How Amgen Makes Money

Amgen Inc. (AMGN), is an American multinational biopharmaceutical company that works to help people beat medical conditions and has extended hundreds of thousands of lives in the process. Founded in 1980 as Applied Molecular Genetics, Amgen's current specialty is human therapeutics, developing treatments for severe asthma, plaque psoriasis, and small-cell lung cancer.

Amgen employs hundreds of scientists, making it one of the largest employers in Ventura County, California. The company's headquarters are located in Thousand Oaks, California. While the company's product line is small (approximately 27 products), Amgen is one of the world's largest independent biotechnology companies.

Amgen's Financials

Amgen makes money by creating treatments for medical conditions affecting millions. The company has 27 approved treatments for cholesterol, osteoporosis, oncology and hematology, lung cancer, and severe asthma.

In the first quarter of 2023, Amgen collected $6.1 billion in revenues, down 2.1% from $6.2 billion. It experienced a 2% increase in sales compared to the same quarter in 2022—$5.8 billion, up from $5.7 billion. While revenues slightly decreased, net income for the quarter was $2.8 billion—up from $1.5 billion in the first quarter last year. However, this significant increase is due to a net unrealized gain of $1.9 billion, accounted for in net other income.

The company claims a 14% volume growth of sales, setting records for 10 of its brands while expanding its international presence and working to close an acquisition of Horizon Therapeutics.

Amgens' Business Segments

Amgen operates in one segment, which it calls human therapeutics. The company breaks down sales by product, listing nine products in its quarterly report and classifying all others into an "other products" category. There are two sales areas recognized, the U.S. and the "rest of world" (ROW)—the majority of which are European countries.

Overall, sales have decreased from Q1 2022 by 2.1% and represent 95% of Amgen's total revenue.

Amgen's Recent Developments

Amgen acquired ChemoCentryx in Oct. 2022, a biotechnology company that developed treatments for autoimmune diseases, inflammatory conditions, and cancer. The company acquired $3.9 billion in assets in the acquisition.

Amgen also continues to battle in court for rights to its products. In April 2023, the abbreviated new drug application (ANDA) patent litigation injuction against Sandoz and Zydus Pharmaceuticals was affirmed by the U.S. District Court. This injunction prevents Sandoz from manufacturing and selling generic versions of Otezla until February 2028.

Other patent litigations have been filed and are pending in court—Janssen Biotech has filed to prevent Amgen from registering a drug biosimilar to one it produces, and antitrust suits are filed against Amgen by Sensipar and Regeneron.

Amgen is facing a class-action suit from Roofers Local No. 149 Pension Fund, in which the defendants argue they were intentionally misled about the potential tax liabilities of a decline in Amgen's stock value.

The Bottom Line

Amgen and its development team have offered relief to many patients that are suffering. The company focuses its resources on alleviating physical pain.

The company faces increasing competition from generic products and biosimilar treatments, but its existing and new products, Enbrel and Prolia, contributed to growth in 2022, although in the first quarter of 2023, Amgen experienced a 2.1 % decrease in total revenues year-over-year.

The company expects total revenue in 2023 to end up between $26 billion and $27.3 billion and forecasts an earnings per share increase to between $17.60 and $18.70 (non-GAAP basis).