Executive Summary / Key Takeaways

• Amgen leverages its deep expertise in biologics and a robust pipeline, including differentiated modalities like bispecific T-cell engagers and novel peptide conjugates, to drive future growth.
• Strong performance across key in-market products like Repatha, EVENITY, TEZSPIRE, and the innovative oncology portfolio, coupled with contributions from the expanding biosimilars franchise, is offsetting anticipated declines from patent expirations.
• Strategic investments in late-stage pipeline assets such as MariTide for obesity and Olpasiran for Lp(a), along with the successful integration of Horizon Therapeutics (HZNP), are expected to fuel long-term expansion.
• The company is actively managing significant market and regulatory pressures, including IRA price setting, state-level pricing actions, and increasing competition, while investing in manufacturing capacity and operational efficiency.
• Amgen maintains a solid financial position with strong cash flow generation, enabling continued investment in innovation, debt reduction, and capital return to shareholders, supporting the investment thesis despite a complex operating environment.

The Biotechnology Pioneer's Next Chapter

Amgen Inc. stands as a foundational pillar of the biotechnology industry, a pioneer that emerged over four decades ago with a mission to discover, develop, manufacture, and deliver innovative human therapeutics for serious illnesses. Operating as a single, integrated human therapeutics segment, the company has built a diversified portfolio spanning General Medicine, Rare Disease, Inflammation, and Oncology. This strategic breadth, coupled with a deep-seated commitment to scientific innovation, positions Amgen to address areas of high unmet medical need globally. The company's history is marked by a consistent ability to generate growth, even when facing significant challenges like patent expirations, demonstrating operational discipline and strategic adaptability.

At the heart of Amgen's competitive strength lies its differentiated technological expertise, particularly in the realm of biologics. The company has honed its capabilities in developing complex protein-based medicines, including monoclonal antibodies and novel modalities like bispecific T-cell engagers (BiTEs). This technological prowess translates into tangible benefits for patients and provides a critical competitive moat. For instance, Amgen's BiTE platform, exemplified by BLINCYTO and the recently launched IMDELLTRA, allows for precise targeting of cancer cells by redirecting a patient's own T-cells. Clinical data for BLINCYTO has shown significantly improved overall survival in certain B-cell ALL patient populations, while IMDELLTRA demonstrated a statistically significant and clinically meaningful improvement in overall survival in a Phase 3 trial for second-line small cell lung cancer, representing a major advance in a difficult-to-treat tumor type. These platforms offer the potential for high efficacy and targeted action, differentiating Amgen's approach from traditional chemotherapy or less targeted immunotherapies offered by competitors like Novartis (NVS) or AstraZeneca (AZN).

Furthermore, Amgen's expertise extends to developing novel peptide conjugates, such as MariTide, its investigational therapy for obesity. The Phase 2 data highlighted a differentiated profile with monthly or less frequent subcutaneous dosing, consistent and sustained weight loss without a plateau through 52 weeks, and clinically meaningful impact on cardiometabolic parameters like A1c. This dosing frequency stands in contrast to the weekly injections required by leading GLP-1 agonists from competitors like Eli Lilly (LLY) and Novo Nordisk (NVO), potentially offering improved patient adherence and persistence. While specific quantitative comparative efficacy metrics against these rivals were not detailed, the focus on a less frequent dosing schedule represents a strategic technological approach to differentiate in a highly competitive market.

Amgen's competitive positioning is also shaped by its scale, manufacturing capabilities, and global footprint. Compared to smaller, specialized biotech firms like BeiGene (BGNE) (though BeiGene is growing rapidly, particularly in Asia, and is an oncology partner for Amgen) or UCB (UCBJF) (focused on neurology and immunology), Amgen possesses a broader portfolio, larger sales force, and more extensive manufacturing network. This allows for greater efficiency in production (contributing to better operating margins compared to some peers) and broader market access. However, larger pharmaceutical companies like Novartis and AstraZeneca have vast pipelines and established market presence across numerous therapeutic areas, posing significant competitive challenges. Eli Lilly's rapid success in the obesity market highlights the risk of being outpaced in emerging areas despite a strong existing portfolio. Amgen strategically leverages collaborations, such as those with AstraZeneca for TEZSPIRE and BeiGene in oncology, to expand its reach and pipeline, acknowledging the need for partnerships in a complex global landscape.

Performance Reflecting Strategic Execution

Amgen's recent financial performance underscores the effectiveness of its strategy and operational execution, even amidst a challenging market and competitive environment. In the first quarter of 2025, the company reported total revenues of $8.15 billion, a 9% increase compared to the prior year period. This growth was primarily fueled by an 11% increase in product sales, driven by robust volume growth of 14%. This volume expansion, particularly notable in the U.S. (up 16%) and Rest of World (up 11%), reflects growing patient demand for key products like Repatha, EVENITY, TEZSPIRE, BLINCYTO, and the newly launched WEZLANA. The biosimilars portfolio also contributed significantly, delivering over $700 million in revenue in Q1 2025, a 35% year-over-year increase, demonstrating the success of Amgen's strategy to be an early entrant with reliable supply.

However, this volume growth was partially offset by a 6% decline in net selling price, a persistent headwind driven by pricing pressures from payers and increased utilization of programs like 340B. This dynamic highlights the ongoing challenge of maintaining profitability in a cost-conscious healthcare system. Operating expenses increased by 8% in Q1 2025, influenced by a significant $800 million intangible asset impairment charge related to Otezla following its selection for Medicare price setting under the IRA. This specific charge underscores the direct financial impact of evolving U.S. drug pricing legislation. Despite this, the cost of sales as a percentage of revenue decreased, benefiting from lower amortization related to the Horizon inventory step-up and improved manufacturing efficiency, partially offset by changes in sales mix.

Research and development expenses saw an 11% increase in Q1 2025, reflecting Amgen's strategic priority to invest in its late-stage pipeline, particularly MariTide and Olpasiran. This increased R&D spend is a deliberate choice to drive future growth, even as it impacts near-term margins. Selling, general, and administrative expenses decreased by 7%, benefiting from lower commercial and acquisition-related costs, demonstrating efforts towards operational efficiency.

Overall, the company delivered strong net income of $1.73 billion in Q1 2025, a significant improvement from a net loss in the prior year period, largely driven by favorable changes in other income/expense related to equity investments (primarily BeiGene). The effective tax rate increased due to this earnings mix shift. For the full year 2024, Amgen achieved record product sales of $33.4 billion, up 19% year-over-year (7% excluding Horizon), driven by 23% volume growth (11% excluding Horizon). The Horizon acquisition, which closed in October 2023, has been accretive to non-GAAP EPS and is on track to deliver $500 million in pretax cost synergies by the end of 2025, demonstrating successful integration and portfolio expansion.

Amgen's financial health is further supported by robust cash flow generation. Net cash provided by operating activities was $1.39 billion in Q1 2025. The company ended the quarter with $8.81 billion in cash and cash equivalents and continues to manage its debt strategically. Debt repayments totaled $2.50 billion in Q1 2025, and the company has retired $10.8 billion of debt since the Horizon acquisition announcement, aiming to return to its pre-Horizon capital structure by the end of 2025. Capital expenditures remain elevated, projected at $2.3 billion for full year 2025, reflecting ongoing investments in manufacturing capacity expansion, including new facilities in Ohio and North Carolina, to support future growth drivers like MariTide.

Pipeline Catalysts and Future Outlook

Amgen's outlook is anchored by a promising pipeline and strategic initiatives designed to sustain growth through the end of the decade and beyond. The company has reaffirmed its 2025 total revenue guidance in the range of $34.3 billion to $35.7 billion and non-GAAP earnings per share between $20.00 and $21.20. This guidance reflects the expectation of continued volume-driven growth from key in-line products and recent launches, offsetting the anticipated impact of denosumab (Prolia/XGEVA) patent expirations in the U.S. (February 2025) and Europe (November 2025), as well as ongoing price erosion.

A major catalyst for future growth is the MariTide program in obesity and related conditions. Following encouraging Phase 2 interim data, Amgen has initiated Phase 3 studies in chronic weight management and a dedicated Phase 2 study in type 2 diabetes. End-of-treatment data from the Phase 2 chronic weight management study (Part II) and the Phase 2 type 2 diabetes study are expected in the second half of 2025. The planned broad Phase 3 program underscores the significant market opportunity Amgen sees for this differentiated molecule, potentially competing in a multi-billion dollar market currently dominated by Eli Lilly and Novo Nordisk.

The rare disease portfolio, significantly bolstered by the Horizon acquisition, is expected to be a key growth driver. UPLIZNA, recently approved as the first and only treatment for IgG4-related disease in the U.S., is launching into an underserved market. The FDA has also accepted the regulatory submission for UPLIZNA in generalized myasthenia gravis, with a PDUFA date in December 2025, based on compelling Phase 3 data. International expansion for TEPEZZA, including launches in Japan and Europe, further adds to the growth potential of this franchise.

In oncology, the BiTE platform continues to advance. Beyond the strong performance of BLINCYTO and the promising launch of IMDELLTRA, Amgen is advancing Xaluritamig, a STEAP1 CD3 bispecific, into Phase 3 for advanced prostate cancer. These assets represent the next wave of targeted cancer therapies leveraging Amgen's core technological strength.

The inflammation franchise is set for potential expansion with TEZSPIRE. Following positive Phase 2 data in COPD, Amgen plans to initiate Phase 3 studies in this large patient population. Regulatory submission for chronic rhinosinusitis with nasal polyps is also underway, with a PDUFA date in October 2025. These new indications could significantly expand TEZSPIRE's addressable market beyond severe asthma.

The biosimilars portfolio is poised for continued growth with recent and upcoming U.S. launches of PAVBLU (Eylea biosimilar), WEZLANA (Stelara biosimilar), and BEKEMV (Soliris biosimilar). Amgen expects these launches to contribute meaningfully to revenue and maintain its leadership position in this segment, providing attractive returns.

Risks and Challenges

Despite the promising pipeline and strategic momentum, Amgen faces significant risks. The loss of exclusivity for key products like Prolia and XGEVA starting in 2025 is expected to result in sales erosion due to biosimilar competition. Pricing pressures from government and commercial payers, exacerbated by provisions of the IRA, continue to impact net selling prices for established products like ENBREL and Otezla, with the latter facing specific Medicare price setting in 2027. The ongoing, complex tax dispute with the IRS regarding profit allocation for prior years represents a material financial contingency with an uncertain outcome, potentially resulting in substantial additional tax liabilities.

The competitive landscape is intense across all therapeutic areas, with large pharmaceutical companies and specialized biotechs vying for market share. The rapid pace of innovation, particularly in areas like obesity and oncology, requires sustained, high levels of R&D investment, which may not always yield successful products. Regulatory hurdles and potential safety signals can delay or prevent product approvals or impact the labels of marketed products. Furthermore, macroeconomic uncertainties, including potential future tariffs on pharmaceutical imports and ongoing geopolitical conflicts, could disrupt supply chains and increase operating costs. Cybersecurity threats also pose a risk to operations and sensitive data.

Amgen is actively working to mitigate these risks through strategic investments in its pipeline, manufacturing capacity, and operational efficiency. The focus on differentiated technologies aims to create products with profiles that can command market share despite competition. Proactive engagement with payers and investment in patient access programs are intended to counter pricing and reimbursement pressures. However, the scale and complexity of these challenges mean they could materially impact future financial results and the realization of the company's growth objectives.

Conclusion

Amgen stands at a pivotal juncture, leveraging its four-decade legacy and deep expertise in biologics to navigate a complex and challenging healthcare landscape. The core investment thesis rests on the strength of its diversified portfolio, the potential of its innovative pipeline – particularly differentiated assets like MariTide, the BiTE platform, and UPLIZNA – and its operational discipline. While facing significant headwinds from patent expirations and pricing pressures, the company's strategic investments in R&D, manufacturing, and digital capabilities are designed to fuel the next phase of volume-driven growth. The successful integration of the Horizon rare disease franchise further diversifies the business and adds new avenues for expansion. Amgen's solid financial position, characterized by strong cash flow and a commitment to debt reduction and capital return, provides a stable foundation.

Investors should weigh the potential for pipeline catalysts and continued market execution against the material risks posed by competition, regulatory changes, and macroeconomic uncertainties. The company's ability to translate its technological prowess into commercially successful therapies will be key to delivering sustained long-term value.