Amgen Inc.'s revenue slump at the end of 2017 will likely give way to a quiet first quarter as key drugs settle into insurance plans, executives said on the latest earnings call.
Quarterly revenue dipped 3% year over year largely due to a $6.1 billion cost to bring offshore cash back to the U.S. and adjustments to other provisions of the new tax law. Amgen also chalked up $146 million in full-year expenses due to damage from Hurricane Maria, which struck Puerto Rico last fall and stalled production at Amgen facilities there.
Yet under these one-time expenses, sales were flat or slipping across several drug franchises. Blockbuster autoimmune medicine Enbrel and bone marrow stimulants Epogen and Neupogen saw revenue declines year over year on a mix of lower selling prices and lower demand for the therapies.
Meanwhile sales for another revenue driver, a hormone therapy called Sensipar — which could have competition as early as March — were flat.
"With pressure on prices globally, we think revenue growth will be more tightly linked to volume growth than was the case historically," Chairman and CEO Robert Bradway said on the call. With that in mind, medicines that serve a broad patient population, such as cholesterol drug Repatha, would be "particularly attractive growth drivers," he added.
However, with Repatha's more than $14,000 wholesale acquisition cost, a U.S. price watchdog has been critical and payers have been reluctant to extend coverage beyond the most severely high cholesterol patients.
Though Amgen executives have previously defended Repatha from cost criticism, they could be starting to budge. An analyst on the call noted that based on volume and sales gains, the drug's net price, or the undisclosed amount actually paid after pharmacy benefit negotiations, seemed to drop 15% from the last quarter.
"I actually couldn't give you the details of that one right now," Anthony Hooper, executive vice president of global commercial operations, said in response. "It was clearly a change in the net price but I don't think it was that high," he said.
Negotiations aside, both Enbrel and Repatha are likely to have flat first-quarter 2018 sales due as insurance plans are reverified and patients work through their deductibles, Hooper warned. Enbrel is projected to make 20% of its total 2018 revenue in the first three months, its lowest sales for the year.
At the same time, Sensipar could see generic competition after a key patent expires in March, though the company is fighting to keep control of exclusivity among children. The broad revenue guidance for 2018 has to do with the potential of Sensipar biosimilar launches, CFO and Executive Vice President David Meline said. The company is also anticipating a number of patent battles in the year ahead, with Enbrel and others up for key U.S. court decisions.
The drugmaker is also banking on Aimovig, a late-stage migraine drug in partnership with Novartis AG, to inject some cash flow in this year after a May decision from the U.S. Food and Drug Administration.
Amgen also announced a $10 billion addition to its share buyback program and disclosed a five-year $3.5 billion plan to invest about $3.5 billion in capital expenditures, with roughly 75% of that investment in the U.S., up from about 50% in recent years. Bradway said the new U.S. tax law allowed the company to competitively consider investment in the U.S.
The company's new corporate tax rate is projected to be between 14% and 15%, compared to 18% last year and 2018 rates of 17% for Pfizer Inc. and 18% for Eli Lilly and Co.
