Amgen is among the biggest of the biotech big'uns, and it's determined to get even bigger. The company uses cellular biology and medicinal chemistry to target cancers, kidney ailments, inflammatory disorders, and metabolic diseases. Its top protein-based therapeutic products include Neulasta and Neupogen (both used as anti-infectives in cancer patients), Aranesp and Epogen (used to fight anemia in chronic kidney disease and cancer patients), and Enbrel for rheumatoid arthritis. In addition, Amgen has extensive drug research and development programs. Its products are marketed in 50 countries to doctors, hospitals, pharmacies, and other health care providers.
Amgen operates distribution centers in the US (primarily in California and Kentucky) and in the Netherlands. Its products are marketed in 50 countries (primarily in North America and Europe)
Sales and Marketing
Sales of the company's top offerings -- Neulasta, Neupogen, Enbrel, Aranesp, and Epogen -- together account for about 80% of annual revenues. Most of these sales take place within the US market, where they are distributed through wholesalers including AmerisourceBergen, McKesson, and Cardinal Health. Amgen employs a direct sales force in the US, Canadian, and European markets to promote its products; it uses partners and independent representatives in other global markets. For instance, Japanese brewer and drugmaker Kirin sells the Neupogen/Neulasta compunds in Asian markets, and Enbrel is marketed internationally by Pfizer.
Sales to AmerisourceBergen, McKesson, and Cardinal Health each accounted for more than 10% of total revenues in 2012, 2011, and 2010.
The company’s revenues jumped 11% in 2012 thanks to an increase in the volume of products sold and and higher sales prices. The increase in other revenues for 2012 was driven by a more profital modification to its Takeda collaboration, originally signed in 2008, with an exclusive license for Takeda to develop, make, and market motesanib. The only poorly performing product line was ESAs (products with proteins that stimulate red blood cell production, such as Epogen and Aranesp), which reported a 10% decline in revenues in 2012.
The company’s net income grew by 18% in 2012 thanks to higher revenues partially offset by an increase in operating expenses (higher cost of sales, research and development and selling, general and administrative costs).
To prepare for the future loss of patent protection on its top products in coming years, Amgen is launching new products it hopes will best its bestsellers, and expanding market share outside of the US. The company expects an increase in competition in future years due to US health care reform legislation that aims to allow for the approval of biosimilars (generic biotech drugs) in a shorter amount of time. Such rules already apply in the European Union, where the firm faces competition from generic biologics on products including Aranesp, Neupogen, and Neulasta.
Looking for new products Amgen's research and development activities are focused on identifying and validating targets through human genetics. Amgen boasts a bulging internal R&D pipeline of compounds target cancer, inflammation, kidney disease, and neurological, cardiovascular, and bone and blood disorders, mostly based on biotech (molecular and cellular biology) technologies. In addition to its proprietary efforts, the company expands its product line through periodic acquisitions and partnerships. For example, Amgen has co-development deals with drugmakers including GlaxoSmithKline, Takeda Pharmaceutical, and Daiichi Sankyo. Amgen formed a new partnership with AstraZeneca in 2012 to jointly develop and commercialize five monoclonal antibodies (single-source proteins) from its clinical inflammation portfolio with applications in respiratory, dermatology, and rheumatology conditions.
New FDA approvals are germane to the company's long-term success, and the firm has launched a number of new products over the years including Sensipar/Mimpara, Nplate, and Vectibix. In 2011, Amgen gained US approval to launch Prolia and XGEVA, both of which contain the same active ingredient but are used differently. Prolia is approved to treat postmenopausal osteoporosis (and cancer-related bone loss in Europe), and XGEVA is approved for treating cancer-related bone weakness. Amgen is working to extend the indications and markets for the products, and it is counting on successful commercialization of both drugs to help grow its business in the next few years.
The company also relies on gaining additional approvals on its existing bestsellers to round out its revenue channels and extend their patent protection as long as possible. For example, in addition to being a key player in the rheumatoid arthritis market, Enbrel's sales have climbed as the FDA has approved the drug to be used for psoriasis and other related inflammatory conditions. Amgen also works to shift existing patients over to its newer, next-generation products as patents expire; for instance, as Neupogen begins to face competition from biosimilars (generic biotech drugs) in some markets, the company has worked to shift patients over to Neulasta, its newer patent-protected offering for neutropenia (a low white-blood cell condition found in chemotherapy patients).
As part of its global expansion strategy, in 2013 Amgen announced plans to invest $200 million to build a new manufacturing plant in the Tuas Biomedical Park area of Singapore. That year, it also teamed up with Astellas Pharma to provide new medicines to help address major unmet medical needs of patients in Japan. The company expects to deliver more than $1 billion in sales in new and emerging markets by 2015 and it plans to expand in key markets, including Japan and China.
In addition, Amgen has been conducting cost-cutting efforts, including the streamlining of facilities and sales of some noncore assets. It sold a a non-core manufacturing plant in Colorado in 2012. In 2011 it sold a development and manufacturing facility in Fremont, California to Boehringer Ingelheim. Amgen aims to keep its operations nimble to minimize losses from patent expirations and other competitive and economic hazards that might impact its operations.
Mergers and Acquisitions
In 2011 Amgen increased its cancer treatment and development programs when it acquired BioVex in a deal worth up to $1 billion ($425 million upfront, plus $575 million in potential milestone payments). The purchase added an experimental cancer vaccine, OncoVEX, that is being developed to treat melanoma and other forms of cancer. The following year the company further expanded its oncology pipeline through the purchase of biotech firm Micromet in a $1.2 billion deal; the purchase added blinatumomab, an antibody candidate in clinical development for acute lymphoblastic leukemia and non-Hodgkin's lymphoma. Also in 2012 Amgen paid $315 million to acquire KAI Pharmaceuticals and gain worldwide rights (in all markets except Japan) to its development-stage treatment of secondary hyperparathyroidism, a complication in patients with chronic kidney disease on dialysis. It also struck a $415 million deal to acquire deCODE genetics to expand its library of validated disease targets.
While the US market accounts for almost 80% of annual revenues, Amgen has also been working to extend its reach in international markets. In addition to extending its product offerings into high-growth regions such as Japan, China, Russia, and Africa, the firm has made select international acquisitions. To establish a presence in Brazil's growing market, the company paid $215 million in 2011 to acquire pharmaceutical maker Bergamo. It also purchased a manufacturing plant in Ireland from Pfizer that year. In 2012 Amgen purchased Turkish drugmaker Mustafa Nevzat Pharmaceuticals to expand its presence in the Middle East and add branded generic injectable drugs to its offerings.