A week ago, activist investor Dan Loeb turned a brighter spotlight on Amgen when his firm, Third Point, highlighted its investment in the biotechnology company and made a bold suggestion: that the drugmaker split up.
"It is well‐established that disparate business units generally benefit from operating separately due to distinct corporate cultures, superior efficiencies, and a greater focus for employees and management alike," Third Point said in its Oct. 21 investor letter. "Given the diverse nature of its assets—cash‐generative Mature Products and R&D‐intensive Growth Products—we believe that Amgen could benefit from a separation into distinct operating units with separate financial statements and should seriously consider separating into two companies."
Amgen's answer? In short, it doesn't make sense.
Chief Executive Officer Bob Bradway cited the company's consolidated supply chain, noting it makes all of its 11 molecules through it, for his opinion.
"As we've looked at this, we've not seen a way through we think unlocks significant value for our shareholders," Bradway told analysts and investors Tuesday at Amgen's business review in New York. "What I'm not saying is, 'No, never,' but right now we're not convinced there's a way through that adds value for all of our shareholders."