Amgen 1Q Profit Falls; Revenue Outlook Cut
Fri, 04/24/2009 - 4:34am
NEW YORK (AP) — Amgen Inc. said Thursday a continuing decline in anemia drug sales and patient difficulty in paying for some of its expensive treatments weighed down first-quarter profit, prompting the world's largest biotechnology company to cut its full-year sales outlook. Sales of the anemia drug Aranesp have been falling for several quarters because of safety concerns and stricter warnings. But other key products also declined during the quarter because of the weak economy and "changes in consumer and physician behavior" as patients struggle to pay for medications, the company said. "For the first time, the biopharmaceutical industry is not exempt from these economic factors in the U.S.," Chairman and Chief Executive Kevin Sharer said in a statement. A key reason for the sharper-than-expected decline was a 20 percent dive in sales of the drug Enbrel, which treats rheumatoid arthritis and the chronic skin disease psoriasis. The company cited a reduction in wholesaler inventory as part of the problem and a stronger U.S. dollar cutting into overseas sales. But in a conference call, Sharer said that it is likely patients are also finding copays for the drugs difficult and fewer patients are likely covered by insurance, following job losses. Biotechnology drugs, high-tech treatments made in living cells, are among the most expensive medicines on the market. Enbrel can cost $12,000 or more, per year, depending on dosage and insurance coverage. Many insurers charge a high copayment for its use as well. Competing drugs also may be taking a toll. Last week, sales of Abbott Laboratories' similar drug Humira also disappointed analysts, even though they increased 17 percent to over $1 billion and the company said the drug is taking market share. The companies all have copay assistance programs to help patients offset costs. Thousand Oaks, California-based Amgen missed Wall Street's forecasts with its results, seemingly surprising the market and sending shares lower in after-hours trading after a day's worth of gains. Profit fell to $1.02 billion, or 98 cents per share, down from $1.1 billion, or $1.01 per share, a year prior. Revenue fell 8 percent to $3.31 billion. Excluding charges, the company said it earned $1.08 per share, but that still falls shy of Wall Street forecasts for profit of $1.15 per share on revenue of $3.63 billion. Amgen hopes to reinvigorate sales with the eventual approval of the experimental osteoporosis drug denosumab. Meanwhile, the weakened global economy took its toll on the company. Sales of Aranesp fell 18 percent to $626 million, while the company's other anemia drug, Epogen, gained 2 percent to reach $565 million. While falling anemia drug sales were expected, Wall Street had not anticipated a the steep decline to $758 million for sales of Enbrel. Sales of Neulasta and Neupogen, which prevent infections in chemotherapy patients, fell 1 percent to $1.07 billion. Looking ahead, Amgen cut revenue guidance to between $14.4 million and $14.8 million, down from prior guidance of $14.8 million to $15.2 million. Still, Amgen reaffirmed its profit outlook for $4.55 to $4.75 per share. Analysts expect profit of $4.62 per share on revenue of $14.9 billion.