Amgen talks long-term growth, but doubts remain for analysts, investors

Amgen is projecting compound annual growth in mid-single digits through the end of this decade. Considering the company reported 2021 revenue at $26 billion, that level of growth would get Amgen to roughly $35 billion in revenue in 2030.

If you think that sounds like an ambitious outlook, you’re not alone. In a survey of investors, conducted Tuesday morning by Mizuho, 92% answered negatively to the question: Do you believe this is achievable?

And many of the respondents registered their votes with dismissive commentary.

“Not realistic,” wrote one.

“Wishful thinking,” said another.

“Good luck,” added a third.

The answers came as Amgen held a comprehensive business report Tuesday morning in lieu of a traditional quarterly earnings conference call. In the three-hour-plus event, Amgen laid out a forward look at its direction and prospects.

“We have felt for a while internally that things were setting up pretty well for us for the long term,” said CEO Robert Bradway when asked why the company opted for the long-form discussion. “We felt that it was clear now what opportunities we had in hand and what the potential of those opportunities were.”   

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With several key products—including rheumatoid arthritis med Enbrel and migraine treatment Aimovig—facing increased competition and stagnating sales, Amgen’s near-term prospects are shaky.

Without a $1.68 billion boost last year from its COVID-19 antibody manufacturing agreement with Eli Lilly, Amgen’s revenue figure in 2021 ($26 billion) would have fallen short of its 2020 number ($25.4 billion).

With no immediate help on the way, Amgen set guidance for 2022 revenue between $25.4 billion and $26.5 billion.

“The revenue range is a bit wider than recent history,” Peter Griffith, Amgen’s chief financial officer, said. “The top end of it is predicated on the possibility of additional COVID antibody manufacturing revenue.”

As for the long-term prospects, Griffith said the company will rely heavily on six upcoming biosimilar launches and its “innovative and longer-range biosimilar pipeline.” Amgen sees revenue from biosimilars more than doubling from 2021 to 2030. The company also said its geographic reach in core therapy areas will expand between now and 2030.

Investors who weighed in with Mizuho weren’t convinced, though. Many suggested the only way out is M&A.  

“Their growth drivers cannot overcome the losses of exclusivity,” wrote one.

“Too many patent losses, too thin a pipeline, too less courage for acquisitions,” said another.

“Do the math: They have greater than $13 billion in LOEs by 2030, (which is) greater than 50% of 2022 revenue, and nothing but (lung cancer treatment) Lumakras in the pipeline,” added another. “They will have to buy that growth.”

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In reacting to the 2030 guidance, analysts at Jefferies warned of the difficulties in projecting so far into the future.

“Even in our world of biotech where things change very fast, this is really far out, and many things could change with pipelines, pricing, commercial situations and especially competition,” wrote Michael Yee in a note to clients. “We believe that investors will have some discount on this outlook despite Amgen’s high confidence.”