Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Easy, Peasy, Just "Pick Winners"

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Amgen (NASDAQ: AMGN  ) presented its long-term plan to investors yesterday that includes an R&D strategy to "pick winners."

Umm, what exactly was the strategy before? Pick losers?

While the name for the strategy is downright stupid, the actual approach behind it isn't quite as bad. The plan is to use human genetics to identify and validate targets. Amgen's recent acquisition of deCODE Genetics should certainly help. It won't ensure that winners are actually picked, but having a genetic basis for a drug should help increase the likelihood of success.

Amgen expects data from eight pivotal trials by 2016. Data from talimogene laherparepvec in melanoma and trebananib for ovarian cancer are expected this year.

The biotech also laid out plans to develop biosimilar drugs, or generic versions of biologic drugs. Yes, the same type of drugs that Amgen is famous for. Call it a "if you can't beat 'em, join 'em" strategy. While it faces potential competition for its biologics, Amgen plans to go after AbbVie's (NYSE: ABBV  ) Humira; Remicade, which is sold by Merck and Johnson & Johnson (NYSE: JNJ  ) ; Eli Lilly (NYSE: LLY  ) and Bristol-Myers Squibb's (NYSE: BMY  ) Erbitux; and Roche's Avastin, Herceptin, and Rituxan.

Amgen likely isn't the only one targeting those blockbuster biologics, but given its experience, it's in one of the better positions to follow all of the rules the Food and Drug Administration is establishing to ensure the drugs are similar enough to be safe and effective. Investors in companies that sell branded biologics should be worried although Amgen isn't targeting to launch the copycat drugs until at least 2017, so the companies have time to prepare.

Finally, Amgen outlined plans to move into Japan and China. Biotechs have typically licensed drugs to a drugmaker in Japan, but Amgen is getting big enough where it makes sense to have a direct presence there. I wouldn't count on sales in Japan having a major impact on the bottom line compared to out-licensing its drugs, but every little bit helps, I guess.

I've made my view of companies moving into China and the rest of the developing nations abundantly clear. It'll boost the top line, but lower margins aren't going to result in much of an increase in earnings. Call me when the developing nations have actually developed.

The company in Amgen's cross hairs
Amgen's biosimilars strategy highlights a key risk facing another company, AbbVie. With the patent expiration of Humira coming up in the few years, many investors need to understand the opportunities and risks facing this recent spinoff. The Fool's brand new premium report on the company answers the high-profile questions that AbbVie investors are asking, and as an added bonus, you'll receive a full year of free analyst updates as significant news hits. Simply click here now to claim your copy today.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2245552, ~/Articles/ArticleHandler.aspx, 9/29/2016 11:55:33 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,301.85 -37.39 -0.20%
S&P 500 2,167.34 -4.03 -0.19%
NASD 5,295.11 -23.44 -0.44%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 11:40 AM
AMGN $167.51 Down -2.21 -1.30%
Amgen CAPS Rating: ****
BMY $54.73 Down -0.37 -0.66%
Bristol-Myers Squi… CAPS Rating: ****
JNJ $118.09 Down -1.30 -1.09%
Johnson and Johnso… CAPS Rating: *****
LLY $79.85 Down -0.86 -1.07%
Eli Lilly and Co. CAPS Rating: ***
MRK $62.09 Down -1.22 -1.92%
Merck and Co. CAPS Rating: ****