netrashetty
Netra Shetty
Amgen Inc. (NASDAQ: AMGN, SEHK: 4332) is an international biotechnology company headquartered in Thousand Oaks, California. Located in the Conejo Valley, Amgen is the world's largest independent biotech firm. The company employs approximately 17,000 staff members. Its products include Epogen, Aranesp, Enbrel, Kineret, Neulasta, Neupogen, Sensipar / Mimpara, Nplate, and Prolia. Epogen and Neupogen (the company's first products on the market) were the two most successful biopharmaceutical products at the time of their respective releases.
BusinessWeek ranked Amgen first on the S&P 500 for being one of the most "future-oriented" of those five hundred corporations.[3] BusinessWeek ostensibly calculated the ratio of research and development spending, combined with capital spending, to total outlays; Amgen had the fourth highest ratio, at 506:1000.
Amgen is the largest employer in Thousand Oaks and second only to the United States Navy in terms of number of people employed in Ventura County.
With plans to expand into a new campus under construction in South San Francisco, Amgen abruptly halted construction on the plans and instead put the 365,000 square feet (33,900 m2) of new space on the sublease market.[4]
It is a leading member of the U.S. Global Leadership Coalition, a coalition of over 400 companies and NGOs that promotes increased funding for US diplomatic and international development programs.[5]
In 2006, Amgen began sponsoring the Tour of California, one of only three major Union Cycliste Internationale events in the United States.
Amgen, the world’s first big biotech company (and, for a while, the largest), rode to prominence thanks to its drugs for treating anemia – a condition caused by the destruction of red blood cells, often as a result of cancer, cancer treatment, or kidney disease. Worldwide sales of anemia drugs make up around half of Amgen’s $14.6 billion revenue in 2009.
Studies in 2007 found that patients taking Amgen’s drugs for anemia caused by cancer were be more likely to die than patients who do not take these drugs. The drugs may have increased the migration rate or the rate of metastasis of the tumor. Since then, these drugs have been used less frequently and at lower doses in some areas – particularly oncology, where Medicare's decision to restrict reimbursement as a result of safety issues has had a big impact on sales. Because these drugs make up such a high percentage of Amgen's revenues, the company's revenue growth stalled. In 2009, revenue decreased 2% from the previous year, although Amgen was able to increase its net profit by 3%, increasing its margins.
Corporate Overview
Amgen generally sells its drugs directly to doctors and hospitals, who distribute them to patients and then bill payors for reimbursement. In most cases, the payor is the federal government via Medicare. As a result, Amgen is locked in a constant struggle with the government to ensure its drugs are paid for and at a high enough rate that doctors can use them profitably. Because of its focus on nephrology patients – who automatically qualify for Medicare – the percentage of Amgen’s revenues that are ultimately paid for by the federal government is higher than any other major pharmaceutical company. To secure its interests, Amgen has one of the strongest lobbying presences in Washington, D.C. of any pharmaceutical company.
Business Update
In Q3 of 2010, Amgen’s reported revenue of $3.816 billion, was approximately the same as the $3.812 billion for the third quarter of 2009. Adjusted net income decreased 14% to $1.313 million. The decrease was driven by unusually low research and development (R&D) costs and favorable tax settlements in the third quarter of 2009. Total product sales for the quarter increased 1 percent compared to the previous year. Revenue from its anemia drug Aranesp fell 9% principally due to decline in unit demand reflecting an overall decline in the segment, slightly offset by an increase in the average net sales price. Adjusted earnings per share (EPS) were $1.36 for the third quarter of 2010, a decrease of 9 percent compared to $1.49 for the third quarter of 2009. However the EPS’s still topped analysts' average expectations by 9 cents, according to Thomson Reuters.[1]
In Q2 of 2010, Amgen reported revenue of $3.8 billion, a growth of 2% from the same quarter in 2009. Total product sales for the quarter decreased 1 percent compared to the previous year. Revenue from its anemia drug Aranesp fell 13% due to reimbursement problems and label changes, although Epogen's sales increased by 3%, with increase in demand (mainly due to patient population growth). Amgen's Q2 results exceeded analyst expectations, with the company preparing for the world-wide launch of Prolia (approved on June 1 in US and days before in Europe). It is widely expected to be Amgen's most important growth driver in the future.[2][3]
In Q1 of 2010, Amgen reported revenue of $3.6 billion, a growth of 9% from the same quarter in 2009. Revenue growth was driven by increased sales of Epogen (10%) due to higher dose utilization and increased sales of Neulasta (10%) from higher demand. Net income for the quarter was $1.17 billion, representing a 15% growth from the previous year. Amgen also annouced a revised guidance, expecting revenues to range at the lower end of their earlier estimate between $15.1 and $15.5 billion. The adjustment was largely due to healthcare reform, which the company expects to negatively impact sales by $200 to $250 million.[4] While Amgen's Q1 results exceeded analyst expectations, top drugs Aranesp and Enbrel missed expectations, and the lowered 2010 outlook also disappointed investors, causing the stock price to fall.[5]
In Q4 2009, Amgen reported revenue of $3.81 billion, which was an increase of 2% over the same quarter of 2008. Net income, however, fell 5% to $1.07 billion for the quarter. These numbers fell within the lower range of analyst estimates for the company.[6] For the quarter, Amgen saw growth in sales for Epogen (9%) and Neupogen (2%), while sales for Enbrel remained largely the same and sales for Aranesp fell 8% amid safety concerns. Amgen also announced its 2010 projections, in which it forecasted revenues of between $15.1 and $15.5 billion and adjusted EPS between $5.05 and $5.25.[7]
In Q3 2009, Amgen reported revenue of $3.81 billion, a decrease of 2% from the same quarter of the previous year. A major factor behind the sales decrease was a 19% decrease in anemia drug, Aranesp's sales. This drop was due in large part from lower pricing and decreased market share from increased competition.[8] Net income increased 16% to $1.52 billion, or $1.49 per share. These profits beat analyst estimates of $1.27 per share. Despite the increased profits, Amgen shares fell 2.9% amid concerns that Amgen's most promising pipeline drug, Denosumab, will not obtain as wide of an approval as initially hoped.[9]
Amgen's Q2 2009 beat the market's expectations, with earnings of $1.27B (up 40%) compared to $906M the year before. Revenues were down 1% to $3.71B, still above forecasts. Big drivers of the stronger revenue numbers were larger revenues from Embrel (particularly from a price hike but also from a larger volume of sales), as well as a $115M tax benefit. With the strong numbers, the company raised its earnings outlook for 2009 to $14.8B from $14.4B. [10]
Recent News
The company's biggest hope is an osteoporosis drug in late-stage clinical development called Denosumab. Studies suggest that the drug is better than competitors at strengthening bones, opening the door to a billion dollar Osteoporosis drug market. [11] On June 1st, 2010 FDA approved Denosumab to help prevent fractures in post-menopausal women. This was days after the company gained European approval.[12]
Pricing Litigation
Amgen is currently subject to two subpoenas over the pricing structure of Aranesp, Epogen, Neulasta, and Neupogen. The lawsuit alleges that Amgen's pricing penalizes clinics for purchasing competitor Johnson & Johnson's anemia drug, procrit. In addition, rebates on Neulasta and Neupogen require clinics to purchase large quantities of Aranesp. Potential damages or fines from these lawsuits have not yet been determined.
Business Segments
Nephrology
Epogen
EPOGEN®, with $2.57 billion in 2009 revenues (5% growth from 2008), is Amgen’s original blockbuster drug, and the engine of much of the company’s sales.[13] It is used to treat dialysis patients for anemia. Epogen has been on the market for 19 years, and sales have grown slowly in recent years - in line with the growth of dialysis patient population, around 4-5% a year. Issues impacting Epogen include:
Incidence of kidney disease: As a monopoly product in a market that is fully penetrated, much of EPOGEN’s growth comes from the growth of the dialysis patient population. The incidence of kidney disease is expected to grow dramatically in coming years, as kidneys tend to fail with age and diabetes. An aging baby boomer population that is increasingly obese and diabetic contributes to the growth in the number of people on dialysis.
Reductions in dose: Around half of dialysis patients at any given time have red blood cell counts above the upper limit recommended by the Food and Drug Administration, a result of aggressive dosing intended to minimize the number of patients whose red blood cell counts are too low. New safety concerns could lead doctors and dialysis centers to reevaluate their dosing protocols, however, and reductions in dose for Epogen could dramatically impact Amgen’s revenues.
Reimbursement: Ultimately, the federal government pays for most of the Epogen used in the United States. For a while, Epogen was the single largest line item in the Federal Medicare budget – a distinction that has made the drug’s reimbursement rate a frequent target of legislators seeking cost savings. Reimbursement and dose may be related – Amgen critics allege that a large part of the reason why doses are so high is that dialysis companies such as DaVita and Fresenius make money on EPOGEN®, and the more of the drug they use, the more money they make. Reductions in reimbursement, these critics say, could reduce the financial incentive to use the drug and save the government money.
Competition: EPOGEN® is currently a monopoly in dialysis – there is no other product for dialysis center to use. Roche has vowed to launch a competing product, Mircera, into the US market, but Amgen’s patents may prevent them from launching this product. A key court case in Boston in September will decide the issue, and the outcome will likely have a significant impact on the company’s stock price and prospects in the dialysis market.
Market concentration: Two customers -- dialysis centers Fresenius Medical Care (FMS) and DaVita (DVA) -- are responsible for around 70% of Amgen's Epogen sales. Epogen is an important part of these companies' profits, responsible for as much as 20% of their net income. While its patents keep out other pharmaceutical companies, Amgen has little to fear from these behemoths. However, with competition, these ascendant customers could cause problems for Amgen, as they could flip market share very quickly to a competing product that offered a significant clinical or financial advantage.
Aranesp
Aranesp is a longer-acting version of Epogen. It is mostly used outside of dialysis -- for patients in the earlier stages of kidney disease, with cancer, or for several other conditions. Aranesp is Amgen's best selling drug, bringing in $2.65 billion in revenue in 2008 (down 15% from 2008).[14] Unlike Epogen, Aranesp does not operate in a monopoly. In the early years of the company, Amgen licensed the right to sell EPOGEN outside of dialysis to Johnson & Johnson (JNJ), which sells it under the brand name PROCRIT. Johnson and Johnson has since become Amgen's biggest competitor. Procrit is identical to Epogen and is manufactured by Amgen.
Aranesp's revenue has fallen each year between 2007 and 2009, after studies in oncology patients found that patients taking aranesp survived less time than those who were not on the drug - which led to dramatic decreases in the use of the drug for anemia of cancer.
Aranesp's biggest competitive advantage over Procrit is its' longer half-life. While Procrit must be injected every week, Aranesp can be injected every other week or every third week, requiring patients to come into their doctor's office less frequently.
How Amgen's erythropoietics revenues break out across drugs, geographies, and indications
On October 30, 2009, the New York Attorney General's office announced that it an 15 states, including the District of Columbia, are suing Amgen over an alleged kickback scheme involving Aranesp. The lawsuit alleges that Amgen encouraged providers to bill third parties in order to receive the drug at no cost. The lawsuit also alleges kickbacks to doctors intended to boost Aranesp prescriptions. Amgen denies all of the allegations.[15]
Sensipar
Sensipar's revenues for 2009 reached $651 million, a growth of 9% from 2008. [16] [17] Launched in 2004, the drug is Amgen's first small-molecule drug. It is used to treat secondary hyperparathyroidism, a mineral metabolism complication common in dialysis patients. Sensipar competes most directly with Abbott Laboratories (ABT)'s Zemplar and Genzyme (GENZ)'s Hectorol.
Oncology
Until recently, Amgen's oncology drugs were exclusively supportive care products. Aranesp, Neupogen, and Neulasta treat the complications that arise from chemotherapy; they do not treat the cancer itself. This strategy has proved lucrative for Amgen. While "therapeutics" -- the term for drugs that treat cancer directly -- are usually only used for a subset of cancers, Amgen's products are used across all of them. As a result, Amgen has one of the largest exposores to the oncology market or any Pharmaceutical company. In recent years, however, Amgen has put enormous resources behind its oncology therapeutics pipeline, in an attempt to develop drugs that treat the cancer itself rather than the symptoms of its treatment. Therapeutics are seen as more essential to cancer care, as such, they command higher prices and there is less pressure from payors (such as insurance companies and the federal government) to reduce their reimbursement.
Neupogen & Neulasta
With combined 2009 sales of $4.64 billion (relatively no change since 2007), Neupogen and Neulasta are major sales drugs for Amgen. Neupogen and neulasta both treat a condition called neutropenia -- a weakening of the immune system as a result of chemotherapy. Patients on high-dose chemotherapy sometimes develop infections that can be life-threatening due to their inability to fight off germs. Neulasta boosts these patients' immune systems, making it less likely they will develop infections, and allowing the to tolerate higher doses of chemotherapy. Neulasta is a longer-acting version of Neupogen, requiring less-frequent injections. Neulasta is also significantly more expensive than Neupogen, and more profitable for Amgen as a result.
Contracting: Oddly enough, Neupogen and Neulasta have been important levers to help the market share of another Amgen drug, Aranesp. Amgen ties discounts on Neupogen and Neulasta to the market share of Aranesp at an individual oncologist's clinic, reserving the bests discounts on Neulasta for oncologists who use Aranesp almost exclusively. Neupogen and Neulasta do not have any significant competitors. Because oncologists purchase both red blood cell growth factors (such as Aranesp and Procrit), as well as white blood cell growth factors (such as Neupogen and Neulasta) oncologists have a financial incentive to use Aranesp. In fact, Because of the dynamics of medicare reimbursement, oncologists must receive discounts on Neulasta in order to break even -- the reimbursement rate is less than the list price. As a result, oncologists who use J&J's procrit lose money on Neulasta. Amgen competitor Johnson & Johnson (JNJ) alleges these contracting practices will push it out of the market, and violate anti-trust laws, in a lawsuit against Amgen.
Aranesp
Aranesp is used both in cancer patients and in patients with kidney disease
Profit Center: Amgen's oncology drugs, including Aranesp, Neupogen, and Neulasta, are profit centers for most doctors. Because Amgen sells it products to doctors at a discount, and these doctors are usually reimbursed by insurance companies at a higher rate, the drugs can be an important source of profit for their practice. One six-person oncology practice in the pacific northwest made $2.7 million last year for prescribing $9 million worth Amgen products. [18] The reimbursement rate for Aranesp and Procrit is an important competitive metric. Reimbursement is calculated according to a complex, government-mandated formula known as Average Selling Price (ASP) plus 6%. The reimbursement rate is meant to be a reflection of the average price paid in the market, and is published quarterly by the Center for Medicare and Medicaid Services.
Dose & Safety Concerns: As a result of the fact that Doctors' make money on Amgen's drugs, there is little financial incentive for them to cut costs and use the drugs infrequently -- the more drug they use, the more money they make. This dynamic has fed into critics' assertions that patients are being given doses that are too high, and are risking their lives in the process. Recent data released in January and February 2007 -- one set from a study sponsored by Amgen, another from a sudy on Danish Head & Neck Cancer patients -- revealed that patients whose anemia was caused by their cancer (instead of by their chemotherapy) were more likely to die if they were taking Amgen's products. Following this study, the government stopped reimbursing Aranesp for Anemia Of Cancer (AOC)-- wiping out what had been a $500 MM market for Amgen. A subsequent study of patients on chemotherapy found no difference in survival for patients taking Amgen's drugs vs. those who were not. It wasn't the positive result the company was hoping for, but it ensured the drugs would stay on the market.
Due to the National Coverage Decision, sales of Aranesp have fallen greatly. In the first quarter of 2008, sales declined by 25 percent, to $761 million from $1.02 billion last year, due to changes in Medicare and Medicaid coverage over the past year.
Amgen had high hopes to expand Aranesp's indications to cover more types of cancers. However, results of a Phase III study involving 733 breast cancer patients taking Aranesp did not find any benefit to the drug.
Therapeutics
Although they make up little of Amgen's current sales, Amgen's pipeline is focused on oncology therapeutics -- drugs designed to treat cancer itself. The initial forray into this market has been dissapointing. Vectibix is an EGF receptor antagonise launched with high expectations in late 2006. Unfortunately, data from Amgen's PACCE trial, designed to show a survival benefit for patients taking vectibix and Avastin, instead demonstrated the opposite. Market share for Vectibix has continued to decline in the third quarter of 2007 due to this result. The drug was approved in December 2007 in Europe, but the drug has yet to create a significant amount of revenue.[19]
Vectibix has also had disappointing test results in the United States, showing no statistically significant extension of overall survival in metastatic colorectal cancer patients. The drug was only able to delay the more severe symptoms when used in combination with other chemotherapy drugs. [20]
Vectibix competes directly with ImClone Systems (IMCL)'s Erbitux.
AMG 386 - Tumor-starving compound
On November 18th, 2008, Amgen announced that compound AMG 386 had moved onto mid-stage trials. The drug interrupts the development of blood vessels providing nutrients to tumors, essentially starving them of nutrients necessary to grow. The tumors consequently starved, their growth is arrested and their advancement halted (both in size and in stage). Amgen's drug is the first of its type to advance this far, as other companies' compounds have only reached pre-clinical or stage I testing. [21]
Immunology
Enbrel, which Amgen purchased with the acquisition of Immunex in 2003, is used to treat Rheumatoid Arthritis (see Arthritis drug market), Psoriasis, and a number of other rheumatological conditions. Enbrel is a low margin product for Amgen; the products' profitability is much lower than its sales suggest. For one, Enbrel is expensive to make, and the cost of making it eats up a much greater portion of sales than for Amgen's other drugs. Secondly, profits are split with Wyeth, which owns half the rights to Enbrel.
Enbrel's biggest competitor is Abbott Laboratories (ABT)'s Humira. While Enbrel is typically considered the safer of the two drugs, there are some indications that Humira may be more effective. In the last 12 months, Enbrel has been losing market share to Humira. Sales of Enbrel have increased by 16% since last year due to increased demand. Even though Enbrel has lost 2 share points to competitors, it retains a leadership position in the rheumatology market.
Amgen is currently seeking FDA approval for Enbrel in treating pediatric psoriasis.
In September of 2008, the FDA ordered the addition of black box warnings on to several arthritis and autoimmune drugs, including Enbrel and Humira, after the drugs were associated with a potentially lethal fungal infection called histoplasmosis.[22]
Denosumab/Prolia
One June 1st, 2010 FDA approved Denosumab ,the next great hope of Amgen's pipeline, a treatment for osteoporosis that requires a twice a year injection. The drug is to be sold under the name "Prolia," [23] The osteoporosis market is currently $7 Billion and is dominated by Merck (MRK)'s Fosamax and Novartis AG (NVS)'s Zometa. Studies suggest, however, that denosumab is more effective than its competitors. [24] Analysts predict annual sales of around $1.4 billion dollars by 2014 for the product. [25]
Denosumab's potential competitive advantage centers around compliance. Currently, treatments for osteoporosis require patients take a pill daily or weekly, fast the night before doing so, and remain standing for several hours after they take the pill. Half of patients stop taking their medication within one year[26]. When patients stop taking their osteoporosis medication, they are at increased risk of hip fractures. Hip fractures are both dangerous and expensive to treat. As a result, payers are willing to cover more expensive treatments for osteoporosis if patient compliance is likely to improve.
Market Size
The National Osteoporosis Foundation estimates there are 24 Million women with Osteopenia, a precursor to full-blown osteoporosis, and 8 million with osteoporosis. Only a very small percentage of osteopenic patients are treated. As the percentage of baby-boomers over the age of 65 increases, this number could increase.
Amgen is also testing denosumab as a potential oncology drug. Test results in June 2009 show that denosumab is effective at stopping the spread of tumor into bones. Should the drug receive FDA approval for cancer applications, it could earn up to $3 billion in annual revenues, a $48 billion market in 2008. [27]
Promotion and distribution are just as important as efficacy. In July 2009, Amgen announced that it will partner up with GlaxoSmithKline (GSK) in order to sell denosumab in Europe. The deal should be beneficial to both companies, according to Amgen management. [28]
Key issues to watch
Crucial issues to look for on Denosumab are any data around hip fractures, bone density, incidences of cancer, and risk of serious infection. Denosumab's novel mechanism of action -- inhibiting the formation of cells that break down bone -- means it could potentially be more effective than current treatments, But the safety profile is unknown. One particular risk is around cancer. Phase II data suggested that patients on Denosumab were more likely to develop cancer 12 months out that patients not on Denosumab, but this effect disappeared a year later. Another risk is serious infection. Denosumab significantly increases the risk of major skin infections, requiring hospitalization of some patients. The drug also raises the risk of jaw deterioration.
In early 2007, Amgen announced the results of a study that showed denosumab to be 40 percent more effective than Fosamax. Another Phase III clinical trial released on May 19 showed that post-menopausal women gained 80 percent more bone mass with denosumab than on Fosamax. With Fosamax's patent set to expire, denosumab is in a strong position to win over market share.[29]
Trends and Forces
National Coverage Decision
On July 30, 2007, the Centers for Medicare and Medicaid Services (CMS) announced a National Coverage Decision (NCD) which affects the reimbursement policies of many of Amgen's anemia drugs, in particular Aranesp. In order to qualify for reimbursement under the new policy, chemotherapy patients must have hemoglobin levels below 10 grams per decileter. Amgen estimates that most patients taking its anemia drugs do not meet this criteria, so as a result of this new policy, fewer patients will be treated by its drugs. As of now, no health insurance policies have completely adopted the NCD, but may do so in the near future. Amgen has submitted an appeal to the CMS to reconsider the NCD, increasing the hemoglobin target to cover more patients. The outcome of the NCD is especially important for the company because the majority of product sales are related to anemia and oncology.
In the first quarter of 2009, Amgen spent $2.8 million on lobbying costs, the most of any pharmaceutical company. [30] Almost all of lobbying efforts have been centered on coverage of its anemia drugs.
Tightening FDA Regulations
When FDA commissioner Margaret Hamburg began her tenure in 2009, she announced that the FDA would toughen it's enforcement efforts to protect public health.[31] As the FDA has drawn criticisms for its failures in preventing deaths caused by drugs such as Vioxx, Hamburg has come in with several fixes that include stricter monitoring of drug adverse events, more funding for the agency, stronger ability to force product recalls, and more scientific expertise within the agency.[32] On May 19, 2010, the FDA announced 21 proposals aimed at increasing transparency to the public regarding regulatory information.[33]
Such information will increase the amount of information accessible to the public with regard to companies' pipeline drugs and manufacturing facilities that might otherwise not have been disclosed. While the tightened regulations and increased transparency will eventually improve the overall quality of pharmaceutical products, there will be growing pains as companies adjust to the stricter standards and stronger enforcement. Amgen's ability to adjust to these new standards will impact its valuation and financial success.
Competitors
In the anemia market in which Arenesp sells, Amgen's major competitor is Johnson & Johnson, which sells the anemia drug, Procrit. Amgen's Enbrel, which competes in the arthritis drug market, competes with Abbott Labs' Humira, Johnson & Johnson's Remicade, and Pfizer's Celebrex. Epogen operates in a relative monopoly, and Neupogen and Neulasta do not have direct competitors.
Competition in the pharmaceutical industry lies mostly in specific drug markets. For example, a new diabetes drug is not going to have any effect on an existing cholesterol drug, no matter how successful it is. As a result, financial data on the pharmaceutical companies do not tell the whole story. Instead, it may be more appropriate to analyze Amgen's competitors by each drug market (See section on Major Drugs and Industry Trends).
The table below displays competitive operating metrics for competitors within the pharmaceutical industry. Note that the total revenue for Merck and Pfizer was influenced by revenue inherited from their acquisitions of Schering-Plough and Wyeth, respectively. In addition, net income for Merck was bolstered by $3.2 billion from the sale of its animal division [34], while Bristol-Meyers Squibb's net income saw a one-time $7.2 billion increase from the sale of its nutrition division.[35]
Pharmaceutical and Biotech Industry — Competitive Operating Metrics (2009)
Johnson & Johnson (JNJ)
Pfizer (PFE)
Novartis (NVS)
Abbott Laboratories (ABT)
Merck (MRK)
Bristol-Meyers Squibb (BMY)
Eli Lilly (LLY)
Amgen (AMGN)
Gilead (GILD)
AstraZeneca (AZN)
Roche (RHHBY)
Revenue (in billions of USD)
Total Revenue
$61.9
$50.0
$44.3
$30.8
$27.4
$18.8
$21.8
$14.6
$7.0
$32.8
$49.1
Gross Profit
$43.5
$41.1
$32.1
$17.6
$18.4
$13.7
$17.6
$12.6
$5.4
$27.2
$34.4
Revenue Growth from 2008
-2.9%
3.5%
4.0%
4.2%
15.0%
6.2%
7.2%
-2.4%
31.4%
3.8%
7.5%
Income
Net Income
$12.3
$8.6
$8.4
$5.8
$12.9
$10.6
$4.3
$4.6
$2.6
$7.5
$7.8
Net Profit Margin
19.8%
17.3%
19.0%
18.7%
47.0%
56.4%
19.8
31.5%
37.6%
22.9%
15.9%
Operating Income
$15.8
$10.8
$10.0
$6.2
$15.3
$5.6
$5.4
$5.5
$3.5
-$11.5
$11.9
Diluted EPS Growth from 2008
-3.7%
2.5%
3.7%
21.8%
55.6%
20.7%
NA
19.6%
36.9%
23.6%
-11.8%
Other
R&D Spending
$7.0
$7.8
$7.5
$2.7
$5.9
$5.1
$4.3
$2.9
$0.9
$4.4
$9.9
BusinessWeek ranked Amgen first on the S&P 500 for being one of the most "future-oriented" of those five hundred corporations.[3] BusinessWeek ostensibly calculated the ratio of research and development spending, combined with capital spending, to total outlays; Amgen had the fourth highest ratio, at 506:1000.
Amgen is the largest employer in Thousand Oaks and second only to the United States Navy in terms of number of people employed in Ventura County.
With plans to expand into a new campus under construction in South San Francisco, Amgen abruptly halted construction on the plans and instead put the 365,000 square feet (33,900 m2) of new space on the sublease market.[4]
It is a leading member of the U.S. Global Leadership Coalition, a coalition of over 400 companies and NGOs that promotes increased funding for US diplomatic and international development programs.[5]
In 2006, Amgen began sponsoring the Tour of California, one of only three major Union Cycliste Internationale events in the United States.
Amgen, the world’s first big biotech company (and, for a while, the largest), rode to prominence thanks to its drugs for treating anemia – a condition caused by the destruction of red blood cells, often as a result of cancer, cancer treatment, or kidney disease. Worldwide sales of anemia drugs make up around half of Amgen’s $14.6 billion revenue in 2009.
Studies in 2007 found that patients taking Amgen’s drugs for anemia caused by cancer were be more likely to die than patients who do not take these drugs. The drugs may have increased the migration rate or the rate of metastasis of the tumor. Since then, these drugs have been used less frequently and at lower doses in some areas – particularly oncology, where Medicare's decision to restrict reimbursement as a result of safety issues has had a big impact on sales. Because these drugs make up such a high percentage of Amgen's revenues, the company's revenue growth stalled. In 2009, revenue decreased 2% from the previous year, although Amgen was able to increase its net profit by 3%, increasing its margins.
Corporate Overview
Amgen generally sells its drugs directly to doctors and hospitals, who distribute them to patients and then bill payors for reimbursement. In most cases, the payor is the federal government via Medicare. As a result, Amgen is locked in a constant struggle with the government to ensure its drugs are paid for and at a high enough rate that doctors can use them profitably. Because of its focus on nephrology patients – who automatically qualify for Medicare – the percentage of Amgen’s revenues that are ultimately paid for by the federal government is higher than any other major pharmaceutical company. To secure its interests, Amgen has one of the strongest lobbying presences in Washington, D.C. of any pharmaceutical company.
Business Update
In Q3 of 2010, Amgen’s reported revenue of $3.816 billion, was approximately the same as the $3.812 billion for the third quarter of 2009. Adjusted net income decreased 14% to $1.313 million. The decrease was driven by unusually low research and development (R&D) costs and favorable tax settlements in the third quarter of 2009. Total product sales for the quarter increased 1 percent compared to the previous year. Revenue from its anemia drug Aranesp fell 9% principally due to decline in unit demand reflecting an overall decline in the segment, slightly offset by an increase in the average net sales price. Adjusted earnings per share (EPS) were $1.36 for the third quarter of 2010, a decrease of 9 percent compared to $1.49 for the third quarter of 2009. However the EPS’s still topped analysts' average expectations by 9 cents, according to Thomson Reuters.[1]
In Q2 of 2010, Amgen reported revenue of $3.8 billion, a growth of 2% from the same quarter in 2009. Total product sales for the quarter decreased 1 percent compared to the previous year. Revenue from its anemia drug Aranesp fell 13% due to reimbursement problems and label changes, although Epogen's sales increased by 3%, with increase in demand (mainly due to patient population growth). Amgen's Q2 results exceeded analyst expectations, with the company preparing for the world-wide launch of Prolia (approved on June 1 in US and days before in Europe). It is widely expected to be Amgen's most important growth driver in the future.[2][3]
In Q1 of 2010, Amgen reported revenue of $3.6 billion, a growth of 9% from the same quarter in 2009. Revenue growth was driven by increased sales of Epogen (10%) due to higher dose utilization and increased sales of Neulasta (10%) from higher demand. Net income for the quarter was $1.17 billion, representing a 15% growth from the previous year. Amgen also annouced a revised guidance, expecting revenues to range at the lower end of their earlier estimate between $15.1 and $15.5 billion. The adjustment was largely due to healthcare reform, which the company expects to negatively impact sales by $200 to $250 million.[4] While Amgen's Q1 results exceeded analyst expectations, top drugs Aranesp and Enbrel missed expectations, and the lowered 2010 outlook also disappointed investors, causing the stock price to fall.[5]
In Q4 2009, Amgen reported revenue of $3.81 billion, which was an increase of 2% over the same quarter of 2008. Net income, however, fell 5% to $1.07 billion for the quarter. These numbers fell within the lower range of analyst estimates for the company.[6] For the quarter, Amgen saw growth in sales for Epogen (9%) and Neupogen (2%), while sales for Enbrel remained largely the same and sales for Aranesp fell 8% amid safety concerns. Amgen also announced its 2010 projections, in which it forecasted revenues of between $15.1 and $15.5 billion and adjusted EPS between $5.05 and $5.25.[7]
In Q3 2009, Amgen reported revenue of $3.81 billion, a decrease of 2% from the same quarter of the previous year. A major factor behind the sales decrease was a 19% decrease in anemia drug, Aranesp's sales. This drop was due in large part from lower pricing and decreased market share from increased competition.[8] Net income increased 16% to $1.52 billion, or $1.49 per share. These profits beat analyst estimates of $1.27 per share. Despite the increased profits, Amgen shares fell 2.9% amid concerns that Amgen's most promising pipeline drug, Denosumab, will not obtain as wide of an approval as initially hoped.[9]
Amgen's Q2 2009 beat the market's expectations, with earnings of $1.27B (up 40%) compared to $906M the year before. Revenues were down 1% to $3.71B, still above forecasts. Big drivers of the stronger revenue numbers were larger revenues from Embrel (particularly from a price hike but also from a larger volume of sales), as well as a $115M tax benefit. With the strong numbers, the company raised its earnings outlook for 2009 to $14.8B from $14.4B. [10]
Recent News
The company's biggest hope is an osteoporosis drug in late-stage clinical development called Denosumab. Studies suggest that the drug is better than competitors at strengthening bones, opening the door to a billion dollar Osteoporosis drug market. [11] On June 1st, 2010 FDA approved Denosumab to help prevent fractures in post-menopausal women. This was days after the company gained European approval.[12]
Pricing Litigation
Amgen is currently subject to two subpoenas over the pricing structure of Aranesp, Epogen, Neulasta, and Neupogen. The lawsuit alleges that Amgen's pricing penalizes clinics for purchasing competitor Johnson & Johnson's anemia drug, procrit. In addition, rebates on Neulasta and Neupogen require clinics to purchase large quantities of Aranesp. Potential damages or fines from these lawsuits have not yet been determined.
Business Segments
Nephrology
Epogen
EPOGEN®, with $2.57 billion in 2009 revenues (5% growth from 2008), is Amgen’s original blockbuster drug, and the engine of much of the company’s sales.[13] It is used to treat dialysis patients for anemia. Epogen has been on the market for 19 years, and sales have grown slowly in recent years - in line with the growth of dialysis patient population, around 4-5% a year. Issues impacting Epogen include:
Incidence of kidney disease: As a monopoly product in a market that is fully penetrated, much of EPOGEN’s growth comes from the growth of the dialysis patient population. The incidence of kidney disease is expected to grow dramatically in coming years, as kidneys tend to fail with age and diabetes. An aging baby boomer population that is increasingly obese and diabetic contributes to the growth in the number of people on dialysis.
Reductions in dose: Around half of dialysis patients at any given time have red blood cell counts above the upper limit recommended by the Food and Drug Administration, a result of aggressive dosing intended to minimize the number of patients whose red blood cell counts are too low. New safety concerns could lead doctors and dialysis centers to reevaluate their dosing protocols, however, and reductions in dose for Epogen could dramatically impact Amgen’s revenues.
Reimbursement: Ultimately, the federal government pays for most of the Epogen used in the United States. For a while, Epogen was the single largest line item in the Federal Medicare budget – a distinction that has made the drug’s reimbursement rate a frequent target of legislators seeking cost savings. Reimbursement and dose may be related – Amgen critics allege that a large part of the reason why doses are so high is that dialysis companies such as DaVita and Fresenius make money on EPOGEN®, and the more of the drug they use, the more money they make. Reductions in reimbursement, these critics say, could reduce the financial incentive to use the drug and save the government money.
Competition: EPOGEN® is currently a monopoly in dialysis – there is no other product for dialysis center to use. Roche has vowed to launch a competing product, Mircera, into the US market, but Amgen’s patents may prevent them from launching this product. A key court case in Boston in September will decide the issue, and the outcome will likely have a significant impact on the company’s stock price and prospects in the dialysis market.
Market concentration: Two customers -- dialysis centers Fresenius Medical Care (FMS) and DaVita (DVA) -- are responsible for around 70% of Amgen's Epogen sales. Epogen is an important part of these companies' profits, responsible for as much as 20% of their net income. While its patents keep out other pharmaceutical companies, Amgen has little to fear from these behemoths. However, with competition, these ascendant customers could cause problems for Amgen, as they could flip market share very quickly to a competing product that offered a significant clinical or financial advantage.
Aranesp
Aranesp is a longer-acting version of Epogen. It is mostly used outside of dialysis -- for patients in the earlier stages of kidney disease, with cancer, or for several other conditions. Aranesp is Amgen's best selling drug, bringing in $2.65 billion in revenue in 2008 (down 15% from 2008).[14] Unlike Epogen, Aranesp does not operate in a monopoly. In the early years of the company, Amgen licensed the right to sell EPOGEN outside of dialysis to Johnson & Johnson (JNJ), which sells it under the brand name PROCRIT. Johnson and Johnson has since become Amgen's biggest competitor. Procrit is identical to Epogen and is manufactured by Amgen.
Aranesp's revenue has fallen each year between 2007 and 2009, after studies in oncology patients found that patients taking aranesp survived less time than those who were not on the drug - which led to dramatic decreases in the use of the drug for anemia of cancer.
Aranesp's biggest competitive advantage over Procrit is its' longer half-life. While Procrit must be injected every week, Aranesp can be injected every other week or every third week, requiring patients to come into their doctor's office less frequently.
How Amgen's erythropoietics revenues break out across drugs, geographies, and indications
On October 30, 2009, the New York Attorney General's office announced that it an 15 states, including the District of Columbia, are suing Amgen over an alleged kickback scheme involving Aranesp. The lawsuit alleges that Amgen encouraged providers to bill third parties in order to receive the drug at no cost. The lawsuit also alleges kickbacks to doctors intended to boost Aranesp prescriptions. Amgen denies all of the allegations.[15]
Sensipar
Sensipar's revenues for 2009 reached $651 million, a growth of 9% from 2008. [16] [17] Launched in 2004, the drug is Amgen's first small-molecule drug. It is used to treat secondary hyperparathyroidism, a mineral metabolism complication common in dialysis patients. Sensipar competes most directly with Abbott Laboratories (ABT)'s Zemplar and Genzyme (GENZ)'s Hectorol.
Oncology
Until recently, Amgen's oncology drugs were exclusively supportive care products. Aranesp, Neupogen, and Neulasta treat the complications that arise from chemotherapy; they do not treat the cancer itself. This strategy has proved lucrative for Amgen. While "therapeutics" -- the term for drugs that treat cancer directly -- are usually only used for a subset of cancers, Amgen's products are used across all of them. As a result, Amgen has one of the largest exposores to the oncology market or any Pharmaceutical company. In recent years, however, Amgen has put enormous resources behind its oncology therapeutics pipeline, in an attempt to develop drugs that treat the cancer itself rather than the symptoms of its treatment. Therapeutics are seen as more essential to cancer care, as such, they command higher prices and there is less pressure from payors (such as insurance companies and the federal government) to reduce their reimbursement.
Neupogen & Neulasta
With combined 2009 sales of $4.64 billion (relatively no change since 2007), Neupogen and Neulasta are major sales drugs for Amgen. Neupogen and neulasta both treat a condition called neutropenia -- a weakening of the immune system as a result of chemotherapy. Patients on high-dose chemotherapy sometimes develop infections that can be life-threatening due to their inability to fight off germs. Neulasta boosts these patients' immune systems, making it less likely they will develop infections, and allowing the to tolerate higher doses of chemotherapy. Neulasta is a longer-acting version of Neupogen, requiring less-frequent injections. Neulasta is also significantly more expensive than Neupogen, and more profitable for Amgen as a result.
Contracting: Oddly enough, Neupogen and Neulasta have been important levers to help the market share of another Amgen drug, Aranesp. Amgen ties discounts on Neupogen and Neulasta to the market share of Aranesp at an individual oncologist's clinic, reserving the bests discounts on Neulasta for oncologists who use Aranesp almost exclusively. Neupogen and Neulasta do not have any significant competitors. Because oncologists purchase both red blood cell growth factors (such as Aranesp and Procrit), as well as white blood cell growth factors (such as Neupogen and Neulasta) oncologists have a financial incentive to use Aranesp. In fact, Because of the dynamics of medicare reimbursement, oncologists must receive discounts on Neulasta in order to break even -- the reimbursement rate is less than the list price. As a result, oncologists who use J&J's procrit lose money on Neulasta. Amgen competitor Johnson & Johnson (JNJ) alleges these contracting practices will push it out of the market, and violate anti-trust laws, in a lawsuit against Amgen.
Aranesp
Aranesp is used both in cancer patients and in patients with kidney disease
Profit Center: Amgen's oncology drugs, including Aranesp, Neupogen, and Neulasta, are profit centers for most doctors. Because Amgen sells it products to doctors at a discount, and these doctors are usually reimbursed by insurance companies at a higher rate, the drugs can be an important source of profit for their practice. One six-person oncology practice in the pacific northwest made $2.7 million last year for prescribing $9 million worth Amgen products. [18] The reimbursement rate for Aranesp and Procrit is an important competitive metric. Reimbursement is calculated according to a complex, government-mandated formula known as Average Selling Price (ASP) plus 6%. The reimbursement rate is meant to be a reflection of the average price paid in the market, and is published quarterly by the Center for Medicare and Medicaid Services.
Dose & Safety Concerns: As a result of the fact that Doctors' make money on Amgen's drugs, there is little financial incentive for them to cut costs and use the drugs infrequently -- the more drug they use, the more money they make. This dynamic has fed into critics' assertions that patients are being given doses that are too high, and are risking their lives in the process. Recent data released in January and February 2007 -- one set from a study sponsored by Amgen, another from a sudy on Danish Head & Neck Cancer patients -- revealed that patients whose anemia was caused by their cancer (instead of by their chemotherapy) were more likely to die if they were taking Amgen's products. Following this study, the government stopped reimbursing Aranesp for Anemia Of Cancer (AOC)-- wiping out what had been a $500 MM market for Amgen. A subsequent study of patients on chemotherapy found no difference in survival for patients taking Amgen's drugs vs. those who were not. It wasn't the positive result the company was hoping for, but it ensured the drugs would stay on the market.
Due to the National Coverage Decision, sales of Aranesp have fallen greatly. In the first quarter of 2008, sales declined by 25 percent, to $761 million from $1.02 billion last year, due to changes in Medicare and Medicaid coverage over the past year.
Amgen had high hopes to expand Aranesp's indications to cover more types of cancers. However, results of a Phase III study involving 733 breast cancer patients taking Aranesp did not find any benefit to the drug.
Therapeutics
Although they make up little of Amgen's current sales, Amgen's pipeline is focused on oncology therapeutics -- drugs designed to treat cancer itself. The initial forray into this market has been dissapointing. Vectibix is an EGF receptor antagonise launched with high expectations in late 2006. Unfortunately, data from Amgen's PACCE trial, designed to show a survival benefit for patients taking vectibix and Avastin, instead demonstrated the opposite. Market share for Vectibix has continued to decline in the third quarter of 2007 due to this result. The drug was approved in December 2007 in Europe, but the drug has yet to create a significant amount of revenue.[19]
Vectibix has also had disappointing test results in the United States, showing no statistically significant extension of overall survival in metastatic colorectal cancer patients. The drug was only able to delay the more severe symptoms when used in combination with other chemotherapy drugs. [20]
Vectibix competes directly with ImClone Systems (IMCL)'s Erbitux.
AMG 386 - Tumor-starving compound
On November 18th, 2008, Amgen announced that compound AMG 386 had moved onto mid-stage trials. The drug interrupts the development of blood vessels providing nutrients to tumors, essentially starving them of nutrients necessary to grow. The tumors consequently starved, their growth is arrested and their advancement halted (both in size and in stage). Amgen's drug is the first of its type to advance this far, as other companies' compounds have only reached pre-clinical or stage I testing. [21]
Immunology
Enbrel, which Amgen purchased with the acquisition of Immunex in 2003, is used to treat Rheumatoid Arthritis (see Arthritis drug market), Psoriasis, and a number of other rheumatological conditions. Enbrel is a low margin product for Amgen; the products' profitability is much lower than its sales suggest. For one, Enbrel is expensive to make, and the cost of making it eats up a much greater portion of sales than for Amgen's other drugs. Secondly, profits are split with Wyeth, which owns half the rights to Enbrel.
Enbrel's biggest competitor is Abbott Laboratories (ABT)'s Humira. While Enbrel is typically considered the safer of the two drugs, there are some indications that Humira may be more effective. In the last 12 months, Enbrel has been losing market share to Humira. Sales of Enbrel have increased by 16% since last year due to increased demand. Even though Enbrel has lost 2 share points to competitors, it retains a leadership position in the rheumatology market.
Amgen is currently seeking FDA approval for Enbrel in treating pediatric psoriasis.
In September of 2008, the FDA ordered the addition of black box warnings on to several arthritis and autoimmune drugs, including Enbrel and Humira, after the drugs were associated with a potentially lethal fungal infection called histoplasmosis.[22]
Denosumab/Prolia
One June 1st, 2010 FDA approved Denosumab ,the next great hope of Amgen's pipeline, a treatment for osteoporosis that requires a twice a year injection. The drug is to be sold under the name "Prolia," [23] The osteoporosis market is currently $7 Billion and is dominated by Merck (MRK)'s Fosamax and Novartis AG (NVS)'s Zometa. Studies suggest, however, that denosumab is more effective than its competitors. [24] Analysts predict annual sales of around $1.4 billion dollars by 2014 for the product. [25]
Denosumab's potential competitive advantage centers around compliance. Currently, treatments for osteoporosis require patients take a pill daily or weekly, fast the night before doing so, and remain standing for several hours after they take the pill. Half of patients stop taking their medication within one year[26]. When patients stop taking their osteoporosis medication, they are at increased risk of hip fractures. Hip fractures are both dangerous and expensive to treat. As a result, payers are willing to cover more expensive treatments for osteoporosis if patient compliance is likely to improve.
Market Size
The National Osteoporosis Foundation estimates there are 24 Million women with Osteopenia, a precursor to full-blown osteoporosis, and 8 million with osteoporosis. Only a very small percentage of osteopenic patients are treated. As the percentage of baby-boomers over the age of 65 increases, this number could increase.
Amgen is also testing denosumab as a potential oncology drug. Test results in June 2009 show that denosumab is effective at stopping the spread of tumor into bones. Should the drug receive FDA approval for cancer applications, it could earn up to $3 billion in annual revenues, a $48 billion market in 2008. [27]
Promotion and distribution are just as important as efficacy. In July 2009, Amgen announced that it will partner up with GlaxoSmithKline (GSK) in order to sell denosumab in Europe. The deal should be beneficial to both companies, according to Amgen management. [28]
Key issues to watch
Crucial issues to look for on Denosumab are any data around hip fractures, bone density, incidences of cancer, and risk of serious infection. Denosumab's novel mechanism of action -- inhibiting the formation of cells that break down bone -- means it could potentially be more effective than current treatments, But the safety profile is unknown. One particular risk is around cancer. Phase II data suggested that patients on Denosumab were more likely to develop cancer 12 months out that patients not on Denosumab, but this effect disappeared a year later. Another risk is serious infection. Denosumab significantly increases the risk of major skin infections, requiring hospitalization of some patients. The drug also raises the risk of jaw deterioration.
In early 2007, Amgen announced the results of a study that showed denosumab to be 40 percent more effective than Fosamax. Another Phase III clinical trial released on May 19 showed that post-menopausal women gained 80 percent more bone mass with denosumab than on Fosamax. With Fosamax's patent set to expire, denosumab is in a strong position to win over market share.[29]
Trends and Forces
National Coverage Decision
On July 30, 2007, the Centers for Medicare and Medicaid Services (CMS) announced a National Coverage Decision (NCD) which affects the reimbursement policies of many of Amgen's anemia drugs, in particular Aranesp. In order to qualify for reimbursement under the new policy, chemotherapy patients must have hemoglobin levels below 10 grams per decileter. Amgen estimates that most patients taking its anemia drugs do not meet this criteria, so as a result of this new policy, fewer patients will be treated by its drugs. As of now, no health insurance policies have completely adopted the NCD, but may do so in the near future. Amgen has submitted an appeal to the CMS to reconsider the NCD, increasing the hemoglobin target to cover more patients. The outcome of the NCD is especially important for the company because the majority of product sales are related to anemia and oncology.
In the first quarter of 2009, Amgen spent $2.8 million on lobbying costs, the most of any pharmaceutical company. [30] Almost all of lobbying efforts have been centered on coverage of its anemia drugs.
Tightening FDA Regulations
When FDA commissioner Margaret Hamburg began her tenure in 2009, she announced that the FDA would toughen it's enforcement efforts to protect public health.[31] As the FDA has drawn criticisms for its failures in preventing deaths caused by drugs such as Vioxx, Hamburg has come in with several fixes that include stricter monitoring of drug adverse events, more funding for the agency, stronger ability to force product recalls, and more scientific expertise within the agency.[32] On May 19, 2010, the FDA announced 21 proposals aimed at increasing transparency to the public regarding regulatory information.[33]
Such information will increase the amount of information accessible to the public with regard to companies' pipeline drugs and manufacturing facilities that might otherwise not have been disclosed. While the tightened regulations and increased transparency will eventually improve the overall quality of pharmaceutical products, there will be growing pains as companies adjust to the stricter standards and stronger enforcement. Amgen's ability to adjust to these new standards will impact its valuation and financial success.
Competitors
In the anemia market in which Arenesp sells, Amgen's major competitor is Johnson & Johnson, which sells the anemia drug, Procrit. Amgen's Enbrel, which competes in the arthritis drug market, competes with Abbott Labs' Humira, Johnson & Johnson's Remicade, and Pfizer's Celebrex. Epogen operates in a relative monopoly, and Neupogen and Neulasta do not have direct competitors.
Competition in the pharmaceutical industry lies mostly in specific drug markets. For example, a new diabetes drug is not going to have any effect on an existing cholesterol drug, no matter how successful it is. As a result, financial data on the pharmaceutical companies do not tell the whole story. Instead, it may be more appropriate to analyze Amgen's competitors by each drug market (See section on Major Drugs and Industry Trends).
The table below displays competitive operating metrics for competitors within the pharmaceutical industry. Note that the total revenue for Merck and Pfizer was influenced by revenue inherited from their acquisitions of Schering-Plough and Wyeth, respectively. In addition, net income for Merck was bolstered by $3.2 billion from the sale of its animal division [34], while Bristol-Meyers Squibb's net income saw a one-time $7.2 billion increase from the sale of its nutrition division.[35]
Pharmaceutical and Biotech Industry — Competitive Operating Metrics (2009)
Johnson & Johnson (JNJ)
Pfizer (PFE)
Novartis (NVS)
Abbott Laboratories (ABT)
Merck (MRK)
Bristol-Meyers Squibb (BMY)
Eli Lilly (LLY)
Amgen (AMGN)
Gilead (GILD)
AstraZeneca (AZN)
Roche (RHHBY)
Revenue (in billions of USD)
Total Revenue
$61.9
$50.0
$44.3
$30.8
$27.4
$18.8
$21.8
$14.6
$7.0
$32.8
$49.1
Gross Profit
$43.5
$41.1
$32.1
$17.6
$18.4
$13.7
$17.6
$12.6
$5.4
$27.2
$34.4
Revenue Growth from 2008
-2.9%
3.5%
4.0%
4.2%
15.0%
6.2%
7.2%
-2.4%
31.4%
3.8%
7.5%
Income
Net Income
$12.3
$8.6
$8.4
$5.8
$12.9
$10.6
$4.3
$4.6
$2.6
$7.5
$7.8
Net Profit Margin
19.8%
17.3%
19.0%
18.7%
47.0%
56.4%
19.8
31.5%
37.6%
22.9%
15.9%
Operating Income
$15.8
$10.8
$10.0
$6.2
$15.3
$5.6
$5.4
$5.5
$3.5
-$11.5
$11.9
Diluted EPS Growth from 2008
-3.7%
2.5%
3.7%
21.8%
55.6%
20.7%
NA
19.6%
36.9%
23.6%
-11.8%
Other
R&D Spending
$7.0
$7.8
$7.5
$2.7
$5.9
$5.1
$4.3
$2.9
$0.9
$4.4
$9.9