Anemic Growth? Not From These Drugs.

Amgen (Nasdaq: AMGN  ) recorded a solid first quarter; just imagine what it'll look like when sales of its anemia drugs finally settle down.

Sales of Aranesp and Epogen were down 11% and 17%, respectively, yet newer products were able to overcome the anemia drug's never-ending slump, resulting in an overall 8% increase in product sales.

Management expects the impact of label changes to be completely incorporated by the middle of the year for Aranesp. Epogen's situation is a little more tenuous, since it has new competition from Affymax (Nasdaq: AFFY  ) and Takeda Pharmaceutical's Omontys. But Amgen's management doesn't seem worried, since about 70% of its business is wrapped up in long-term contracts. Being the entrenched leader has its perks.

It's also easy for management not to worry about Epogen because it's become an increasingly smaller portion of the biotech's portfolio. In the first quarter, sales of Epogen made up just 11% of product sales.

The sales leader, Neulasta and its older brother Neuopogen, saw sales increase 9% year over year. Coming up behind, Enbrel, which Amgen sells with Pfizer (NYSE: PFE  ) , was up 7%. The direct-to-consumer adds seem to be bringing in new customers, despite continued competition from Abbott Labs' (NYSE: ABT  ) Humira and Remicade sold by Johnson & Johnson (NYSE: JNJ  ) .

The newer drugs are also selling growing well. Xgeva and Prolia have almost reached a run rate that would classify them as a combined blockbuster, but that still leaves them with plenty of upside. Osteoporosis, which Prolia treats, is a multibillion-dollar market, and Xgeva competes with Novartis' Zometa to prevent bone breaks in cancer patients where it's taking market share but still has more to grab.

Amgen isn't as exciting as it was in its heyday a few decades ago. But if the biotech can continue to put up 8% sales increases -- with or without stabilization of its anemia drug franchise -- and throw of a little dividend, it'll be worth holding.

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Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Abbott Laboratories and Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Novartis, Pfizer, and Johnson & Johnson and creating a diagonal call position in Johnson & Johnson. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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