Amgen ( AMGN ) reported fourth
quarter 2012 earnings of $1.39 per share, 4 cents below the Zacks
Consensus Estimate. Earnings, however, increased 16.8% from the
year-ago period. Higher revenues and a lower share count
contributed to the year-over-year increase in earnings.
Total revenue increased 11.0% to $4,421 million in the fourth
quarter of 2012, comfortably surpassing the Zacks Consensus
Estimate of $4,371 million. Key growth drivers included Enbrel,
Xgeva, and Prolia.
Including one-time items, fourth quarter earnings declined 6% to
$1.01 per share.
Full year earnings increased 22.6% to $6.45 per share, missing
the Zacks Consensus Estimate of $6.49. Total revenues increased 11%
to $17,265 million, surpassing the Zacks Consensus Estimate of
$17,215 billion.
The Quarter in Detail
Fourth quarter total product revenues increased 11% to $4,337
million (US: $3,315 million, ex-US: $1,022 million).
Revenues of Amgen's erythropoiesis-stimulating agent (ESA)
Aranesp fell 9% to $489 million (US: $187 million; ex-US: $302
million) due to changes in practice patterns.
Revenues of Amgen's other ESA, Epogen, decreased 1% to $479
million mainly due to a reduction in dose utilization that offset
the impact of lower customer discounts and a favorable change in
accounting estimates. Revenues declined 2% sequentially due to
competition. We note that a new competitor,
Affymax' ( AFFY ) Omontys
(peginesatide), has entered the dialysis market. On its fourth
quarter call, Amgen said that the impact of competition continues
to be modest and mainly in the form of pilot programs.
Worldwide revenues of Neulasta and Neupogen declined 1% to
$1,306 million in the fourth quarter. Amgen is focusing on
increasing investment in the US on direct-to-patient and caregiver
communications in order to increase awareness about the risk of
febrile neutropenia.
Enbrel delivered revenues of $1,161 million, up 23%. Higher
average net sales price and increase in unit demand drove revenues.
The company has been taking steps to improve Enbrel's performance
which includes optimization of the sales force, higher
direct-to-consumer advertising and increased focus on appropriate
access.
The company said that it has been increasing its share among
bio-naïve (patients new to biologics) patients. With Amgen and
Pfizer's ( PFE ) collaboration for
Enbrel set to expire in late 2013, Amgen has completed the
consolidation of US field sales activities under its wing. The
consolidated sales force is targeting both the rheumatology and
dermatology segments.
Fourth quarter 2012 Prolia revenues came in at $154 million, up
from third quarter 2012 revenues of $110 million.
Meanwhile, Xgeva, which gained FDA approval in Nov 2010,
delivered fourth quarter 2012 revenues of $215 million, up from the
$201 million, $179 million, and $153 million reported in the last
three quarters. Xgeva's unit share in the US increased to 37% in
the fourth quarter. However, with Novartis' ( NVS ) Zometa slated to
lose patent protection, there could some choppiness in the market
with the entry of generic competition and reimbursement
considerations.
Sensipar/Mimpara revenues increased 19% to $256 million in the
reported quarter. Vectibix revenues came in at $91 million during
the quarter, up 5%.
While fourth quarter 2012 R&D expenses increased 9% from the
year-ago period, SG&A expenses increased 13%. Higher Enbrel
profit share expenses and expansion in international markets led to
the increase.
Amgen bought back 14 million shares during the reported quarter
for $1.2 billion. Going forward, the company expects its share
buyback activities to slow down with a higher focus on increasing
dividend meaningfully.
Guides above Expectations
The company expects to earn $6.85 - $7.15 (up 5-10% from 2012)
per share on total revenues of $17.8 billion - $18.2 billion (up
3-5% from 2012). Guidance was above expectations with the Zacks
Consensus Estimate for earnings and revenues standing at $6.78 per
share and $17.7 billion, respectively.
The company also provided an update on its 2015 guidance which
had initially been provided in 2011. Amgen, which had forecasted
2015 earnings of $7.25 to $8.60 per share on revenues of $16
billion - $18 billion, now expects to reach the upper end of its
revenue guidance in 2013 itself. Meanwhile, the company expects to
achieve the earnings guidance in 2014.
During 2015, the company expects to achieve at least the upper
end of its revenue guidance range and deliver earnings per share of
at least $8.00.
Amgen currently carries a Zacks Rank #3 (Hold). We expect
investor focus to remain on the company's business review on Feb
7.
While both Pfizer and Novartis are Zacks Rank #3 stocks, Affymax
is a Zacks Rank #2 stock (Buy).
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