A history of: Amgen
Amgen today is the biggest biotechnology company in the world, but its plush headquarters, global reach and tens of thousands of employees belie its humble origins. Founded in 1980 as Applied Molecular Genetics, it initially resembled the type of Californian start-up more common in the computer industry than the traditional big pharma behemoth. Much like the straightened origins of Apple or Microsoft, Amgen combined a relaxed attitude with determination and flexibility in dealing with limited resources. The CEO’s office was housed in a trailer to save on lab space, and each scientist had a mere two feet of lab bench each. Members of staff “drove beat up cars and rode their bikes to work” and took part in a company culture that would work late, but also enjoy a beer and pizza whilst discussing their work.¹
Despite the informal ways of working, the company was in no way amateurish. It was backed initially by several million US dollars in venture capital funding and its first CEO, George Rathamann, was a former Vice President at Abbott. The Californian location put Amgen close to academic centres such as UCLA and provided access both to the academic community in the area and bright young graduates seeking employment. Its focus in those early days was on recombinant DNA technology, an exciting innovation that had only succeeded in producing its first medication, recombinant human insulin, in 1977. And perhaps unsurprisingly, given its cutting edge research interests, the company recorded losses for five years straight, forcing Amgen to issue stock several times to raise the capital needed to finance further research. Even when it did break even in 1986, the major source of income was research grants from other, bigger pharma companies, rather than the production and sale of its own medications.
“Founded in 1980, it initially resembled the type of Californian start-up more familiar in the computer industry than the traditional big pharma behemoth.”
But by this point the breakthrough that would cement Amgen’s future had already been made. In 1983 Amgen scientists managed to isolate the human erythropoietin gene and produce the recombinant protein in hamsters. Erythropoeitin is a hormone that stimulates red blood cell creation, and the drug gained an indication for anaemia associated with kidney dialysis in 1989. FDA approval wasn’t an easy ride, as protracted patent wrangles with competitors who had developed similar medications, and an attempt by Congress to remove its orphan drug status, made getting the drug to market a challenge. But when it finally arrived, and Amgen won its legal battles, its blockbusting status as the first in its class enabled Amgen’s sales revenue to leap from $2.8 million in 1989 to around $140 million in 1990. Epogen was named Fortune magazine’s ‘product of the year’ in 1989.1 Having set the stage for the company’s continued growth, Rathmann retired in 1990, handing over to George Binder who became CEO and chairman.
The next drug Amgen brought to market in 1991 was Neupogen, a recombinant version of G-CSF (granulocyte colony-stimulating factor), that could be used to treat chemotherapy-induced neutropenia in cancer patients. As with Epogen, the initial discoveries that laid the basis for the drug had been made well back in the 80s, when the company was unprofitable. That decade of investment and research was paying off. In 1992, Amgen hit the billion dollars sales mark and doubled this again four years later, at the same time markedly expanding its R&,D operations, doubling its investment in this part of the business from 1992 to 1993. Throughout the 1990s, Amgen continued in the same vein, investing heavily in R&,D, expanding its sales and bringing out new medications such as Infergen, an anti-hepatitis C medication, in 1997.
A new CEO, Kevin Sharer, took the helm around the turn of the millennium, and rapidly moved to capitalise on the research groundwork laid by his predecessors. Amgen’s focus on blood cell medications continued in the 2000s, with the approval of Aranesp for the treatment of anaemic patients with chronic renal failure, and the 2002 approval of Neulasta for the same indication as Neupogen. It was also breaking into the rheumatology disease area with the approval of Kineret in 2001, and its acquisition, through the merger with Immunex a year later, of the anti-TNFmonoclonal antibody Enbrel. Amgen’s oncology portfolio achieved a number of successes too, with Kepivance being approved for oral mucositis as a side effect of chemotherapy in 2004, and monoclonal antibody Vectibix approved for colon cancer in 2006.
“A key part of Amgen’s strategy was to broaden the indications for those drugs it already owned…”
A key part of Amgen’s strategy was to broaden the indications for those drugs it already owned, with Epogen successfully obtaining indications for anaemia in cancer patients, Enbrel broadening from rheumatoid arthritis to psoriasis and other conditions, and Neupogen being indicated for chronic neutropenia and transplant patients as well. Another key plank of Amgen’s remarkable growth in the 1990s and early 2000s was through mergers and acquisitions. It focused on other innovative biotechnology companies, acquiring Synergen in 1994, Immunex in 2002, the owners of Enbrel, Tularik in 2004 (who focused on the biology of transcription factors) and Abgenix in 2006. As seen with the case of Enbrel, this allowed it to broaden the pipeline beyond those molecules discovered in-house, much as the more traditional pharma companies were doing at this time.
By the mid 2000s Amgen was already a giant. It was already easily the biggest biotech company in the world, in 2006 it was several times the size of the next largest (Genzyme) in terms of revenue, and twice the size in terms of employees. In its Thousand Oaks hometown in California, it was far and away the biggest employer, with 1 in 10 of the town folk working for Amgen. It built sites throughout Europe and Asia, and became even large enough to register on the list of top pharma companies, rating as the 15th largest in the world in 2008.
Its “big pharma” size has been accompanied by some big pharma problems. The company has felt the same pipeline squeeze that the more traditional pharma companies have had for a while. It has experienced some wobbles in share price and profit rates in recent years, as its anaemia drugs have been placed under FDA restrictions due to suspected side-effects and Medicare reduced reimbursement for them. 2007 was something of a crunch year for the company, which seemed to be overextended, forcing the company to make considerable layoffs, totalling up to 15% of their total workforce, and cut back heavily on capital expenditure. Most recently, Amgen faced the kind of legal challenges normally reserved for big pharma, with allegations of allegedly violating anti-kickback rules by “overfilling” Aranesp vials.
“In its Thousand Oaks hometown in California, it was far and away the biggest employer, with 1 in 10 of the town folk working for Amgen.”
However, the company seems to have weathered those storms for the time being, and the recent approval of Prolia, its new monoclonal antibody for use in osteoporosis, is giving shareholders some cause for comfort. Amgen’s innovative and flexible approach seems to be continuing into the new decade, it is widening its research to include small molecules as well as the more traditional biologicals, and it retains one of the highest ratios of R&,D spend to income of the Fortune 500 companies. Biotechnology certainly promises many discoveries for the future, and Amgen will surely be as key a player in the next 30 years as it has been in the last 30.
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About the author:
Robin Walsh is a freelance writer on healthcare and the pharmaceutical industry. He is currently training to be a doctor, and previously worked in medical communications. He can be contacted at Robwalsh9@hotmail.com. He is also chairing the debate “What Science Can and Cannot Tell Us” at the Battle of Ideas festival in London on the 30th and 31st of October. For further details, follow this link:- http://www.battleofideas.org.uk/index.php/2010/session_detail/4087/.
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