AMGEN
Updated Dec 23, 2002
| Years |
Q1-Q3
2002 |
Dec
2001 |
Dec
2000 |
Dec
99 |
Dec
98 |
Dec
97 |
Dec
96 |
Dec
95 |
Dec
94 |
97-01 5-year
Annual Growth |
| Revenues, bn $ |
3.7 |
4.01 |
3.63 |
3.34 |
2.72 |
2.40 |
2.24 |
1.94 |
1.65 |
|
| Revenues Growth % |
|
10 |
9 |
21 |
13 |
7 |
15 |
18 |
20 |
13 |
| Net Income, mln $ |
1,190 |
1,360 |
1,121 |
1,051 |
860 |
640 |
680 |
540 |
320 |
|
| Special Items, mln $ |
-3,000 |
-203 |
+19 |
+49 |
|
|
|
|
|
|
| Earning Growth % |
|
20 |
4 |
27 |
34 |
-5 |
26 |
68 |
-15 |
17 |
| Net Profit Margin % |
|
34 |
31 |
34 |
33 |
28 |
31 |
28 |
20 |
|
| Gross Margin % |
|
89 |
89 |
93 |
92 |
92 |
92 |
90 |
90 |
|
| Operating Income, mln $ |
1,643 |
1,770 |
|
|
|
|
|
|
|
|
| Operating Growth |
|
14 |
|
|
|
|
|
|
|
|
| Return on Equity % |
|
26 |
26 |
36 |
34 |
30 |
36 |
32 |
25 |
|
| Debt / Equity |
|
|
|
0.07 |
0.09 |
0.11 |
0.03 |
0.11 |
0.14 |
|
| EPS |
1.03 |
1.18 |
1.05 |
1.02 |
|
|
|
|
|
|
| EPS Growth % |
|
12 |
3 |
24 |
39 |
-3 |
27 |
66 |
-15 |
|
| R&D, mln $ |
|
860 |
840 |
820 |
660 |
630 |
530 |
450 |
360 |
|
| R&D / Sales % |
|
22 |
23 |
25 |
24 |
26 |
24 |
23 |
22 |
|
Market Cap.:
$ 60 billion
(Jan 24, 2002)
Cash & Short Term Investment:
$ 5,175 millions
(Sep 30, 2002)
Total Assets:
$ 6,406 millions
Long Term Debt:
$ 4,950 millions
Total Liabilities:
$ 7,997 millions
Shareholders Equity:
$ 4,950 millions
Amgen's earning guidance: $1.37-$1.39 EPS for 2002, and
$1.70-$1.80 EPS for 2003, excluding acquisition charges. (Dec 13, 2002)
Price: $49.79
(Oct 25, 2002)
P/E:
35
(based on EPS 1.42, the average of 2001, projected 2002 and 2003)
Profile
- the biggest US biotech company and wwaas found in 1980
- 52nd in BusinessWeek Global 1000 in market value, Jun 2001
- Revenues in 2001: US$4 billion
- 2 genetically engineered drugs, Epogen and Neupogen,
account for 90% of the sales
- acquired Immunex for $16 billion in Dec 2001
- researches are focusing on blood cell development, nervous system
and hormone system. The products may be used to treat cancer, disorders
of blood and bone marrow, infectious disease, excessive fat, neuro-degenerative
disease such as Parkinson's disease and Alzheimer's disease, and joint
inflammation.
- Immunex is specialized in recombinant Cytokine products. Cytokines
are protein messengers that coordinate the function of immune cells, which
are white blood cells and other types of cells and tissues.
- stock code: AMGN
Major Products on the Market
| Trade Marks |
Target |
Sales in 2,001
Billion US$ |
% Change |
Remarks |
| Aranesp & Epogen |
Anemia associated with chronic kidney failure |
2.2 |
+10% |
Aranesp was launched in Oct, 2001 in the U.S.
-fewer injections required.
Epogen was introduced in 1989 for patients on dialysis.
It is a modified version of the erythropoietin, a hormone naturally
produced by healthy kidneys, to stimulates the production of red blood
cells. |
| Neupogen & Neulasta |
Infection in certain chemotherapy treatment for cancer |
1.3 |
+10% |
Introduced in 1991
A hormone selectively stimulates the production of neutrophils, one
type of white blood cell.
Neulasta is a longer lasting version of Neupogen and approved in Jan
2002. Amgen projected sales of the 2 drugs at $2 billion by 2005. |
| Kineret |
Rheumatoid arthritis, disease of joints |
0.012 |
|
Launched in Nov 2001. |
| Enbrel |
Rheumatoid arthritis, disease of joints |
|
|
Produced by Immunex. Projected sales of $1.2 - $1.4 billion in 2003
Co-marketing with Wyeth |
Is it in a great potential market which could lead to a sizable increase
in sales for at least several years? Does it have a strong demand?
How big is the market?
1. The growth of the existing drugs is slowing down. The future growth
depends on the new drugs under research. Once a new drug works, the
earning will be explosive.
The improved version of Epogen (with a new
name Aranesp) has been approved. As a result of collaboration,
Epogen
is also marketed by Johnson & Johnson under a different name.
The total market for anemia treatment was about $5 billion in 2000.
2. There is an increase in aging population in developed countries.
As estimated by an analyst, health care expenses account for 20% of US
GDP. Middle class consumer is growing in countries like China, Brazil
and India.
3. Motivated by the great amount of investment, the technology and
the new discovery itself should be able to create bigger market in biotech
drugs.
What makes the company different from its competitors? How does
the company sustain its competitive advantages?
1. Amgen is one of the pioneer companies which have successfully discovered
genetically engineered drugs. Their experience is very valuable for
further growth.
2. Because they are the most successful biotech drug maker which is
having a huge profit, it allows them to spend much larger money on research.
Its R&D is 2 times those of Genentech and Chiron, the 2nd & 3rd
biotech drug producers. It is a great advantage over other biotech
drug makers.
3. The greatest asset is the talents inside its company.
4. The 2 successful drugs are related to blood cells. This makes
them become the dominated power in this specific area.
5. The company has successfully targeted at a market with huge demand.
How does it make money? What is its business model for success?
1. The company is focusing on those diseases which are not yet cured by
regular medicines.
2. The company spends a great amount on research. The created
new products could be marked up extremely high. Then the huge return
is able to generate a further expansion.
What are the risks?
1. Successful product development is not guaranteed. There are many uncertain
factors lead to a failure of new discovery.
2. Patent disputes frequently happen and they could preclude commercialization
of products.
3. Increasing emphasis on managed care in the U.S. has pressure on
price and usage of products.
Is it a monopoly-type business?
For the 2 drugs on the market, Amgen has the greatest
market share.
Because each drug is well protected by patent for
7 years. Usually the specific market of each drug is restricted from
competition. Therefore, successful drug companies could be considered
as monopoly type business within the period of their patents.
For overall industry, there is intensive competition
in product development from other biotech and pharmaceutical companies.
Large drug makers have greater clinical, research, regulatory and marketing
resources. They may also acquire technology from academic institutions,
government agencies and other private and public research organizations.
Major Development Products
| Trade Mark |
Clinical trial |
Disease |
Remarks |
| AMG 073 |
Phase III |
Secondary hyperparathyroidism |
Small molecule therapentic, licensed from NPS Pharmaceuticals. |
| KGF |
Phase III |
Oral mucositis |
A growth factor for oral mucositis, a painful side effect
of chemotherapy and radiation treatment. |
| Epratuzumab |
Phase III |
Non-Hodgkin's lymphoma |
|
Recent Changes
European regulators have approved Enbrel as a treatment for psoriatic
arthritis, the form of arthristis that occurs in people who have psoriasis,
a condition linked to an overactive immune system that causes inflamed
scaly red patches of skin throughout body. (Dec 17, 2002)
Useful Links
www.amgen.com www.fool.com www.multex.com
www.biospace.com www.informedinvestors.com
Does the management have a determination to continue to develop products
that will further increase total sales when the growth potentials of currently
attractive product lines have largely been exploited?
How effective are the company's research and development efforts
in relation to its size?
Does the company have an above-average sales organization?
Does the company have worthwhile profit margin?
What is the company doing to maintain or improve profit margin?
Does the company have outstanding labor and personnel relations?
Does the company have outstanding executive relations?
Does the company have depth to its management?
How good are the company's cost analysis and accounting controls?
Does the company have a short-range or long-range outlook in regard
to profits?
Will the growth of the company require sufficient equity financing
so that the larger number of shares then outstanding will dilute existing
shares?
Does the management talk freely when things are going well, but "clam
up" when troubles and disappointments occur?
Does the company have a management of unquestionable integrity?