10-QPeriod: Q3 FY2012

AMGEN INC Quarterly Report for Q3 Ended Sep 30, 2012

Filed November 6, 2012For Securities:AMGN

Summary

Amgen Inc. reported strong financial results for the nine months ended September 30, 2012, demonstrating significant growth in both revenues and net income compared to the same period in 2011. Total revenues increased by 11% to $12.84 billion, primarily driven by a robust 8% rise in product sales to $12.30 billion, with notable performance from key products like ENBREL and Neulasta®/NEUPOGEN®. The company successfully executed strategic business combinations, acquiring Micromet, Inc., Mustafa Nevzat Pharmaceuticals, and KAI Pharmaceuticals, which contributed to a substantial increase in goodwill and intangible assets. This expansion reflects Amgen's commitment to strengthening its pipeline and market presence in oncology, Turkey, and nephrology. Despite increased investments in research and development and higher interest expenses, Amgen maintained strong operational efficiency, leading to a 43% increase in operating income and a 29% rise in net income to $3.56 billion for the nine-month period. Amgen also demonstrated a strong commitment to returning capital to shareholders through significant stock repurchases and consistent dividend payments. The company's financial position remains robust, with substantial cash and marketable securities, enabling continued investment in growth opportunities and shareholder returns.

Financial Highlights

54 data points
Beta

Revenue

$4.32B

79.3% Gross Margin

Net Income

$1.11B

25.6% Net Margin

EPS (Diluted)

$1.41

Total Assets

$55.45B

Cash & Equivalents

$5.82B

Free Cash Flow

$1.55B

Financial Statements
Beta
Revenue$4.32B
Cost of Revenue$775.00M
Gross Profit$3.43B
SG&A Expenses$1.13B
Operating Expenses$2.90B
Operating Income$1.42B
Interest Expense$271.00M
Net Income$1.11B
EPS (Basic)$1.44
EPS (Diluted)$1.41
Shares Outstanding (Basic)771.00M
Shares Outstanding (Diluted)783.00M

Key Highlights

  • 1Total revenues increased 11% to $12.84 billion for the nine months ended September 30, 2012, compared to $11.61 billion in the prior year.
  • 2Product sales grew 8% to $12.30 billion for the nine months ended September 30, 2012, driven by strong performance in ENBREL (up 12%) and Neulasta®/NEUPOGEN® (up 4%).
  • 3Net income surged 29% to $3.56 billion for the nine months ended September 30, 2012, compared to $2.75 billion in the prior year.
  • 4Diluted Earnings Per Share (EPS) increased 52% to $4.51 for the nine months ended September 30, 2012, from $2.96 in the prior year.
  • 5Amgen completed three significant acquisitions: Micromet, Inc., Mustafa Nevzat Pharmaceuticals, and KAI Pharmaceuticals, expanding its pipeline and market reach.
  • 6The company repurchased $3.4 billion of its common stock and paid $844 million in dividends during the nine months ended September 30, 2012.
  • 7As of September 30, 2012, Amgen held $25.4 billion in cash, cash equivalents, and marketable securities, while total debt was $26.5 billion.

Frequently Asked Questions

Revenue growth was primarily driven by an 8% increase in product sales to $12.30 billion. Key products like ENBREL (up 12%) and Neulasta®/NEUPOGEN® (up 4%) showed strong performance. Additionally, 'Other revenues' saw a substantial increase, largely due to milestone payments and changes in collaboration agreements, particularly with Takeda related to motesanib, which contributed $232 million in revenue for the nine-month period.

Amgen completed three strategic acquisitions in 2012: Micromet, Inc., Mustafa Nevzat Pharmaceuticals, and KAI Pharmaceuticals. These acquisitions significantly increased Amgen's goodwill and intangible assets on the balance sheet. The costs of these acquisitions were primarily funded by cash, impacting the investing and financing cash flows. While specific revenue contributions from these acquisitions are not detailed separately in this report, they are expected to bolster Amgen's pipeline and future growth in oncology, nephrology, and the Turkish market.

Amgen actively manages its debt and returns capital to shareholders. During the first nine months of 2012, the company issued $4.9 billion in long-term debt, increasing its total debt to $26.5 billion. Simultaneously, Amgen repurchased $3.4 billion of its common stock and paid $844 million in dividends, demonstrating a commitment to shareholder returns. The company ended the period with $25.4 billion in cash, cash equivalents, and marketable securities, indicating a strong liquidity position to support its ongoing capital allocation strategies.

A significant concern highlighted is the upcoming expiration of patents for key products, such as NEUPOGEN® (December 2013) and Neulasta® (2015), which will likely lead to increased competition, including from biosimilars, potentially impacting future sales. Additionally, Amgen is managing ongoing legal proceedings and government investigations related to sales and marketing practices, with an expectation to finalize a settlement that will resolve these matters. Deteriorating economic conditions in Southern Europe are also impacting the timing of customer payments, although significant losses have not yet been incurred.