Amgen, one of the biggest success stories of the biotechnology industry, has denied it is in crisis, despite facing a series of setbacks that pose the greatest challenge to the company in its 27-year history.
In an interview quoted in The New York Times, Kevin Sharer, Amgen’s chairman and chief executive, said: “We are not in crisis, that’s for sure.” In a crisis “people don’t know what to do. People’s hair is on fire. Confidence is challenged. We’re not there”.
But the paper reports that some analysts are comparing this once charmed company to a lumbering pharmaceutical company that leans too heavily on an aging portfolio.
“The barrage of bad news that’s come out on Amgen in the past 60 days is absolutely unprecedented in the biotech sector,’ said Mark Schoenebaum, a biotechnology stock analyst at Bear Stearns.
But a series of setbacks have posed a serious threat for the future of the company. Amgen shares took a recent battering on the news that the firm had discontinued a late-stage trial of Vectibix (panitumumab) designed to prove the drug's efficacy as part of a potential first-line treatment for patients with colorectal cancer.
And further dding to its woes, the US Food and Drug Administration has said that new safety and dosage information needs to be put on the labels of its two blockbuster erythropoiesis-stimulating agents, Aranesp (darbepoetin alfa) and Epogen (epoetin alfa), after studies suggested the drugs might cause heart problems or hasten the deaths of cancer patients. Preliminary data from an independent study looking at Aranesp for an unapproved use in patients with head and neck cancer undergoing radiotherapy have also showed the drug fared no better than placebo.
The New York Times cites a report by Citigroup analyst, Yaron Werber, in which he predicts that Amgen’s revenues will grow only 4% a year through 2010, well below its 20% annual sales growth from 2003 to 2006.
The company is said to have reacted to the mounting uncertainty about future sales by taking cost-control steps, postponing the opening of a new factory in Ireland and cutting back on recruitment. Amgen has also revealed that its chief financial officer, Richard Nanula, it to resign to “pursue other opportunities” but would stay on for three months to allow his successor to bed in.
While some industry commentators are beginning to raise questions about Amgen’s once prized management, Amgen executives have defended their strategies as being driven by science and sound medical considerations.