| ||||
By James E. Aisner, HBS Director of Media Relations
When Gordon Binder (HBS MBA '62) joined Amgen in 1982 as chief financial officer, what is now the world's largest and most integrated biotechnology company was a start-up that didn't have a product and was running out of cash. Founded just two years earlier, it had enough money left from its initial financing to last six months.
Steeped in the ways of financial management after five years at Ford Motor Company and a decade as CFO of a firm that provided advanced computer systems to the military, Binder was responsible for refilling the coffers. Using a variety of methods, including three public offerings of stock, he raised more than $300 million, which became the lifeblood of Amgen's research and development efforts. "Our strategy was to earn a penny a share every quarter so we could say we were in the black," smiles Binder, who retired as CEO in May after heading the biotech giant for almost twelve years. "Everything else went into R&D. But investors realized we knew how to manage our finances—a reputation that helped us enormously as we continued to grow."
Amgen's numbers today underscore what a powerhouse the company has become. With its products reaching around the globe, net income in 1999 was $1.1 billion on sales of $3.3 billion. Its blockbuster products—EPOGEN®, which fights anemia in kidney dialysis patients, and NEUPOGEN®, which restores white blood cells for those undergoing chemotherapy—are the two biggest-selling biotech drugs in the world. Last year, Amgen spent a hefty 27 percent of revenues on an ongoing R&D program that has filled its pipeline with a dozen new product candidates. Investors have also benefited enormously under Binder's leadership. With a compound annual return of 68 percent between 1986 and 1996, Amgen topped a Fortune magazine survey of one thousand firms. Year in and year out, it also ranks high on lists of "best companies to work for" and "best managed companies."
But sitting in his office on Amgen's thirty-building campus in Thousand Oaks, California (complete with a child-care facility, jogging trails, and a fitness center), the unassuming Binder prefers to focus on the company's mission—"to be the world leader in developing and delivering important, cost-effective therapeutics based on advances in cellular and molecular biology"—and the contributions others have made to its success. "Our [6,300] employees, the culture and values we have, the teamwork, and so on—that's really the way Amgen runs," he once told an interviewer. "I just do what CEOs do. I try to recruit very good people for senior jobs, manage the company's affairs, and make good decisions on major issues."
During Binder's tenure as CEO, there was certainly no lack of those, as the company focused not only on creating, patenting, and protecting products that can take a decade to develop at a cost of $300 to $400 million, but on having an impact on the regulatory and political environment in which the firm does business. In the mid-1990s, for example, Binder began to lead a successful effort by the Biotechnology Industry Organization (BIO) and the Pharmaceutical Research and Manufacturers of America (PhRMA) to obtain federal legislation to reform the Food and Drug Administration. "For three years," he recalls, "we worked on behalf of legislative initiatives to modernize the FDA's drug approval process, which had grown excessively to as much as thirty months." As a result, over the next few years, average approval time will be reduced by more than half.
As president of BIO from 1997 to 1999 and of PhRMA for a one-year term that ended in April, Binder was a frequent visitor to Capitol Hill regarding many health-care-related matters, most recently as an advocate of Medicare coverage for prescription drugs for people being treated outside the hospital. "When I started going to Washington," he points out, "my Amgen colleagues and I made two inviolable rules: Don't lobby for anything that isn't good for patients and the country and always tell the truth. By following these precepts, we gained credibility with everyone we met, from members of Congress to presidential advisors."
Knowledgeable as he is in a field continuously bursting with new information and advances, Binder learned his biotechnology on the job. Raised in New Mexico, the son of schoolteachers, he won a Navy ROTC scholarship to Purdue. Earning a degree in electrical engineering in 1957, Binder served three years on the aircraft carrier Intrepid. About to be discharged in 1960, he took a friend's advice and applied to HBS. The transition back to student life went well. Binder graduated as a Baker Scholar and opted for a two-year stint as an assistant to a vice president at Litton Industries, a conglomerate that was then buying about a company a month. When that job ended in 1964, Binder headed for Ford and the beginning of his journey to Amgen.
For many years Binder has underscored the importance of Amgen's serving three constituencies—shareholders, patients, and employees. But he might easily add a fourth to that list—community. The company has long supported science curriculum reform in the California public schools and annually honors outstanding teachers in the three U.S. locations where it has research and production facilities. In addition, it has established the Amgen Center for Molecular Biology at Spelman College in Atlanta, part of a long-term commitment to an institution dedicated to the education of African-American women.
Binder's ties with Amgen end next December, when he steps down as chairman at the age of 65. His calendar, however, will be far from clear. He'll remain on the board of the California Institute of Technology, become a trustee of MIT, and try his hand at some venture capital investments. He also looks forward to spending more time with his wife, Adele, whom he married in 1964. After all, Binder says, "retirement should mean not having to work quite so hard."
· · · ·