FDA Strikes 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.
<!–more–>
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.
Tags: Amgen, AMGN, Anemia, Aranesp, Business, Denosumab, Drug Companies, Epogen, Healthcare, Investing, Osteoperosis, Pharma & Healthcare, Pharmaceuticals, Stock
This entry was posted on Thursday, July 31st, 2008 at 1:05 pm and is filed under Pharmaceuticals, Stocks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
