How Competitive Pressures Could Impact Amgen’s Segmental Revenues in 2016
Amgen's Valuation Drivers in 2016: The Inside Story
Anti-inflammation and nephrology revenues
Amgen’s (AMGN) newest anti-inflammation drug, Enbrel, is currently facing strong competition from AbbVie’s (ABBV) Humira, Johnson & Johnson’s (JNJ) Remicade (through subsidiary Janssen Biotech), and Novartis’ (NVS) Cosentyx. This has severely affected the company’s capability to negotiate favorable pricing from payers. But with the patent exclusivity of Enbrel extending till 2029, Amgen considers it to be a key growth driver for the company.
Wall Street analysts have projected that Enbrel’s revenues will reach about $5.6 billion in 2016, which would be a YoY (year-over-year) growth of about 5.2%. Revenues from the sales of its nephrology drug, Aranesp, are also expected to rise YoY by about 3.5% and reach around $2 billion in 2016. Epogen, however, is expected to witness a YoY decline in revenues of about 32.1% but still manage to earn $1.3 billion in 2016.
Notably, Amgen makes up about 1.1% of the iShares Russell 1000 Growth ETF (IWF).
Enbrel customer mix
Rheumatology patients make up about 80% of Enbrel’s total sales. Enbrel is also used extensively by patients suffering from skin diseases. However, rising competition of non-biologics has adversely affected Enbrel’s market share in the dermatology space. Currently, Enbrel accounts for around 21% of the dermatology market in the US. (For more on Enbrel, please refer to “Amgen’s Presence in Inflammation, Nephrology, and Bone Segments.”)
Nephrology drugs
With Fresenius Medical Care Center shifting its patients to Mircera and Amgen shifting one-third of the drug’s patients to Aranesp, Epogen is expected to witness steep declines in total revenues in 2016. Epogen, however, is not expected to face competition from biosimilars in 2016.
Still, Aranesp currently accounts for 70% of the ESA (Erythropoietin Stimulating Agents) sales in the US. Aranesp is expected to continue being a strong growth driver for Amgen in 2016.
In the next part, we’ll examine Amgen’s investigational chronic migraine drug, AMG 334.
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