Infection drugs help lift Amgen’s 1Q profit above view, health reform to drag on 2010 results

Amgen 1Q profit tops view; warns on reform costs

THOUSAND OAKS, Calif. — Amgen Inc. said Wednesday that higher sales of its anti-infection drugs helped lift first-quarter profit by 15 percent, but the drugmaker cautioned that health care reform measures will tamp down full-year results.

One of the world’s largest biotechnology companies, Amgen said the health care legislation passed last month will trim $200 million to $250 million from fiscal 2010 results. Amgen expects adjusted profit and revenue will come in toward the lower end of its forecast of $5.05 to $5.25 per share on sales of $15.1 billion to $15.5 billion, as a result.

Chairman and CEO Kevin Sharer said the company “will take appropriate steps to manage the impact of the new U.S. health care reform law.”

The health care overhaul is expected to trim revenue by requiring drugmakers to give the government a larger discount on drugs for Medicaid patients, and by extending rebates to insurers that dispense drugs to Medicaid recipients. More health care facilities will be eligible for discount prescriptions, as will patients who fall into a coverage “donut hole.” And the law’s expansion of Medicaid eligibility will mean that more people will be serviced by the above discounts. Some of the provisions are already in effect, and others will be phased in by Jan. 1, 2014.

In aftermarket trading, Amgen shares fell 36 cents to $58.35, having closed earlier down 2.4 percent to $58.71.

For the three months ended March 31, Amgen’s profit rose to $1.17 billion, or $1.18 per share, from $1.02 billion, or 98 cents per share, a year earlier. Excluding one-time costs, Amgen would have earned $1.30 per share — topping the $1.23 estimate of analysts surveyed by Thomson Reuters.

Revenue climbed 9 percent to $3.59 billion, slightly shy of analysts’ $3.65 billion forecast.

Amgen said sales of Neulasta and Neupogen, which help prevent infections in chemotherapy patients, rose 10 percent to $1.18 billion. The gains came from higher prices and greater demand, especially overseas, as the drugs enter new markets and patients are switched from Neupogen to the newer Neulasta.

Sales of rheumatoid arthritis and psoriasis drug Enbrel increased 6 percent to $804 million from $758 million.

Sales of Amgen’s anemia drugs rebounded 5 percent to $1.25 billion from $1.19 billion, as a 10 percent rise in Epogen sales helped offset flat sales of Aranesp.

Use of both anemia drugs began to fall in 2007 after studies linked them to side effects including faster tumor growth. Use of the drugs was restricted, which hurt Amgen’s sales growth. The company is hoping to regain sales momentum with its osteoporosis drug Prolia, which is currently being reviewed by the Food and Drug Administration.

The FDA is scheduled to make a decision on Prolia by July 25. Wall Street sees Prolia as a potential billion-seller that could recharge Amgen’s revenue growth.