Amgen, Inc. (AMGN), Celgene Corporation (CELG): Is Big Biotech Still Growing?

In several Phase 2 trials, AMG145 had a marked effect on cholesterol levels in patients unresponsive to statins, and as a co-treatment with statins.  AMG145 may face competition from Regeneron Pharmaceuticals Inc (NASDAQ:REGN) and Sanofi SA (ADR) (NYSE:SNY)‘s Alirocumab, but the market may be large enough to support both.

The biggest strategic move of late is Amgen’s new biosimilars program.  Biosimilars are generic versions of biologic branded drugs, and Amgen is planning production of 6 biosimilars by 2017.  Its lead biosimilar candidate is a version of Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY)‘s Herceptin for certain breast cancers, and will be entering a pivotal clinical trial in the second half of 2013.  Herceptin saw global sales of $6.3 billion in 2012, so even a portion of this market could help Amgen’s position.  There are also plans for generic versions of mega-blockbusters Humira and Remicade in the works.  Amgen’s new facility in Singapore should help margins for the mass production of these biosimilars.

Let’s not forget Amgen’s acquisition strategy.  Amgen has been at the center of take-over rumors surrounding oncology innovator Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX), and with $2.5 billion in cash (and another $18.7 billion in marketable securities) Amgen has the resources for pipeline growth by acquisition.

A Fool Says…

Wall Street might be short-sighted in its estimate of Amgen’s growth potential.  While its current portfolio of marketed drugs may be near its peak potential, its pipeline of diverse drug candidates and clear interest in growth-via-acquisition suggests that its long-term potential may now be on sale at a discount.  In the meantime, Amgen has committed to enhancing value for investors with increasing dividends and authorization for an additional $1.6 billion share repurchasing program (as of the Q1 report).

In the upcoming quarterly report, I would keep an eye on Amgen’s long-term debt, as it has increased over the last few years.  Additionally, it will be interesting to see how Amgen balances shareholder value, acquisition strategy, and in-house R&D expenses to support growth and value for investors.

The article Is Big Biotech Still Growing? originally appeared on Fool.com and is written by Seth Robey.

Seth Robey has no position in any stocks mentioned. The Motley Fool recommends Celgene and Gilead Sciences (NASDAQ:GILD). Seth is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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