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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



  • 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
  • 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
  • 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
  • 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
  • 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
  • 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: