Amgen shares were off 6.6% Tuesday to a two-and-a-half year low after the Centers for Medicare & Medicaid Services proposed limiting payments for Amgen's and Johnson & Johnson's anti-anemia medications on safety concerns. Amgen was downgraded by Robert Baird analyst Christopher Raymond and Banc of America Securities analyst William Sargent after Medicare issued its proposal. "[W]e see this development as a watershed event, possibly opening the door to significant downstream private-payer pressure for years to come," Raymond wrote in his note. Anemia drugs Aranesp and Epogen represented 48% of Amgen's profits last year; J&J licenses Epogen from Amgen and sells it under the name Procrit. J&J's shares fell 1.3% to close at $61.82. Amgen's shares have lost over 15% of their value since last Thursday, when an FDA advisory panel recommended that more limits be placed on the anti-anemia drugs and further safety testing be implemented.
Sources: MarketWatch, Reuters
Commentary: Amgen Down Sharply On Medicare Proposal; Expecting a Bounce • Amgen Keeps Falling, I Keep Buying: Long Term Prospects Look Good • Amgen: Still a Bargain Despite Recent Selloff • FDA Panel Recommends Stronger Warning Labels, More Testing for Anemia Drugs
Stocks/ETFs to watch: Amgen, Inc. (NASDAQ:AMGN), Johnson & Johnson (NYSE:JNJ). Competitors: Roche Holding Ltd. [ADR] (OTCQX:RHHBY), Novartis AG (NYSE:NVS), Baxter International Inc. (NYSE:BAX). ETFs: Biotech HOLDRs (NYSEARCA:BBH), PowerShares Buyback Achievers (NASDAQ:PKW), PowerShares Dynamic Large Cap Growth (NYSEARCA:PWB)
Conference call transcripts: Q1 2007
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