Amgen CEO Kevin Sharer’s Report Card: C

12/19/11Follow @xconomy

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with the introduction of denosumab as an important new treatment for osteoporosis (Prolia) and for cancer-related bone loss (Xgeva). Another drug, cinacalcet (Sensipar) has been a modest success. Aranesp and Neulasta have been major cash cows, but really only incremental medical advances that cleverly extended the life cycle of drugs that Amgen developed in the 1980s. Several other new products have done very little to improve Amgen’s fortunes, including panitumumab (Vectibix), and romiplostim (Nplate). Remember the hype about palifermin (Kepivance) or anakinra (Kineret)? Amgen once had high hopes for those drugs, which were duds. The final tally is one great internally developed product, for two different disease categories, over a decade. There may be more to come, but we can’t say that for sure yet. Grade: C-

Vision: Great CEOs have to articulate a clear, consistent, and inspiring vision to motivate the troops. Sharer was above average on this score, by focusing Amgen consistently on drugs that make a significant difference for patients with “grievous illness.” This is a bold position to take, especially when drug companies tend to become more cautious as they age, focusing on making the eighth different cholesterol-lowering drug, or on “lifestyle” drugs for consumer products for erectile dysfunction or enlarged prostate. Amgen under Sharer stuck to its guns about not treading into such territory, even though it might have been the safer road, and more lucrative. So he deserves kudos for clarity and consistency: Grade: B+

Culture: The best biotech companies have been science-based, and all seemed to have demanding, yet fun, freewheeling, irreverent cultures that allowed creativity to flourish. By contrast, Sharer’s Amgen insisted on being science-based, but it also exuded a command-and-control, disciplined, and insular culture. That may work well in certain departments, but doesn’t always appeal to scientists. While Amgen was respected around the industry for its business achievements, and it made some of the “Best Places to Work” lists, it isn’t looked to as a cultural role model like South San Francisco-based Genentech. Like all big companies, as Amgen has gotten bigger, processes and bureaucracy have taken hold. And that kind of process can be the enemy of creativity and entrepreneurial initiative, for individuals and small teams. Grade: C

Acquisitions: Sharer did a lot of building Amgen through acquisitions. There was Immunex in 2002 for $10 billion, Tularik in 2004 for $1.3 billion, Abgenix in 2006 for $2.2 billion, Ilypsa in 2007 for $420 million, and BioVex in 2011 for as much as $1 billion. Amgen, importantly, expanded its geographic footprint into other regions with these deals, enabling it to tap into established talent pools beyond its headquarters in southern California. But only the Immunex acquisition can be considered a clear win for the bottom line, as it brought the autoimmune drug etanercept (Enbrel) to Amgen. That drug exceeded $3.3 billion in U.S. sales last year. Grade: D

Compensation: Sharer was well compensated for his work at Amgen. He took home $94.3 million in total compensation (salary, bonuses, stock, options, perks) from 2006 through 2010, according to the company’s proxy statements filed with the Securities and Exchange Commission. When Amgen suffered through its anemia drug woes of 2007, Sharer saw his total compensation drop from $19.9 million that year to $13.7 million the following year. And even while Amgen has seen modest stock appreciation since, his total compensation has swelled back up to over $20 million in 2010. Sharer certainly isn’t the only overpaid CEO out there, but it’s too much money for the performance, and it sends a bad message both inside and outside the company. Grade: F

Industry relations: Partnerships are critical to the pharmaceutical industry, since great ideas are found all over the map—in academic centers, small biotech startups, and sometimes at big companies. Amgen under Sharer has never been seriously active in reaching beyond its own corporate walls to other companies. While partnerships are fraught with peril due to cultural contrasts, shared control of projects, and bad communication, Amgen just hasn’t done much to work through those problems and tap into some of the benefits that can come through partnerships. Michael Yee, an analyst with RBC Capital Markets in San Francisco, told Bloomberg last week he’s hopeful that Bradway will “shake up the culture” at least partly through business development strategy. Grade: D

When you add it up, it looks to me like Sharer gets a C for his overall report card, the definition of mediocre.

I’m curious what Xconomy readers hope will change at Amgen under the new boss. Please let me know your thoughts, either in the public comment section below, or via e-mail at ltimmerman@xconomy.com.

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  • Sean Thompson

    I agree with your assessment Luke. The company is stable but not imaginitive and industry leading. I think he was overpaid also. Amgen should have used their market cap to grow through acquisition. Immunex was a winner, but they don’t all have to be the big disruptive sort to add value to the company.

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  • ExAmgenite

    Sharer was an arrogant bastard who almost ruined Amgen during his early days. Banished to Boulder to learn the business he came back smarter but not wiser. To much US Navy, McKinsey, GE and MCI to fit in well with the laid back culture of a free wheeling biotech. Maybe a D but definitely not a C.

  • SF

    You give Sharer props for bringing in an outsider a few years before his departure to take over his role when he’s gone? Amgen did not have any internal talent? Something is wrong here. This seems more like a move by an egotistical manager who wants to ensure that his light is not eclipsed. That Amgen did not have, or more likely, did not and does not recognize its internal talent points to significant issues at the company.