In July 2014, Amgen announced a cost-cutting plan focused on reducing its manufacturing footprint by 23 by shuttering its facilities in Washington state and Colorado, and slashing over 2,000 jobs.
And according to CEO Robert Bradway, the restructure has been a success.
“We've been working towards improving the efficiency and productivity of our manufacturing organization for some time,” he told investors during the firm’s Q2 2016 financial call yesterday (transcript here). “We think manufacturing is a source of competitive advantage for Amgen.”
He added the restructure contributed to the quarterly figures, which saw a 6% year-on-year rise in sales to $5.7bn (€5.1bn) and a 13% growth in net income to $1.9bn, resulting in a profit margin up 2.1 percentage points to 32.9%.
Cost of sales as a percent of product sales stood at 13.5%, an improvement of 1.6 points.
“We consolidated our manufacturing activity to try to improve the efficiency, and you're now seeing that coming through into the results,” CFO David Meline added. “
“Through time, we'll seek to maintain our cost of sales at that very competitive level, recognizing there will be some pressure on us in terms of the cost of sales as we introduce the new portfolio. But we think it's a reasonable trajectory overall.”
Manufacturing reductions
Over the past two years, Amgen exited the Bothell, Washington facility and stopped manufacturing at its Longmont and Lake Centre, Colorado plants – the latter sold to AstraZeneca last September.
But the firm has also opened a $200m bioproduction plant in Singapore as part of what Bradway called “our next-generation bio-manufacturing.”
The Singapore plant has an open ‘ballroom’ configuration and relies solely on single-use technologies which allow greater manufacturing flexibility and efficiency. The firm has said the site will reduce production costs by 60% or more per gram of protein.