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Amgen profits down on rising costs

R&D and general operating expenses cancel out rise in product sales

Amgen saw its net income decline 16 per cent in the fourth quarter of 2012 - despite a healthy 11 per cent increase in product sales - thanks largely to increased R&D and general operating costs.

The biopharma company made a profit of $788m on sales of $4.4bn in the quarter, while for 2012 as a whole, earnings rose 18 per cent to $4.3bn and sales were up 11 per cent to $17.2bn.

The sales growth is indicative of how well Amgen is repositioning its business in the face of declining sales for its anaemia products Epogen (epoetin alfa) and Aranesp (darbepoetin alfa) and white cell stimulators Neupogen (filgrastim) and   Neulasta (pegfilgrastim).

Epogen fell by just one point to $479m, but Aranesp continued to feel the effects of label changes related to safety concerns and dropped 9 per cent to $489m. Combined sales of Neupogen and Neulasta were down 1 per cent to just over $1.3bn, thanks largely to competition from biosimilars in Europe.

Arthritis drug Enbrel (etanercept) was the top performer in the quarter, rising 23 per cent to $1.16bn with around half of the increase coming from price rises while unit volumes were up 76 per cent.

Among Amgen's other new products, Sensipar/Mimpara (cinacalcet) for hyperparathyroidism grew 19 per cent to $256m, while Xgeva and Prolia (both denosumab) for preventing bone fractures rose 72 per cent to $369m, bringing in $1.22bn for the full-year.

"Our performance in 2012 was consistent and strong throughout the year," commented Amgen's chief executive Bob Broadway.

"We enter 2013 with good momentum, a broad late-stage pipeline and a continued focus on building our business internationally," he added.

Broadway pointed to the start of phase III trials for four new projects in 2012, namely anti-cholesterol antibody AMG-145, romosuzamab for osteoporosis, brodalumab for psoriasis and rilotumamab for gastric cancer, as promising projects.

In addition, he also mentioned Amgen's acquisition of Decode Genetics in December for its potential to identify and validate new drug targets.

The large-scale trials needed for AMG-145 and romosuzumab were a major contributory factor to Amgen's 9 per cent increase in R&D expenses to $917m in the fourth quarter, said Amgen's chief financial officer Jon Peacock, while a major commercial drive for Enbrel was a factor in raising general, selling and administration (SG&A) cost by 13 per cent to $1.35bn.

Amgen said it expects 2013 revenues to be in the range of $17.8bn-$18.2bn with earnings per share between $6.85 and $7.15.

24th January 2013

From: Research, Sales



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