Amgen Expects Sales to Soar
Biotechnology giant Amgen Inc. forecast strong sales growth for its drugs in 2003, offering the biggest hint yet that a long-awaited second factory for its much-in-demand rheumatoid arthritis drug should open on schedule.
The Thousand Oaks-based company said it would end 2002 with a 40% jump in sales, driven by accelerating growth of second-generation medications to treat anemia and chemotherapy-related infections. And Amgen said its sales gains would continue at the same pace or better in 2003, exceeding its previous bullish forecast in the 30% range.
Wall Street responded enthusiastically, driving Amgen’s stock almost 7% higher Thursday. The shares closed at $50.45, up $3.18, on Nasdaq. Amgen’s market capitalization is now $64.9 billion, the highest of any Southland-based company and nearly twice the market value of Burbank-based Walt Disney Co.
Next year “will be a big year of performance for Amgen,” Prudential Securities analyst John Sonnier said in a research note.
Among the greatest challenges facing Amgen, in the eyes of analyst Martin Auster of SunTrust Robinson Humphrey, is maintaining its supercharged growth rate beyond 2003. Citing what he called “the law of large numbers,” Auster said Amgen must generate new revenue of $1 billion in 2004 to achieve an earnings growth rate in the mid-teens.
Amgen should end 2002 with $4 billion in cash that it could use to license promising drugs or make an acquisition. Chairman and Chief Executive Kevin W. Sharer said that Amgen is “always looking for candidates to add to the pipeline” but that he was “not predicting anything about acquisitions or targets.”
Much of Amgen’s growth in the coming year will come from its anti-inflammatory rheumatoid arthritis drug Enbrel. Amgen estimated 2003 Enbrel sales would increase as much as 75% to $1.4 billion, a projection that assumes its new plant in Rhode Island would receive government approval by March. The factory is needed to meet extraordinary demand for Enbrel, the crown jewel of Amgen’s $9.6-billion purchase of Immunex Corp. in July. Capacity constraints have kept sales of the drug at or below 2001 levels.
The company’s 2003 growth forecast for its two newest drugs, Neulasta and Aranesp, also exceeded most analysts’ rosy expectations.
Amgen said sales of anti-infection drugs Neupogen and Neulasta should range from $2.1 billion to $2.3 billion, up from about $1.7 billion this year. More than half of those sales should come from Neulasta, a once-a-week injectable drug for chemotherapy-related infections that was approved in January by the Food and Drug Administration. Neupogen, which goes off patent in 2006, is administered daily.
Sales of Amgen’s anemia drugs Epogen and longer-acting version Aranesp should range from $3.2 billion to $3.4 billion in 2003, the company said. Analysts expect sales of the anemia drugs to reach $2.6 billion this year.
Sharer said in an interview that Aranesp sales have accelerated steadily since summer, when Amgen received government approval to promote the drug for cancer-related anemia, its largest potential market. The outcome of the company’s closely watched lawsuit against Medicare over reimbursement for the drug shouldn’t affect the forecast, he said.
Amgen’s share of the anemia drug market in the United States is growing at the expense of rival Johnson & Johnson, Sharer added. J&J; sells a product here identical to Epogen under a license from Amgen.
Aranesp sales in the United States are benefiting as well from 25% to 30% growth in the size of the cancer-related anemia market, Sharer said.
Aranesp also has gained in Europe, where J&J; has experienced quality problems with a modified version of its anemia drug.
Amgen said total revenue in 2003 may climb as high as $7.8 billion. Earnings per share should range from $1.50 to $1.60, an increase of 25% to 30%, after merger-related costs of about 20 cents a share.
