Amgen’s Financial Performance and Outlook

Amgen Inc., a leading biotechnology company, has reported its financial results for the year ended December 31, 2024. The company has seen strong growth in its product sales, driven by volume increases across its portfolio, including the addition of products acquired from Horizon Therapeutics. However, the company also faces challenges from pricing pressures, competition, and regulatory changes that have impacted its profitability.

Revenue and Profit Trends

Amgen’s total product sales increased by 19% in 2024 to $32.0 billion, primarily driven by a 23% increase in sales volume. This was partially offset by a 2% decline in net selling prices. The company’s U.S. sales grew by 21%, while its Rest of World (ROW) sales increased by 14%.

The acquisition of Horizon Therapeutics in October 2023 contributed significantly to Amgen’s revenue growth, with the acquired products generating $4.2 billion in sales in 2024, up from $954 million in 2023. Amgen’s other brands, including Repatha, TEZSPIRE, EVENITY, BLINCYTO, and Prolia, also saw strong volume growth of 11%.

Despite the revenue growth, Amgen’s operating income declined by 8% to $7.3 billion in 2024. This was primarily due to a 52% increase in cost of sales, driven by higher amortization expenses from the Horizon acquisition and higher profit-sharing and royalty expenses. Research and development (R&D) expenses also increased by 25%, while selling, general, and administrative (SG&A) expenses rose by 15%.

As a result, Amgen’s net income declined by 39% to $4.1 billion, and its diluted earnings per share (EPS) decreased by 39% to $7.56.

Strengths and Weaknesses

Strengths:

• Diversified product portfolio with strong growth in key brands like Repatha, TEZSPIRE, EVENITY, and BLINCYTO
• Successful integration of the Horizon Therapeutics acquisition, which has significantly expanded Amgen’s product offerings
• Continued investment in R&D to advance its pipeline of innovative medicines
• Strong cash flow from operating activities, supporting investment in the business and return of capital to shareholders

Weaknesses:

• Increasing cost pressures, including higher amortization expenses and profit-sharing/royalty costs, which have impacted profitability
• Pricing pressures and competition, particularly from biosimilars and generics, which have led to net selling price declines
• Regulatory changes, such as the Inflation Reduction Act (IRA) and the 340B Program, that have affected the company’s business
• Ongoing tax disputes with the IRS, which could result in significant additional tax liabilities

Outlook and Future Challenges

Looking ahead, Amgen expects to continue facing macroeconomic and industry challenges, including the risk of inflation, higher interest rates, and ongoing pricing pressures. The company also anticipates that the provisions of the IRA and the 340B Program will continue to impact its business.

Despite these challenges, Amgen remains focused on advancing its innovative pipeline, generating strong sales growth, and expanding its manufacturing capabilities. The company expects volume growth from certain brands to be partially offset by net selling price declines in 2025.

Amgen’s long-term success will depend on its ability to continue discovering, developing, and commercializing innovative products, as well as its ability to acquire or collaborate on therapies currently in development by other companies. The company must also navigate the increasing regulatory scrutiny of safety and efficacy, both before and after product launches.

Capital Allocation and Financial Condition

Amgen has a strong financial position, with $12.0 billion in cash and cash equivalents as of December 31, 2024. The company has been disciplined in its capital allocation, investing in its business, reducing debt, and returning capital to shareholders through dividends and stock repurchases.

During 2024, Amgen paid quarterly cash dividends of $2.25 per share, representing a 6% increase over the prior year. In December 2024, the Board of Directors declared a cash dividend of $2.38 per share for the first quarter of 2025, another 6% increase.

The company also returned capital to shareholders through its stock repurchase program, repurchasing $200 million of common stock in 2024. As of December 31, 2024, $6.8 billion remained available under the stock repurchase program.

Amgen has financed its operations through a combination of cash flows from operating activities, commercial paper, syndicated credit facilities, and access to debt and equity markets. As of December 31, 2024, the company had $56.5 billion in long-term debt, with S&P, Moody’s, and Fitch assigning investment-grade credit ratings to its outstanding senior notes.

The company’s cash flows from operating activities totaled $11.5 billion in 2024, supporting its investments in the business, including $1.1 billion in capital expenditures to enhance and expand its manufacturing network. Amgen expects its existing funds, cash generated from operations, and access to financing to be adequate to meet its liquidity needs, including for working capital, capital expenditures, debt service, and other strategic initiatives.

Conclusion

Amgen has delivered strong revenue growth in 2024, driven by the successful integration of the Horizon Therapeutics acquisition and continued volume growth in its key product brands. However, the company faces increasing cost pressures and regulatory challenges that have impacted its profitability.

Looking ahead, Amgen remains focused on advancing its innovative pipeline, maintaining its disciplined approach to capital allocation, and navigating the evolving healthcare landscape. The company’s strong financial position and cash flows provide it with the resources to invest in its business and return capital to shareholders, while also addressing the various macroeconomic and industry-specific challenges it faces.