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Amgen to cut up to 2,600 jobs to save USD 1bn

The world's largest biotech Amgen has said it will reduce its workforce by between 2,200 to 2,600 jobs, or 12 to 14 per cent, in order to save USD 1bn

The world's largest biotech Amgen has said it will reduce its workforce by between 2,200 to 2,600 jobs, or 12 to 14 per cent, in order to save USD 1bn.

The cuts were prompted by the loss of Medicare reimbursement for certain cancer treatments for its best-selling anaemia drugs Aranesp and Epogen.

Amgen shares have fallen 26 per cent so far in 2007 when clinical data showed that its anaemia drugs raised the risk of death when given in high doses. Both Aranesp and Epogen are responsible for nearly 50 per cent of Amgen's total revenue, which in FY06 was USD 14.3bn.

for the first time in its 27-year history, close plants and cut capital spending in response to declining sales of its top-selling drug, Aranesp.

The job cuts, the first instituted in Amgen's 27 years of trading, are part of a plan to save money, as FY07 projected earnings will be lower than expected. In addition, payment limits by insurers and safety warnings from US regulators could wipe out USD 1.3bn in sales, according to analysts.

Amgen shares dropped USD 0.39 to rest at USD 50.20 in evening trading on 14 August. Earlier, they fell USD 0.73 to rest at USD 50.59 in regular NASDAQ Stock Market composite trading.

Amgen will take on a pre-tax charge in FY07 and FY08 of between USD 600m and USD USD 700m because of the cutbacks, according to the statement. It will close some production operations and reduce the size of other units to become more efficient, Amgen said. Capital spending will also be cut by USD 1.9bn during the two years to improve cash flow.

The companylowered its profit forecast for 2007 to USD 4.13 from USD 4.23 a share, excluding stock options and other expenses. In January, the company said it expected profit of USD 4.30 to USD 4.50 a share for the year. The average estimate was USD 4.24 in a Bloomberg survey of 25 analysts.

16th August 2007

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