Amgen operates in such a rarefied world that it can boost annual sales 26 percent, crack the $10 billion sales mark and still disappoint...

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Amgen operates in such a rarefied world that it can boost annual sales 26 percent, crack the $10 billion sales mark and still disappoint Wall Street.

The bellwether of the biotechnology industry saw its stock dip $1.98 yesterday on heavy trading, to close at $61.58, after it told investors its sizzling growth rate may be slowing down in 2005.

The numbers from its year-end report were stunning.

It has 14,000 employees globally, nearly double what it had three years ago. Sales last year eclipsed $10 billion, up from $4 billion in 2001. Net profit margin, when excluding the costs of acquisitions, was 30 percent of sales.

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Enbrel, the autoimmune-disease drug Amgen bought when it acquired Seattle-based Immunex, cracked $1.9 billion in sales last year, up 46 percent from the prior year. That performance happened as the rheumatoid-arthritis drug branched into a new market, psoriasis, but also faced serious competition from Abbott Laboratories’ Humira.

The company also has begun heavily touting several experimental drugs in its development pipeline, a traditionally weak area.

Amgen Chief Executive Kevin Sharer, in a conference call with analysts, called the work “astonishing.”


Quick profile




Employees:
14,000, including 900 in Seattle and Bothell


2004 sales:
$10.6 billion


2004 Enbrel sales:
$1.9 billion (46 percent annual increase)


2004 R&D spending
: $2 billion

What it does: Makes drugs for the side effects of chemotherapy, kidney disease and inflammatory diseases.

Source: Amgen


Several analysts were less impressed because of Amgen’s relatively tepid forecast for 2005. The company predicted its revenues would grow, in percentage terms, in the high-single digits to low-teens.

Earnings per share, excluding acquisition costs and some other expenses, are forecasted between $2.70 and $2.85, about 12 to 19 percent growth, below some analysts’ expectations.

Amgen said new Medicare rules are squeezing it and cancer doctors that prescribe its drugs. The rules limit what the government will pay for Amgen’s high-priced drugs used for the side effects of chemotherapy.

Frank DiLorenzo, an analyst with Standard & Poor’s, downgraded Amgen from “strong buy” to “hold.” He said Amgen could face generic competition in Europe for its twin blockbusters, Epogen and Neupogen.

He also wrote, “We think Amgen overpaid for acquisitions and deals, and neglected niche opportunities.”

The company bought Immunex for $10 billion in 2002, then Tularik of South San Francisco for an estimated $1.3 billion.

At the time it acquired Immunex, Amgen said it anticipated $3 billion in Enbrel sales by 2005. If the drug continues on its current growth rate, it will come close, at $2.8 billion.

The company has been less clear about how that success translates into growth plans in the Northwest.

Randy Hassler, vice president of Washington operations, said the company is going through a global master plan for the next 10 years. Hassler said Amgen has 900 employees in Washington.

He would not say how many it intends to hire this year. It is advertising nine open positions in Washington on its Web Site.

Many former employees of Amgen and Immunex, especially talented scientists, have continued to leave without being replaced.

Despite the company’s luxurious new Helix campus along Elliott Bay, a flush research-and-development budget and generous pay packages, several former Amgen scientists say morale at the company is low.

Ken Brasel, a former scientist there, said employees have the resources to do their jobs but many have quit out of frustration with Amgen’s micromanaging style.

Sharer, on the conference call, painted a quite different picture. He said his top strategic priority is assembling the best work force in the industry.

“Talent continues to flow to Amgen,” he said. “If you don’t have the best team, you can not win.”

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com

Amgen’s results
Dec. 31 %
4th QTR 2004 2003 CHG
Profit $689,000,000 $547,000,000 +25.9
Per share 0.53 0.41 +29.3
Sales 2,909,000,000 2,346,000,000 +24.0
Annual 2004 2003 CHG
Profit $2,363,000,000 $2,259,000,000 +4.6
Per share 1.81 1.69 +7.1
Sales 10,550,000,000 8,356,000,000 +26.2