Should Amgen join the biopharma breakup party? Analyst says maybe

Amgen CEO Robert Bradway

Now that the Big Pharma breakup craze has moved down the drugmaker food chain to Baxter International ($BAX), should Big Biotech jump on the trend? Maybe one in that group should, an analyst suggests. And as Forbes notes, analyst suggestions helped pressure Pfizer toward its dramatic streamlining plan.

As Forbes reports, Bernstein analyst Geoffrey Porges figures Amgen ($AMGN) offers a decent opportunity for a breakup. Its stock price is trailing not only other biotech companies, but pharma as well, so it could definitely use a boost. More importantly, it has two identifiable businesses that could be split.

Item One, Amgen's older products, some of which already face biosimilar competition overseas, and will get U.S. competitors at some point in the near term. That group notably includes its big-selling--but declining--hemoglobin-boosting meds for kidney and cancer patients, Epogen and Aranesp. Then there are its white-blood-cell stimulators Neupogen and Neulasta. Plus Enbrel, the anti-inflammatory used for rheumatoid arthritis, psoriasis and more, which turned in some disappointing sales for the first quarter.

Item Two, its newer growth products and innovative-but-"somewhat risky" pipeline. Those marketed would be its bone drug denosumab, sold as Prolia for osteoporosis and Xgeva to treat bone problems in cancer patients; and Kyprolis, the myeloma drug that came with its Onyx Pharmaceuticals buyout.

As Porges notes, Amgen's mature products offer stable-to-declining sales--not too exciting, but a reliable source of "tremendous" cash flow. Its newer products are "genuine growth drivers." Added together, the whole isn't worth the sum of its parts, he figures.

"Such divergent growth profiles for the different parts of Amgen means that any positive news from pipeline drugs ... may not offer the same upside sitting inside the slow-growing shell as it would in a smaller, more speculative company attractive to growth investors," Porges says (as quoted by Forbes).

In sum, a split-up "seems worthy of consideration and discussion," he says.

Should Amgen start the same soul-searching that prompted Big Pharma's flurry of unit sales, spin-offs and other streamlining actions, it would join a growing group. Bristol-Myers Squibb ($BMY), it could be argued, started the whole thin with its successful spin-off of its Mead-Johnson nutrition unit. Pfizer ($PFE) ramped things up considerably with its animal health and nutrition deals--and the promise to consider a bigger breakup down the line.

Abbott Laboratories ($ABT) spun off its pharma unit to create AbbVie ($ABBV). Novartis' ($NVS) strategic review spawned yesterday's trade-and-joint venture with GlaxoSmithKline ($GSK), and animal health sale to Eli Lilly ($LLY). Merck ($MRK) is taking bids for its consumer health business. Baxter says it wants to spin off its pharma unit. And GlaxoSmithKline may divest its established products business, CEO Andrew Witty said yesterday.

- read the Forbes piece

Special Report: 20 highest-paid biopharma CEOs - Robert Bradway, Amgen