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Amgen CEO Discusses Company's Secrets of Success

By Ramy A. Arnaout
Editor in Chief

Chairman and Chief Executive Officer of the biotechnology company Amgen Gordon Binder spoke before a packed audience of students, faculty, and guests in Bartos Theater yesterday.

The talk, part of a series sponsored by the School of Engineering and the Sloan School of Management, profiled the world's largest biotech company while highlighting the conditions and culture that have helped Amgen succeed.

"Every biotech drug available today was started by an American," Binder said.

Part of the reason why Amgen is so successful is the ease with which companies can raise money here in the United States, he said.

"Amgen raised $400 million before it sold anything at all. [That] shows why British biotech companies are coming over here to raise money," Binder said. "That, combined with the university research base, is why America leads and will continue to lead the world in biotechnology."

Amgen and MIT closely linked

Amgen itself is both a product and a sponsor of the university research base, particularly MIT. It was co-founded by Professor Emeritus of Chemical Engineering Raymond F. Baddour PhD '49. And two years ago it sealed a 10-year, $30 million research collaboration pact with the Institute.

In all, a third of Amgen's investment money goes to outside researchers at universities at home and abroad, Binder said. "When it works really well it's a cooperative relationship," as opposed to simple subcontracting.

Binder went on to describe the company's first two government-approved products. Epogen, a hormone that stimulates bone marrow to make red blood cells, is used to alleviate anemia. Neupogen boosts white cell counts to counteract the side effects of chemotherapy and the AIDS drug AZT, making those treatments safer and more useful.

"These two products are the best sellers in biotech," Binder said. And although they do not come cheap, "by the end of this year we'll have 12 products on the market," he said.

"We did one small clinical trial," Binder said. "The hospital charged us $25,000 per patient."

Every drug must be extensively tested on many people for statistical relevance. As a result, "it's not unusual for a trial to cost $10 million," he said.

Inside Amgen's culture

The talk also offered a look at the kind of corporate culture that made Amgen a multi-billion-dollar success. Among the key ingredients, Binder said, are teamwork, risk-taking, and pursuit of excellence.

"You need to be the kind of company good people want to work in," Binder said. Managers and the higher ranks are treated no differently from other workers.

"Sure I get a higher salary, more stock options. But everyone else gets stock options. When we say we're all in this together, we mean it," Binder said.

Worker inclusion in higher-level decisions is also stressed.

"The people who do the work should help plan the work," Binder said. "The enthusiasm this creates for people who make the plan more than makes up for the time it takes to come up with that plan."

Peer pressure plays an important role in Amgen's model. Peers expect each other to do their best, so "the pressure that people feel is peer pressure. The boss is there to help them deal with the pressure," not add to it, he said.

Binder stressed the importance of high standards and hard work, even at the risk of making mistakes.

"We all know how to avoid mistakes. A cadaver could do that for us. Some people in government have that figured out," he said.

One slide Binder presented read, "Every time we took a risk, it paid off. And when we didn't, it hurt us."

"You need to be mistake-tolerant or else no one will ever take any risk," he said.

But hard work and risk taking should not be stressful. "We think everyone should have fun, at least most of the time," Binder said. If you're not, "you're probably doing the wrong thing. If you come home and yell at your spouse and kick your dog that doesn't do anyone any good. As long as we do [have fun], Amgen will be successful."