FDA Delivers Another Blow to Amgen’s Anemic Drug Sales

Amgen (NYSE:AMGN) made its reputation as one of the premier firms in the biotechnology industry with its blockbuster anemia drugs, Aranesp and Epogen. Worldwide sales of anemia drugs made up around half of Amgen’s $14.8B revenue in 2007 and an even larger percentage of its profit - Epogen, its original bestselling medicine, brought in revenues of $2.5B, while Aranesp sales hit $3.6B. But these impressive totals obscure falling demand for the drugs - in the the second quarter of 2008, for example, sales in the United States plunged 26 percent.

A major reason for the slow numbers is that public perception of Amgen’s big drugs has become increasingly negative. Amgen’s medications are commonly used by cancer victims to treat anemia caused by chemotherapy treatments, and studies in the past year have shown that these drugs can increase the risk of blood clots and death in these patients. Amgen’s stock was punished in the spring after the studies hit mainstream media in February.

Lately, though, things had been looking up for Amgen - its drug Denosumab has been looking good in Phase III trials and shows promise as a breakthrough drug in the $7B+ osteoperosis market. But this week brought rain on Amgen’s parade - the Food and Drug Administration ordered the company to change the labeling on its drugs in a way that could reduce the use of Aranesp by an additional 40%. It was the first time the FDA has done this, invoking its authority under a 2007 law that allows it to order changes to a drug’s prescription information.

The label change, and continued negative press, could hurt sales of Amgen’s flagship drugs even further as patients seek alternatives with less beleaguered reputations. The company, of course, spins the news as in line with expectations - saying in a statement that it had already taken the FDA’s ruling into account when it gave financial guidance earlier this week, and calling attention to overall financial results that beat Wall Street expectations for the second quarter.

Investors seem inclined to agree with the company’s optimism - shares were up to $62.63 on Thursday, close to the 52-week high of $64.00. Basically, Amgen buyers are betting on the bone drug Denosumab as a more important indicator than the slowly falling anemia sales. This makes sense in an industry with a short attention span, where patents expire quickly, and when they do generics quickly devour their market share. This means that Amgen, and its peers, are constantly looking forward to the next big drug - and AMGN investors must be confident that the company has found the next blockbuster in the osteoperosis market.

Disclosure: none

Comments

[knowsmore:]

there was a study published back in the late 90's which amgen had supported. the study was stopped due to the high mortality rate. it was amgen's attempt to increase the hct of pts, and then present the info to medicare so that amgen could lobby for higher payment rates.

2008 Aug 01 11:37 AM

[knowsevenmore:]

Who was the author on the study and in what Journal was it published? Please cite the source.

2008 Aug 01 11:55 AM