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Amgen Inc.’s _______. Epogen. Commercializing the First Biotech Blockbuster drug Presented by: Faryn Kapala October 26 th , 2010. Brief History of Key Players What is Epogen ? Uses? Who Discovered Epogen ? How did they protect their IP? 3 types of patents

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Amgen inc s

Amgen Inc.’s _______


Commercializing the First Biotech Blockbuster drug

Presented by:


October 26th, 2010

Presentation outline

  • Brief History of Key Players

  • What is Epogen? Uses?

  • Who Discovered Epogen?

  • How did they protect their IP?

    • 3 types of patents

  • Legal Issues----------------------------------------

  • How IT has changed business processes

    • How to do a patent search

  • IT Developments

  • IT Department Organization

Presentation Outline

Epo key players
EPO – Key Players

  • Franklin “Pitch” Johnson

    • BS in Mechanical Engineering from Stanford

    • MBA from Harvard

    • Stanford Graduate School of Business Teacher (12+ yrs.)

    • Independent Venture Capitalist since the early 1960’s

    • One of Amgen’s original founders

Epo key players1
EPO – Key Players

  • Bill Bowes

    • B.A. in Economics from Stanford University

    • MBA from Harvard University

    • Venture Capitalist

    • One of Amgen’s original founders

Epo key players2
EPO – Key Players

  • George Rathmann “Golden Throat”

    • Accepts position as CEO of Amgen in 1980

    • Former director of research at Abbot Laboratories

    • Came to CA to study Molecular Biology at UCLA

    • UCLA professor impressed with his business background invited him to head Amgen

    • In the early years much of Amgen’s research

      was done through collaborations with UCLA and CIT.

Epogen s uses
Epogen’s Uses

  • Chronic Renal Failure (CRF) – Kidney Failure

    • Dialysis patients

    • Covered by Medicare

  • Prior to surgeries that may involve heavy blood loss

  • Treating anemia caused by

    • HIV medications

    • Chemotherapy

What is epogen epoetin alfa
What is Epogen (Epoetin Alfa)?

Mimics a naturally occurring hormone erythropoietin

Produced in the kidneys

Stimulates the production of RBC’s by the bone marrow

RBC’s carry oxygen around

our bodies

Who discovered epogen
Who Discovered Epogen?

  • The protein, erythropoietin, was discovered in 1976

    • Eugene Goldwasser at the University of Chicago

    • They did not patent it or try to synthesize it

  • NIH-funded research at Columbia University invented a technique for synthesizing the protein and patented this.

  • Amgen then licensed the technique from Columbia

  • The public pays twice?

    • 1st by supporting the research that discovered it

    • 2nd by paying for it through Medicare

So what did amgen discover
So what did Amgen discover?

  • Not the protein

  • Not the technique to synthesize the protein

  • They isolated the gene (1983)

    • 2 year process

    • Fu-Kuen Lin & Chi-Hwei Lin

  • Transformed CHO cells to produce biologically active EPO (Feb. 1984)

Protecting their intellectual property
Protecting Their Intellectual Property

  • 3 requirements for a biotech patent:

    • NOVEL

      Nobody ever made the product before

    • NONOBVIOUS in light of prior art

      Prior Art: Publications, other patents

      Ex.) Pencil & Eraser


      It has to somehow be useful

3 types of patents
3 Types of Patents

  • Product Patent

  • Process Patent

  • Patent the Starting Materials

1 product patent
1.) Product Patent

  • Best level of protection

  • Excludes competitors from making, using, selling or importing the patented invention

  • Difficult to obtain in the biotech industry because many drugs are based on purified proteins that have previously been identified (naturally occurring)

  • Any mention of their discovery or isolation in scientific literature can qualify as prior art

2 process patent
2.) Process Patent

  • The next best level of protection

  • Covers the method to make the final product

  • Worded in general terms which often offered increased protection as it protected even unknown methods of achieving the outcome.

    • Ex.) Alexander Bell – The Telephone

      “transmitting vocal sounds telegraphically by using electrical undulations”

      *His invention: Electromagnetism*Better invention: Variable Resistance


Product vs process
Product vs. Process

Dividing line between Product & Process is vague

  • Product: “An apparatus for measuring activity of the autonomic nervous system of a patient…”

  • Process: “A method of measuring activity of the autonomic nervous system of a patient…”

3 patent starting materials
3.) Patent Starting Materials

  • Genetically engineered cells

    • Host cell and vectors (usually a virus or bacteria)

  • Even if an end product isn’t patentable because it lacks novelty the inventor can patent the starting materials

October 1987 surprise
October 1987 - Surprise!

1.) Product Patent  Denied!

Epogen had already been patented!

2.) Process Patent  Denied!

This one was expected based on recent biotech laws…

3.) Starting Materials  Granted!

Genetics institute
Genetics Institute

  • Founded by 2 Harvard scientists in 1981

  • Isolated EPO from human urine in 1984

    • 5 months AFTER Amgen’s breakthrough

  • Unable to produce it in significant quantities because they didn’t know what gene produced it

  • Not feasible to isolate it from urine

    • 6 million gallons of urine to treat one patient for a year

Legal stalemate
Legal Stalemate

  • Genetics Institute asks for a cross-patent which would allow them to use Amgen’s starting materials

  • In response, Amgen filed for patent infringement

  • Genetics Institute would infringe on Amgen’s patent if they attempted to produce EPO

  • Genetics Institute countersues claiming that Amgen infringed on their product patent for EPO

Who wins
Who Wins?

  • Dec. 1989 – Genetics Institute wins the lawsuit

    • “GI’s patent covered EPO irrespective of how the drug was produced.”

  • Amgen never deposited their cell line in a public cell bank

  • Genetics Institute argued that they needed this

  • Courts declared that Amgen had provided sufficient description of the method they had used and a person skilled in the art would have no difficulty replicating Amgen’s procedure

Stalemate continues
Stalemate Continues

  • Neither company was able to produce EPO without infringing the other’s rights

  • Legal bills were stacking up

  • Stock prices of both companies were dropping

Amgen wins 1991
Amgen Wins! (1991)

  • Court of Appeals for the Federal Circuit ruled that…

    Genetics Institute had not proved that it had isolated a protein with the biological characteristics described in the patent. As a result, Genetics Institute's claims were invalid.

  • Amgen stock jumps from $12 to $113 overnight!

How has it changed the business process
How has IT changed the business process?

  • Patent Searching & Research

    • Much easier to do today then in 1980 (EPO years)

    • TCP/IP came about in the mid 1980’s

    • In Amgen’s early days they had a modem connection to a service at USF through which they did sequence comparisons

    • Patent searches were done via mail, telephone, etc. and often sent out to patent search specialists to perform

    • Amgen also had a small (one room) on-site library with a librarian who assisted in patent searching.


  • Patent Searching


  • Patent Searching

It developments at amgen
IT Developments at Amgen

  • They had a Zilog, with unbelievably small (by todays standards) amount of ram and disk space

  • Shared by all the scientists

  • Sole purpose was for searching genetic sequences via modem

It developments at amgen1
IT Developments at Amgen

  • Amgen purchased a copy of GenBank and the programs to enable searching and analysis

    • Genetics Computer Group (GCG)

    • Subscriptions to DNA & Protein sequence databases

    • Today anyone can access GenBank for free at

It developments at amgen2
IT Developments at Amgen

  • Next, a VAX (VMS) machine was setup in Bldg 5 and a cable was ran through conduit back to Bldg 2 so that groups in both buildings (about a block apart) could use it.

  • Each scientist had a terminal that connected to VAX, with all data stored centrally on it.

It developments at amgen3
IT Developments at Amgen

  • Next step is the installation of an onsite network

    • Primarily to support sales and development

  • It took years for ‘terminals’ to be replaced by desktop computers (Macs) in the research department

  • In ~1996 Amgen switched from Macs to PC’s

Amgen s it department
Amgen’s IT Department

Organizational Changes

See Ch.2 – Page 65 in YOUR MIS BOOK!

Early 1990 s
Early 1990’s

  • Each department had their own IT group

  • A centralized IT group oversaw telephones, network support, infastructure (cabling, switches, routers, etc.) and desktop support

  • Quite independent of each other

Early 1990 s1
Early 1990’s



  • Each department was an expert at their applications

  • Problems often solved within minutes

  • Didn’t scale well as the company grew

  • Duplicated efforts & resources

  • Some departments not operating at full capacity

Late 1990 s department level it
Late 1990’s – Department Level IT

  • Merged all of the IT departments into one big group

  • Database and application servers consolidated

  • Centralized IT Help Desk

  • Each department still maintained a small group of application based IT personnel

Late 1990 s
Late 1990’s under central control



  • Scaled better

  • Resources could be pooled and shared

  • End users received excellent support

  • Compatible systems

  • Centralized IT person may not understand intricacies of each department

  • Application support still needed

  • Can take longer for the right person to be assigned

Amgen today
Amgen Today under central control

  • Central IT support is outsourced

  • Maintains application experts and system architects

  • Computer installation, network support is outsourced

  • Computers are an integral part of everyone's job

  • Heavily reliant on e-mail and MS Office Suite

  • Numerous teleworkers

Amgen today1
Amgen Today under central control

  • PC based

  • Numerous rooms dedicated to video conferencing

  • Windows Servers, Unix servers (LINUX and Solaris)

  • Research has a few hefty parallel computers

Amgen today2
Amgen Today under central control

  • Personal Electronic Library with it’s own IT support

  • Online articles, databases, research, patents, etc.

  • They still have a physical library but it is used less and less

  • All business processes use IT ( Manufacturing, Sales & Marketing, Finance & Accounting, Human Resources, R&D, etc.)

Special thanks
Special Thanks under central control

  • To Jim Duliakas and Jody Simon

    • Jim has been at Amgen since 1994 – Snr. Technologist

    • Jody since the beginning!

      • Started in Research

      • Later moved to IT

References under central control

  • Amgen. (2010). Epogen. Retrieved October 24, 2010, from

  • Andrews, E. L. (1991, March 7). The New York Times. Retrieved October 26, 2010, from Amgen Wins Fight Over Drug:

  • Business Week. (1998). How George Rathmann Mastered the Science of the Deal. Business Week.

  • Fu-Kuen Lin, S. S.-H.-H. (1985). Cloning and Expression of the Human Erythropoietin Gene. Proceedings of the National Academy of Sciences of the USA, 7580-7584.

  • Jim Duliakas, J. S. (2010, October 25). An Interview with Two Current Amgen Employees. (F. Kapala, Interviewer)

  • Lin, F.-K. (1987). Patent No. 4,703,008. United States Patent.

  • Marcia Angell, M. (2005). The Truth About the Drug Companies: How they deceive us and what to do about it. New York: Random House, Inc.

  • Warren, J. M. (2010). Patterns of Entrepreneurship Management. Hoboken: John Wiley & Sons, Inc.

  • Wellsphere. (2009, November 16). Wellsphere. Retrieved October 24, 2010, from Kidney Failure Community - Anemia in Kidney Failure and Dialysis Patients:

  • WikiInvest. (2009). WikiInvest. Retrieved October 24, 2010, from Stock: Amgen: