#2: Amgen, Inc.
Headcount 17,000
Year Established 1980
Pharma Revenues $14,660 2%
Total Revenues $15,053 3%
Net Income $4,627 0%
R&D Budget $2,894 1%
Top-Selling Drugs in 2010
Drug |
Indication |
$ |
(+/- %) |
Neulasta |
chemotherapy-induced neutropenia |
$3,558 | 6% |
Enbrel |
rheumatoid arthritis, psoriatic arthritis |
$3,534 | 1% |
Aranesp |
chemotherapy-induced anemia |
$2,486 | -6% |
Epogen |
anemia |
$2,524 |
-2% |
Neupogen |
chemotherapy |
$1,286 |
0% |
Sensipar |
renal disease complications |
$714 | 10% |
Vectibix |
colorectal cancer |
$288 |
24% |
Account for 98% of total biopharma sales, down from 99% in 2009.
PROFILE
I turned 40 this year, a milestone that removes all notion that I’m not middle-aged. Similarly, Amgen crossed a threshold in which it admitted to itself and the public that it’s no longer a high-flying growth company. Four years of stagnant sales — equivalent to my sore back and inability to run more than 30 yards without wheezing — has led Amgen to admit to itself that it’s a mature company. Amgen announced in April 2011 that it will pay out its first dividend, responding to investor concerns that the company was piling up too much cash with no goal for it. (And perhaps pre-empting an attack by activist investor Carl Icahn, who began buying up Amgen shares in early 2011.)
The move was Amgen’s admission that a major acquisition wasn’t as worthwhile to shareholders as a cash return. The company also initiated a $5.0 billion stock buyback, hoping to placate shareholders who have grown impatient with the company’s slowing growth. The dividend and buyback also allay fears that Amgen would make a sizable, difficult-to-integrate acquisition in order to goose revenues. Rumors had been swirling that Amgen was looking to buy Swiss biopharma Actelion, to get hold of its pulmonary arterial hypertension pipeline. Estimates for that acquisition soared as high as $10.0 billion.
This isn’t to say that Amgen doesn’t have its own growth prospects. Denosumab — marketed as Prolia for osteoporosis and Xgeva for prevention of bone metastases in cancer — is hugely important to Amgen’s future. Estimates for peak sales have been all over the place, ranging from $1.0 billion to a Lipitor-sized $10.0 billion in annual revenues. Amgen itself projects denosumab will sell bring in $3 billion to $4 billion by 2015, as reimbursement expands, new indications are approved, and more clinical data gets generated.
However, the new biologic started off small, posting a mere $10 million in sales in 3Q10, its first full quarter on the market. It brought in a combined $69 million for Amgen in 1Q11: $27 million for Prolia, $42 million for Xgeva.
Uptake can’t come quickly enough. Amgen posted its first revenue decline in 2009, followed up by an anemic (ha-ha) 2% rise in 2010. Revenues rose 3% in 1Q11, but Aranesp, Epogen and Neupogen, three of Amgen’s mainstays, posted revenue drops of 7%, 14% and 6% during the quarter, respectively. Neupogen has faced biosimilar competition abroad, and Amgen has also worked to move patients from that drug over to Neulasta, which passed Enbrel to become Amgen’s top seller in 2010. (Expect those two to go neck-and-neck for the top honors this year, despite the competition that has slowed Enbrel’s growth.) Sensipar, Vectibix and Nplate — the company’s first wave of new drugs to follow the Epogen/Neupogen/Enbrel wave — are showing signs of success, albeit in the sub-$1.0-billion range.
With a not-ready-for-prime-time late-stage pipeline — Amgen has a number of drugs in Phase III, but none on the verge of filing BLAs/NDAs — the next few years will focus on denosumab’s success and the company’s ability to expand into new markets and streamline operations. The company plans to boost its presence in emerging regions, including Russia, Turkey, Mexico and Brazil (see Acquisition News for more on its play in Brazil), and hopes to pass $1.0 billion in annual sales from new and emerging markets by 2015.
In January 2011, Amgen announced that it was selling its biomanufacturing facility in Fremont, CA to Boehringer Ingelheim, which will use it for contract manufacturing. The site was part of Amgen’s 2006 acquisition of Abgenix, and BI will continue to make Vectibix in Fremont through the end of 2012. In June 2011, Amgen announced 134 layoffs at its Longmont and Boulder manufacturing sites in Colorado. Longmont performed bulk manufacture of Aranesp and Epogen. Around 700 staffers will remain at the two sites.
It’s not all divestitures and belt-tightening at Amgen. Back in 2006, the company had been planning a billion-dollar expansion in County Cork, Ireland, but the aforementioned business slowdown led to those plans getting scuttled. Now Amgen is buying into Ireland by acquiring a Pfizer facility. In March 2011, Amgen announced that it will buy Pfizer’s 37,000-sq.-m. facility in Dun Laoghaire, Dublin. The site employs 280 people, all but 40 of whom will transfer to Amgen. The remaining staffers will be Pfizer employees.
As noted in our interview with Pfizer’s John Kelly elsewhere in this issue, the Dublin site includes a trailing supply agreement (terms not disclosed), keeping the site busy with Pfizer products while Amgen prepares it for its next stage of internal sterile fill/finish production. The site has been in operation since 1970.
If denosumab can hit escape velocity quickly enough, Amgen may be able to weather the storm of EPO restrictions, biosimilar competition, and reimbursement issues that have slowed the company to a crawl. —GYR
THE LOWE DOWN
Well, we can talk about Amgen’s pipeline — the part that’s older, still profitable, but perhaps deteriorating a bit, and the part that’s newer and maybe promising. But let’s talk about Carl Icahn instead. He’s just been buying a stake recently, and he never does that just for laughs.
No, Mr. Icahn buys stuff to turn around and sell it at a higher price. Well, most investors do (you’d hope) but he is actually in a position to do something about the weather. A big Amgen auction would probably go over pretty well, since there had been Icahn-less takeover/merger speculation before. So look for the usual elect-my-buddies-to-your-board tactics, and lots of talk about how the company could be making so, so much more of its assets.
Honestly, whether we — or they — like it or not, I have to think that the days of independent Amgen may already be numbered. So those questions I asked last year about how the company would age, and how it would adapt? Moot points, most likely. We’ll probably never know. —Derek Lowe
ACQUISITION NEWS
Target: BioVex
Price: $425 million in cash, as much as $575 million in milestones
Announced: January 2011
What they said: “OncoVex has demonstrated encouraging anti-tumor activity in clinical studies for the treatment of melanoma and head and neck cancer, and BioVex is currently enrolling patients into pivotal Phase 3 trials in both indications.”
—Roger M. Perlmutter, M.D., Ph.D.,
Executive Vice President, R&D, Amgen
Target: Bergamo
Price: $215 million
Announced: April 2011
What they said: “Acquiring Bergamo, a profitable company with an established local infrastructure, and regaining the rights to our products in Brazil [Vectibix, Sensipar and NPlate, via a separate transaction with Mantecorp], provides us an attractive entry into the Brazilian market.”
—Kevin Sharer, chairman and
Chief Executive Officer, Amgen