10-QPeriod: Q3 FY2011

AMGEN INC Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 4, 2011For Securities:AMGN

Summary

Amgen Inc.'s third quarter 2011 results showed a significant decrease in net income, primarily driven by a $780 million legal settlement charge related to sales and marketing practices. Despite this, total revenues grew 3% year-over-year to $3.94 billion, with product sales increasing 3% to $3.88 billion, largely supported by strong performance in Neulasta®/NEUPOGEN® and ENBREL, which offset declines in EPOGEN® and Aranesp®. The company demonstrated solid cash flow generation, with $3.54 billion in cash from operations for the nine-month period. Amgen continued its commitment to returning capital to shareholders, with $3.15 billion in share repurchases and the initiation of a quarterly dividend. The company also made strategic acquisitions, including BioVex Group, Inc., to bolster its pipeline, particularly in oncology. Looking ahead, Amgen faces ongoing challenges from the decline in its erythropoiesis-stimulating agents (ESAs) and potential impacts from healthcare reform and evolving global economic conditions. However, the company's strategic investments in R&D and recent product launches like XGEVA® and Prolia® indicate a focus on future growth drivers.

Financial Highlights

53 data points
Beta

Revenue

$3.94B

83.0% Gross Margin

Net Income

$454.00M

11.5% Net Margin

EPS (Diluted)

$0.50

Total Assets

$45.77B

Cash & Equivalents

$3.89B

Free Cash Flow

$849.00M

Financial Statements
Beta
Revenue$3.94B
Gross Profit$3.27B
SG&A Expenses$1.13B
Operating Expenses$3.42B
Operating Income$525.00M
Interest Expense$158.00M
Net Income$454.00M
EPS (Basic)$0.50
EPS (Diluted)$0.50
Shares Outstanding (Basic)907.00M
Shares Outstanding (Diluted)914.00M

Key Highlights

  • 1Total revenues increased by 3% to $3.94 billion for the third quarter, and by 4% to $11.61 billion for the first nine months of 2011.
  • 2Product sales grew by 3% to $3.88 billion in Q3 and by 4% to $11.39 billion for the nine-month period, driven by Neulasta®/NEUPOGEN® and ENBREL, despite declines in Aranesp® and EPOGEN®.
  • 3Net income significantly decreased by 63% to $454 million for Q3, and by 24% to $2.75 billion for the nine-month period, largely due to a $780 million legal settlement charge.
  • 4Operating expenses increased by 46% in Q3, primarily driven by the aforementioned legal settlement and higher SG&A costs.
  • 5Amgen completed the acquisition of BioVex Group, Inc. for $597 million, strengthening its oncology pipeline.
  • 6The company returned $3.15 billion to shareholders through share repurchases and initiated a quarterly dividend of $0.28 per share.
  • 7Cash and cash equivalents, along with marketable securities, totaled $17.68 billion as of September 30, 2011, providing significant liquidity.

Frequently Asked Questions

The primary driver for the substantial decrease in net income was a $780 million charge recorded in the third quarter related to an agreement in principle to settle allegations concerning Amgen's sales and marketing practices, stemming from federal civil and criminal investigations.

Key products like Neulasta®/NEUPOGEN® and ENBREL showed positive sales growth, driven by price increases and demand. However, sales of Aranesp® and EPOGEN® continued to decline, influenced by factors such as product label changes, regulatory reimbursement changes (particularly for ESAs), and increasing competition. Newer products like Prolia® and XGEVA® are showing strong initial growth.

Amgen remains committed to returning capital to shareholders. During the nine-month period, the company repurchased approximately $3.0 billion of its common stock and initiated a quarterly cash dividend of $0.28 per share. The company has significantly increased its share repurchase authorization, signaling confidence in its long-term value and cash flow generation.

Key risks include potential impacts from U.S. healthcare reform, evolving global economic conditions affecting reimbursement and pricing internationally, ongoing litigation, and patent expirations. Opportunities lie in the continued growth of newer products like XGEVA® and Prolia®, pipeline development through R&D and strategic acquisitions like BioVex, and potential benefits from international market expansion.