business journey at McKinsey; soon, he switched to General Electric. There, the Iowaian worked as a senior consultant for mergers and acquisitions at General Electric. In 1989, at the age of 41, he got a fat in the GE engine department, but resigned on the first day of his appointment and unexpectedly jumped to MCI. Schaller attributed the decision to his youthful vigor. 3M's CEO Jim 8226; Jim McNerney, who was then working at General Electric's computer services department, remembered that Schaller was "energetic, optimistic, and enthusiastic", but easily emotional.

Perhaps because of his poor eyesight, Schaller did not become a navy pilot like his dad, but he had a keen eye that made him see that the times were about to change when he was the leader of Amgen. In 2000, although Epogen and Neupogen still had relative monopolies, Amgen had already begun researching products like Aranesp. This is a drug that treats anemia, which is more durable than Epogen, and can compete with Johnson & Johnson's major drug Procrit. But in 1985, Amgen, which lacked cash, reached an agreement with Johnson & Johnson to share the drug's global market). Amgen also plans to enter areas of intense competition such as inflammation and oncology. Schaller said: "We went from monopoly to competition, and I know no company has succeeded ... never," he smiled, and then said, "so I'm very concerned about this."

Schaller knew that Amgen's cherished corporate culture needed to change. The company's two previous CEOs, George Rothmann and Binder, were also the actual heads of the R & D department. During their tenure, research (laboratory work) and development (clinical trials) have been left out in the company. Marketers are not integrated into the drug development process at all. It's no accident that Amgen hasn't launched a new drug for nearly a decade.

Schaller firmly believes that if Amgen is to continue to develop, it must reform. In the eight years he has worked in the company's core divisions, he has found numerous redundant positions. After taking power, he began to reshuffle senior management, acting like an "airborne" CEO. Immediately after taking office, the new CEO cleared management positions. Half of the vice president positions were originally 40, and now half are gone. In order to speed up the company's change of old and new, he also recruited many new employees from the camp of large pharmaceutical companies. The competition for talent among these companies is extremely fierce.

George Morrow, 52, was one of the first employees to be added by Schaller, who was previously the head of GlaxoWellcome America (a $ 6.5 billion turnover) and took over Amgen Sales and marketing business. The author asked him: What's wrong with Amgen's commercialization process? He laughed and asked, "How long have you been here?" He said, there is no process, only a series of unrelated steps. To integrate these steps, he quickly established a product strategy team, led by clinicians and senior marketing representatives who will "hold the product."

However, Schaller's smartest hiring move was to bring in Permut. He was Amgen's first true R & D director. He spent four years at Merck, climbing to the position of executive vice president of drug development. Previously, he taught in the Department of Immunology at the University of Washington, and at the time enjoyed an excellent reputation in the tolerant academic circle. Stephen Williams, director of biotechnology recruiting at research firm Bench International, said, "He attracts people with honesty and scientific knowledge." At Merck, he led the development of anti-inflammatory drugs. Vioxx's team currently has sales of $ 2.5 billion. Like Morrow, 51-year-old Permut is facing an unobstructed environment, and the two teams of drug research and clinical trials do their own thing and don't interact. When he called the senior staff of the two teams together in April 2001, he said that this was the first time that so many people were sitting in the same room [Amgen's former research director, who left the company in 1997. Daniel Vapnek disagrees, claiming that during his tenure "the communication between the research and development departments was very good"].

When the research department met the development department, Permut found that a considerable part of the research project would never bear fruit. To his surprise, Amgen was conducting more research projects than Merck. As a result, Perlmutter cut half of them and injected research and development funds into the most attractive drugs. "What I want to do is to introduce the rigor and discipline of the best R & D institutions for Amgen without sacrificing its entrepreneurial spirit," Perlmutter said. "To do this, we need to introduce command And control mechanisms. "

Perlmutter set out to convene employees who were able to adapt to strict requirements and discipline. At a high level, he has two people who have known him since he came to work at Merck: Joseph Miletich, senior vice president of laboratory research and preclinical research; Beth Saiden Beth Seidenberg, senior vice president of development. Both are members of Amgen's executive committee, which means four of Amgen's 11 top-level officials are from Merck. Another is Hassan Dayem, director of information. Some people may question whether it is wise to recruit so many people from the difficult situation of Merck, but in attracting talented scientists, Merck has been smooth (retaining talent is another matter). Below senior managers, Amgen's business units are full of talent from big pharmaceutical companies.

60% of the employees in the R & D department came to the company after January 2001. Quickly recruiting new talent has a profound impact on the nature of the company. Mark Levin, CEO of biotech company Millennium Pharmaceuticals, headquartered in Cambridge, Mass., Which experienced rapid growth in the 1990s, says he often hires employees from former large pharmaceutical companies, But he prefers those who have been working in other biotech companies for some time, because this time allows them to eliminate old habits. Recruiters at biotech companies believe that this is not necessarily the case at Amgen, because today Amgen has more in common with large pharmaceutical companies in culture than it does with small biotechnology companies. Biotech headhunter John Phillip said, "It's easier to get into Amgen from Glaxo than to get into Amgen from a biotech startup."

Perlmutter's more rigid R & D operations approach may be necessary, but it has annoyed some employees. An Amgen employee from a large company who engaged in preclinical research said: "Scientific research has always been the top priority, and now everything has become a business decision." New employees often have layers of management for Amgen Be surprised. Amgen spent $ 625 million to build a beautiful and prominent new research and development center overlooking the Elliott Bay in Seattle. Victor Fung, deputy director of process development at the center, said there were so many people involved in decision-making that "I feel like a full-time switchboard operator who is in charge of connecting." The preclinical researcher added, "It's completely different from the company I worked for when I came."

Schaller said he totally disagrees with the claim that commercial motives have come to precede scientific research. Although he and Permut have heard some people feel uncomfortable about the depressing bureaucracy, they say it is a regrettable phenomenon in large institutions, especially for institutions that have grown so fast. As Amgen's culture changed, employees also moved in both directions. A Los Angeles-based venture capitalist said, "Some departures have never happened at Amgen before." Amgen's staff turnover rate was 5.2% in 2000, and is now 6.7%, a slight increase, but it is still lower than that of Big Pharma the company. So while the old employees who stay at the company may not like the new Amgen, some of them mocked it as "Merck of the West," but they are working to adapt to it.

Amgen's location has been both a treasure and a ferocious land, and it is located directly north of Malibu Beach in Santa Monica Hill. If the climate you live in is not pleasant enough, you are likely to think it is a treasure. It is said to be fierce because Thousand Oaks, northwest of Los Angeles, is a barren place for biotech companies. Amgen's base camp has been very desolate in the past, and many episodes of the TV series Gunsmoke were filmed there. Isolation has become a major feature of Amgen. Amgen's similar companies, such as Genentech and Genezyme, have long-term cooperation with emerging startups in their respective headquarters locations, but Amgen has hardly engaged in these and is satisfied with the large amount of banknotes brought by Epogen and Neupogen.

In dealing with some smaller biotechnology companies, Amgen gradually gained a reputation for being noble and even arrogant. These small companies are eager to use their inventions in exchange for Amgen's cash and products. A biotechnology consultant said, People are used to thinking that Amgen is difficult to access. It has two highly successful products, so they do nt seem to need to absorb new technology. (The company s third heavyweight product, rheumatism Enbrel for arthritis was obtained after acquiring Immunex for $ 10.3 billion in 2002).

Schaller made a quick decision after taking over, and the company must abandon this one-way strategy and should actively seek cooperation to strengthen production. However, the company's think tank has not realized that they have had trouble reaching an agreement. Until February this year, their bid for cardiovascular specialty company Scios failed, and Johnson & Johnson bought it. When Perlmutter contacted Scios, he found that the people in this company still held the previous view of Amgen, which was a great deal for him. "People outside don't know how different this company is now," he said. "We should go out and talk to people." So they rushed around, sending presentation materials to startups in Boston, San Francisco and Seattle Companies, they soon received a return: Amgen signed 68 agreements last year, compared with 40 and 25 in 2002 and 2001, respectively.

The deal that best embodies the company's new strategy is a partnership agreement signed with Tularik, an oncology specialist in South San Francisco, last year. Schaller recently agreed to acquire the biotech company. Oncology is the most popular area of drug development among biotechnology companies, and Amgen has invested more in cancer than any other specific medicine. Currently, Amgen is not focusing on drugs that have peripheral effects (such as eliminating infections in chemotherapy patients), but is developing drugs to fight the cancer itself. It has talked to Tularik about cooperation for years, but things didn't come to light until Permut brought a team to the San Francisco Bay Area in February 2003.

After the meeting, Perlmutter spoke privately with Tularik's chief executive Dave Goeddel. Godel was a pioneer in biotechnology. He was the first scientist hired by Genentech in 1978, where he studied the company's first drug, pancreatin. Tularik has already talked to two companies about its cancer gene exploration program. "This is unacceptable," Permut said. "We are your ideal partners." Less than a month later, Amgen offered a more attractive offer and signed the agreement. "The good thing about a small company is that you can act as soon as you decide. It's good to have a big partner that moves as fast as we do," Gödel said.

The agreement with Tularik also shows that Amgen is determined to enter the field of small molecule drugs. These drugs can be made into tablets and are currently monopolized by big pharmaceutical companies. In early March, Amgen received permission from the US Food and Drug Administration (FDA) to develop its first oral drug, Sensipar, which can treat a glandular abnormal disease called parathyroidism. Amgen's involvement in the small molecule field is of great significance for two reasons: first, it adds a treatment method for a special disease; second, the development of small molecule drugs is completely different from large molecule drugs, which is much more difficult and requires human and material resources. A lot of input. Schaller believes that such investment is necessary to secure Amgen's future.

The R & D Day event in New York is the first such display for Amgen, as its previous product development is not to be bragged about. Aranesp (the longer-lasting Epogen drug) and Neulasta (the improved Neupogen drug released in 2002) have achieved amazing success, but both drugs are variants of the same research topic. Amgen also expanded the use of rheumatoid arthritis drug Enbrel, which reached the level of a heavy-weight drug last year ($ 1.3 billion in sales) for the treatment of ankylosing spondylitis and psoriasis arthritis (45 million in the United States) Adults suffer from psoriasis of the skin, 23% of whom have this arthritis). Amgen hopes to use it later this year to treat psoriasis. And Sensipar is the only product launched by the company in two years. Rival Genentech has recently obtained a number of high profile drug manufacturing licenses, such as Avastin, a drug for rectal cancer. Last year, it had as many as 20 projects put into production, and the total R & D expenditure of these projects was less than half of Amgen's 1.6 billion US dollars. "In terms of (Amgen's) size, it hasn't made much progress," said Burt Adelman, research director at one of Amgen's rivals, BiogenIdec.

That must change! In the first three years of Permut's tenure (2001-2003), Amgen has developed 23 projects (meaning starting the preclinical research process), one more than the total number of projects launched in the previous decade. . The most promising prospect is AMG162, a single-body antibody against osteoporosis, which will enter clinical phase III trials this year (after the acquisition of Tularik, five more projects in clinical trial stage will be put into production). In this year's clinical trial, Amgen's number of patients to be recruited increased from 27,700 in 2002 to 50,000. "We are a very productive company compared to many large pharmaceutical companies," Perlmutter said.

What do people think of the dual characteristics that are the core of Amgen? Amgen's executives want the company to have both. They would be happy to make such comparisons if they compare favorably with large pharmaceutical companies; but if it involves something like "culture", they will flatly refuse to make any comparisons with large pharmaceutical companies. We can understand that if Amgen or other biotechnology companies are labeled as "big pharmaceutical companies", they will fall into fear, these marks bear the notoriety of "creative creativity". "I see Amgen as a pharmaceutical company now," said an employee doing preclinical trials. "If the company is to succeed, it must take this step."

Visitors to Schaller's office will see the huge modern art portrait of General George A. Custer on the wall. The general looks down gloomily, reminding Schaller to never underestimate his opponent . After reading a biography of British Navy hero Horatio Nelson of writer Edgar Vincent last year, Schaller found a new role model and made a portrait of Nelson. Nelson is known for his defiant orders and the courage to take risks, but unlike Custer, he will not rush into danger. Vincent believes that Nelson is also very good at communicating and cooperating, and will use his political skills to win the support of his innovation plan. From this point, this is exactly what Schaller did at Amgen-after obtaining the unanimous consent of everyone, then take bold and rapid actions to take the risk of serious estimates and huge returns. In this regard, the entire pharmaceutical industry will wait and see.