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Fitch affirms Amgen's issuer default rating with stable outlook

Fitch Ratings affirmed Thousand Oaks, Calif.-based drugmaker Amgen Inc.'s issuer default rating at BBB with a stable outlook.

The agency said the rating applies to Amgen's $35.6 billion of outstanding debt as of Sept. 30, 2018. The company has reduced its debt by about by roughly $1.1 billion in 12 months through Sept. 30, 2018, while repurchasing $16.5 billion worth of common stock.

Amgen has easy access to its cash holdings due to the U.S. tax reform but has significantly higher gross debt leverage than its peers, Fitch stated.

Fitch expects a very low single-digit sales growth through 2020, with established drugs offsetting the declines due to biosimilar competition against Neupogen, Neulasta, Epogen and Enbrel.

The established products include bone cancer medicine Xgeva, osteoporosis treatment Prolia, blood disorder drug Nplate, cancer therapy Vectibix and thyroid disorder drug Sensipar. The agency sees Amgen's exposure to biologics as a positive to its credit profile as biologics being large and complex molecules tend to lose market share to biosimilars more gradually than small molecules.

The latest launches such as blood cancer drugs Kyprolis and Blincyto as well as migraine therapy Aimovig offer significant growth opportunities to the company, the agency added.

With a charged political environment, Fitch expects better price defensibility for Amgen's truly innovative products, with commoditized products likely to face higher headwinds.