Amgen’s Fourth Quarter 2010 Adjusted Earnings Per Share Increased 11 Percent to $1.17; Full Year 2010 Adjusted Earnings Per Shar

Fourth Quarter 2010 Revenue Increased 1 Percent to $3.8 Billion; Full Year 2010 Revenue Increased 3 Percent to $15.1 Billion

THOUSAND OAKS, Calif., Jan. 24, 2011 /PRNewswire/ -- Amgen (Nasdaq: AMGN) reported adjusted earnings per share (EPS) of $1.17 for the fourth quarter of 2010, an increase of 11 percent compared to $1.05 for the fourth quarter of 2009.  Adjusted net income increased 4 percent to $1,103 million in the fourth quarter of 2010 compared to $1,065 million in the fourth quarter of 2009.

Full year 2010 adjusted EPS were $5.21 versus $4.91 in 2009, a 6 percent increase.  Full year 2010 adjusted net income increased slightly to $5,024 million versus $5,014 million in 2009.

Total revenue increased 1 percent during the fourth quarter of 2010 to $3,841 million versus $3,809 million in the fourth quarter of 2009.  For the full year 2010, total revenue increased 3 percent to $15,053 million from $14,642 million in 2009.

“2010 was a strong year with approvals of Prolia and XGEVA,” said Kevin Sharer, chairman & CEO.  “We delivered solid EPS growth while absorbing the impact of health care reform. Our priorities in 2011 are to make Prolia and XGEVA successes, advance and enrich our pipeline, and build value for our shareholders.”

Adjusted EPS and adjusted net income for the fourth quarter and full year 2010 and 2009 exclude, for the applicable periods, stock option expense; certain expenses related to acquisitions, impairments and restructurings and cost savings initiatives; non-cash interest expense resulting from a change in accounting for our convertible notes; the income tax benefit (expense) as a result of resolving certain non-routine transfer pricing issues with tax authorities and certain other items. These adjustments and other items are presented on the attached reconciliation tables.

On a reported basis and calculated in accordance with United States (U.S.) Generally Accepted Accounting Principles (GAAP), Amgen’s GAAP diluted EPS were $1.08 in the fourth quarter of 2010, an increase of 17 percent compared to $0.92 in the same quarter last year. GAAP net income of $1,022 million in the fourth quarter of 2010 increased 10 percent from $931 million in the fourth quarter of 2009.  For the full year 2010, Amgen’s reported GAAP EPS were $4.79, an increase of 6 percent compared to $4.51 for the full year 2009. For the full year 2010, GAAP net income increased slightly to $4,627 million versus $4,605 million for the full year 2009.  GAAP net income for the fourth quarter of 2010 was positively impacted by a favorable tax settlement as a result of settling certain non-routine transfer pricing issues aggregating $113 million, partially offset by an impairment charge associated with the Company’s recently announced transaction involving its manufacturing operation in Fremont, California aggregating $118 million on a pretax basis ($74 million after tax).

Product Sales Performance

Total product sales were $3,760 million in the fourth quarter of 2010 versus $3,743 million in the fourth quarter of 2009.  U.S. product sales were $2,869 million in the fourth quarter of 2010 versus $2,882 million in the fourth quarter of 2009. Fourth quarter 2010 U.S. product sales included a $65 million unfavorable impact due to U.S. health care reform. International product sales increased 3 percent to $891 million in the fourth quarter of 2010 versus $861 million in the fourth quarter of 2009.  Excluding the $26 million negative impact of foreign exchange in the fourth quarter of 2010, total product sales increased 1 percent and international product sales increased 7 percent.  For the year, total product sales increased 2 percent to $14,660 million in 2010 versus $14,351 million in 2009.  U.S. product sales increased 1 percent to $11,254 million in 2010 versus $11,135 million in the prior year.  For the year, U.S. product sales included a $198 million unfavorable impact due to U.S. Health Care Reform.  International product sales increased 6 percent to $3,406 million in 2010 versus $3,216 million in the prior year.  Foreign exchange had no material impact on sales for the year.

Worldwide Aranesp^® (darbepoetin alfa) sales decreased 2 percent to $633 million in the fourth quarter of 2010 versus $648 million in the fourth quarter of 2009.   U.S. Aranesp sales decreased 1 percent to $285 million in the fourth quarter of 2010 versus $288 million in the fourth quarter of 2009, due principally to a high-teens percentage point decrease in unit demand reflecting an overall decline in the segment. The decrease was substantially offset by favorable changes in wholesaler inventories and certain changes in accounting estimates.  International Aranesp sales decreased 3 percent to $348 million in the fourth quarter of 2010 versus $360 million in the fourth quarter of 2009 primarily due to foreign exchange.  Excluding the impact of foreign exchange, international Aranesp sales decreased 1 percent.  For the year, worldwide Aranesp sales decreased 6 percent to $2,486 million in 2010 versus $2,652 million in 2009, due principally to a mid-teens percentage point decline in U.S. unit demand.

EPOGEN^® (Epoetin alfa) sales decreased 16 percent to $591 million in the fourth quarter of 2010 versus $703 million in the fourth quarter of 2009, due primarily to a high single-digit percentage point decline in unit demand and, to a lesser extent, unfavorable changes in wholesaler inventories and accounting estimates. The decrease in unit demand partially reflects a decrease in dose utilization as healthcare providers began implementing new dose regimens, partially offset by patient population growth.  For the year, EPOGEN sales decreased 2 percent to $2,524 million in 2010 versus $2,569 million in 2009, due primarily to unit demand.

Combined worldwide Neulasta^® (pegfilgrastim) and NEUPOGEN^® (Filgrastim) sales increased 3 percent to $1,237 million in the fourth quarter of 2010 versus $1,202 million in the fourth quarter of 2009.  Combined U.S. Neulasta and NEUPOGEN sales increased 4 percent to $914 million in the fourth quarter of 2010 versus $880 million in the fourth quarter of 2009, primarily driven by an increase in the average net sales price, and to a lesser extent, favorable changes in wholesaler inventories.  Combined Neulasta and NEUPOGEN international sales were $323 million in the fourth quarter of 2010 versus $322 million in the fourth quarter of 2009.  Excluding foreign exchange impact, international Neulasta and NEUPOGEN product sales increased 2 percent, reflecting growth in Neulasta primarily from continued conversion of NEUPOGEN to Neulasta, partially offset by a decline in NEUPOGEN as a result of biosimilar competition. For the year, combined worldwide Neulasta and NEUPOGEN sales increased 4 percent to $4,844 million in 2010 versus $4,643 million in 2009, principally driven by an increase in the U.S. average net sales price, and to a lesser extent, favorable changes in U.S. wholesaler inventories.

Enbrel^® (etanercept) sales increased 3 percent to $939 million in the fourth quarter of 2010 versus $912 million in the fourth quarter 2009. For the year, ENBREL sales increased 1 percent to $3,534 million in 2010 versus $3,493 million in 2009. In the fourth quarter of 2010, the mid single-digit decline in unit demand, due to share declines primarily in dermatology, was offset by an increase in the average net sales price.  ENBREL continues to maintain a leading position in both the rheumatology and dermatology segments.  

Worldwide sales of Sensipar^® / Mimpara^® (cinacalcet) increased 10 percent to $188 million in the fourth quarter of 2010 versus $171 million in the fourth quarter of 2009.  For the year, Sensipar / Mimpara sales increased 10 percent to $714 million versus $651 million in 2009.  These sales increases were driven principally by international demand.

Worldwide sales of Vectibix^® (panitumumab) increased 20 percent to $79 million in the fourth quarter of 2010 as compared to $66 million in the fourth quarter of 2009.  For the year, worldwide Vectibix sales were $288 million in 2010 versus $233 million in 2009, a 24 percent increase.  These sales increases were driven principally by international demand.

Worldwide Nplate^® (romiplostim) sales increased 59 percent to $65 million in the fourth quarter of 2010 versus $41 million in the fourth quarter of 2009.  For the year, worldwide Nplate sales increased 108 percent to $229 million in 2010 versus $110 million in 2009.  These sales increases were driven by an increase in worldwide demand.

Worldwide Prolia^® (denosumab) sales in the fourth quarter and for the year were $20 million and $33 million, respectively, reflecting steady progress with physicians, patients and payers in the U.S. and internationally.

Following FDA approval of XGEVA^TM (denosumab) on Nov. 18, 2010, U.S. sales for the fourth quarter 2010 were $8 million.

Operating Expense Analysis on an Adjusted Basis:

The adjusted tax rate for the fourth quarter of 2010 was 15.5 percent compared to 15.9 percent for the fourth quarter of 2009.  The decrease was due primarily to the full year benefit of the federal R&D credit recognized in the fourth quarter of 2010, offset by reductions in the tax provision in the fourth quarter of 2009 as a result of changes in revenue and expense mix.

For 2010, the adjusted tax rate was 18.8 percent compared to 16.9 percent for 2009.  The increase in the full year adjusted tax rate was due primarily to the favorable impact in 2009 of settling IRS and California tax audits for prior years. During the fourth quarter of 2010, Amgen repurchased approximately 20 million shares of common stock at a total cost of $1.1 billion.  For 2010, Amgen repurchased approximately 66 million shares of common stock at a total cost of $3.8 billion.  The Company currently has $2.2 billion remaining under its authorized stock repurchase program.

Average diluted shares for adjusted EPS for the fourth quarter of 2010 were 946 million versus 1,012 million for the fourth quarter of 2009 and 965 million for the full year 2010 versus 1,021 million for the full year 2009.  

Capital expenditures for the fourth quarter of 2010 were approximately $182 million versus $144 million in the fourth quarter of 2009.  For 2010, capital expenditures were $580 million versus $530 million in 2009.  Operating cash flow for 2010 decreased 8 percent to approximately $5.8 billion versus approximately $6.3 billion in 2009 due primarily to timing differences in tax payments.  Worldwide cash and marketable securities were $17.4 billion and adjusted outstanding debt was $13.7 billion as of Dec. 31, 2010.  The Company’s adjusted outstanding debt excludes the impact of a change in accounting for the carrying values of its convertible debt.  The Company’s outstanding debt presented in accordance with GAAP was $13.4 billion as of Dec. 31, 2010.

2011 Guidance

The Company expects total revenue for 2011 to be in the range of $15.1 billion to $15.5 billion.  Amgen expects 2011 adjusted EPS to be in the range of $5.00 to $5.20, excluding stock option expense, certain expenses related to prior acquisitions and the non-cash interest expense resulting from a change in accounting for convertible debt.  

The total impact of U.S. health care reform in 2011 is expected to be in the range of $400 million to $500 million.  This includes the federal excise fee which is expected to be in the range of $150 million to $200 million.

With respect to other guidance, Amgen’s expectation for the 2011 adjusted tax rate is that it will be in the range of 19 percent to 20 percent.

The Company expects 2011 capital expenditures to be approximately $600 million.

Fourth Quarter Product and Pipeline Update

In addition to the previously announced U.S. approval of XGEVA and the top-line results from the pivotal Phase 3 study of XGEVA for the prevention of bone metastases in patients with prostate cancer (‘147 study) the Company provided the following updates:

Sensipar / Mimpara: The Company announced that based on current event rates, completion of the Phase 3 Evaluation of Cinacalcet Therapy to Lower Cardiovascular Events (EVOLVE) study in dialysis patients is now anticipated in 2012.

Motesanib: The Company announced that data from the Phase 3 MONET-1 study in non-squamous non-small cell lung cancer is expected in the first half of 2011.

Non-GAAP Financial Measures

Management has presented its operating results in accordance with GAAP and on an “adjusted” (or non-GAAP) basis for the three and twelve months ended Dec. 31, 2010 and 2009. In addition, management has presented its outstanding debt in accordance with GAAP and on an “adjusted” (or non-GAAP) basis as of Dec. 31, 2010.  The Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors.  The Company uses these non-GAAP financial measures in connection with its own budgeting and financial planning.  These non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in conformity with GAAP. Further, our reconciliations of GAAP to "adjusted" operating results, which are included on the attached tables, are presented in the format of condensed consolidated statements of income solely to facilitate a reader's understanding of the impact of the various adjustments to our GAAP operating results, individually and in the aggregate, and are not intended to place any undue prominence on our adjusted operating results.

Forward-Looking Statements

This news release contains forward-looking statements that involve significant risks and uncertainties, including those discussed below and others that can be found in our Form 10-K for the year ended Dec. 31, 2009, and in our periodic reports on Form 10-Q and Form 8-K.  Amgen is providing this information as of the date of this news release and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.  

No forward-looking statement can be guaranteed and actual results may differ materially from those we project.  The Company’s results may be affected by our ability to successfully market both new and existing products domestically and internationally, clinical and regulatory developments (domestic or foreign) involving current and future products, sales growth of recently launched products, competition from other products (domestic or foreign) and difficulties or delays in manufacturing our products.  In addition, sales of our products are affected by reimbursement policies imposed by third-party payors, including governments, private insurance plans and managed care providers and may be affected by regulatory, clinical and guideline developments and domestic and international trends toward managed care and health care cost containment as well as U.S. legislation affecting pharmaceutical pricing and reimbursement.  Government and others’ regulations and reimbursement policies may affect the development, usage and pricing of our products.  Furthermore, our research, testing, pricing, marketing and other operations are subject to extensive regulation by domestic and foreign government regulatory authorities.  We or others could identify safety, side effects or manufacturing problems with our products after they are on the market.  Our business may be impacted by government investigations, litigation and product liability claims.  Further, while we routinely obtain patents for our products and technology, the protection offered by our patents and patent applications may be challenged, invalidated or circumvented by our competitors.  We depend on third parties for a significant portion of our manufacturing capacity for the supply of certain of our current and future products and limits on supply may constrain sales of certain of our current products and product candidate development.  In addition, we compete with other companies with respect to some of our marketed products as well as for the discovery and development of new products.  Discovery or identification of new product candidates cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate will be successful and become a commercial product.  Further, some raw materials, medical devices and component parts for our products are supplied by sole third-party suppliers.  

About Amgen

Amgen discovers, develops, manufactures, and delivers innovative human therapeutics. A biotechnology pioneer since 1980, Amgen was one of the first companies to realize the new science’s promise by bringing safe, effective medicines from lab to manufacturing plant to patient. Amgen therapeutics have changed the practice of medicine, helping millions of people around the world in the fight against cancer, kidney disease, rheumatoid arthritis, bone disease, and other serious illnesses. With a deep and broad pipeline of potential new medicines, Amgen remains committed to advancing science to dramatically improve people’s lives. To learn more about our pioneering science and vital medicines, visit www.amgen.com.

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SOURCE Amgen