Amgen Profit Falls on Declining Sales of Anemia Drugs

Amgen Inc., the world’s largest biotechnology company, said first-quarter profit fell 3.6 percent as sales of the company’s anemia drugs declined and marketing expenses increased because of a new bone treatment.

Net income dropped to $1.13 billion, or $1.20 a share, from $1.17 billion, or $1.18, a year earlier, the Thousand Oaks, California-based company said today in a statement. Earnings excluding one-time items beat by 5 cents the $1.29 average estimate of 22 analysts surveyed by Bloomberg.

Combined sales of the company’s anemia medications Aranesp and Epogen, used by patients with kidney disease, fell 11 percent on declining use due to tighter rules on reimbursement from Medicare. Revenue from denosumab, approved last year as Prolia to treat women with osteoporosis and Xgeva to reduce fractures in cancer patients, topped analyst estimates.

“Epogen is definitely feeling the effects of bundling” from Medicare, said Eric Schmidt, a Cowen & Co. analyst in New York.

Amgen fell $1.18, or 2.1 percent, to $55 at 5:19 p.m. New York time in extended Nasdaq Stock Market composite trading. The shares have declined 6.6 percent in the past 12 months.

The company reaffirmed its forecast of earnings per share of $5 to $5.20 for 2011, issued on Jan. 24. First-quarter EPS rose because stock repurchases reduced the number of shares outstanding, Schmidt said.

Marketing Expenses

Revenue rose 3 percent to $3.7 billion, helped by denosumab sales of $69 million. Selling and administrative expenses jumped 16 percent to $1.02 billion as the company stepped up marketing for denosumab. Research and development costs rose 14 percent to $736 million.

“This is unusual for Amgen which has been and remains disciplined” at managing expenses, Amgen Chief Executive Officer Kevin Sharer said today during a conference call with analysts. “2011 is an investment year for Amgen as we launch two products and move three promising programs into” late-stage studies.

Xgeva sales may top $1 billion next year, said Michael Yee, a San Francisco-based analyst with RBC Capital Markets. The company may unveil plans at an investor meeting tomorrow to start paying a dividend, a move that would boost the flagging stock price, Yee said in a telephone interview yesterday.

“The announcement of a dividend with a yield around 2 percent will get value and income investors interested in the stock,” Yee said. The stock may rally more if the company pleases growth investors by announcing “an aggressive move to cut research and development spending,” Yee said. Research spending topped $2.9 billion last year.

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