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 75 countries to doctors, hospitals, pharmacies, and other health care providers.
In addition to Neulasta, Neupogen, Aranesp, Epogen, and Enbrel, some of the company's marketed drugs include XGEVA (for the prevention of skeletal-related events) and Sensipar/Mimpara (for the treatment of secondary hyperparathyroidism in chronic kidney disease patients on dialysis). On the pipeline, Amgen has a few products in phase 3 testing: its YUKAWA-2 study is evaluating Repatha for lowering cholesterol, other studies are evaluating AMG 416 as a treatment for secondary hyperparathyroidism in chronic kidney disease patients, and the ASPIRE study is comparing treatments for relapsed multiple myeloma.
Amgen has a 50-50 partnership with Japanese brewer and drugmaker Kirin through which it develops and out-licenses certain product rights. Additionally, it has a collaboration with AstraZeneca to develop and commercialize some of the monoclonal antibodies from its clinical inflammation portfolio. The company is also working with UCB to develop and commercialize romosozumab, which has shown positive results for the treatment of osteoporosis in postmenopausal women.
Amgen operates distribution centers in the US (primarily in California and Kentucky) and the Netherlands. Though its products are marketed in 75 countries (primarily in North America and Europe), the US accounts for about 80% of revenue. In 2014, Amgen continued to expand into growth markets, adding new markets in Latin America, Asia, and the Middle East.
The company operates manufacturing facilities in Brazil, Ireland, the Netherlands, Puerto Rico, Singapore, and Turkey.
Sales and Marketing
Sales of the company's top offerings -- Neulasta, Neupogen, Enbrel, Aranesp, and Epogen -- together account for about 70% 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, Kirin sells the Neupogen/Neulasta compunds in Asian markets, and Enbrel is marketed internationally by Pfizer.
Amgen also markets certain of its products directly to consumers using print, online, and television advertising.
Sales to AmerisourceBergen, McKesson, and Cardinal Health each account for more than 10% of total revenue.
The company’s revenue has been trending up for several years and 2014 didn't buck the trend. Revenue rose 7% to $20 billion, from $18.7 billion the previous year, as all products reported increased sales (largely due to an increase in average net sales prices) except Neupogen (down 17% due to decreased demand in the US). Geographic expansion also played a role in the increase.
The company’s net income grew 2% to $5.2 billion, compared to $5.1 billion in 2013, thanks to higher revenues partially offset by an increase in operating expenses (higher cost of sales and research and development costs).
Cash flow from operations has followed net income's trend over the last five years. In 2014 it increased 36% to $8.6 billion due to changes in trade receivables, inventories, and accounts payable.
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. In 2014 it reacquired the rights to several medications in emerging markets and made good on its plan to be in 75 markets by 2016, two years ahead of schedule. It also received FDA approval to market its bispecific T-cell engager (BiTE) immunotherapy BLINCYTO to treat a certain form of acute lymphoblastic leukemia, and it gained European approval to market Repatha for the treatment of uncontrolled cholesterol.
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 and Takeda Pharmaceutical. With The University of Texas MD Anderson Cancer Center, it has a research collaboration focusing on its BiTE antibody therapies; it also has a neuroscience collaboration with Novartis encompassing Alzheimer's disease and migraine headache studies.
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 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 2014 Amgen completed the construction of a new manufacturing plant in the Tuas Biomedical Park area of Singapore. In 2013, it 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. After selling a couple of non-core plants in previous years, in 2014 the company announced it would close facilities in Washington and Colorado and lay off up to 2,900 people, about 15% of its workforce, to redirect money to upcoming product launches. 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
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. In 2013 it purchased drug firm Onyx and picked up not only oncology drugs available in Asia and the US but also secured collaboration agreements with Bayer.
In 2015 the company agreed to buy Dezima Pharma, a biotechnology firm working on cardiovascular disease treatments. The $1.55 billion deal will add Dezima's TA-8995 and Repatha (cholesterol inhibitors for patients with high lipids in the blood) to Amgen's portfolio.