Can Amgen Grow Faster Than Gilead Sciences and Teva Pharmaceutical?

Amgen (NASDAQ: AMGN  ) will release its quarterly report on Tuesday, and the biotech giant has been on a tear, as its stock is once again approaching new all-time record highs. But growth investors who rode the long-term bull market in Amgen to big profits now wonder if its best growth days are behind it, leaving it vulnerable to efforts from Gilead Sciences (NASDAQ: GILD  ) and Teva Pharmaceutical (NYSE: TEVA  ) to catch up and even surpass Amgen.

Amgen helped pioneer the biotech industry, and products like white-blood-cell deficiency treatment Neulasta and Neupogen, psoriasis-fighter Enbrel, and osteoporosis treatments Xgeva and Prolia have helped make Amgen hugely profitable for long-term investors. But Amgen's big bet on the promise of cancer treatments it acquired with its purchase last month of Onyx Pharmaceuticals marks its foray back into the high-competition, high-growth side of the business, where Gilead Sciences seeks its own fortune. Meanwhile, Teva Pharmaceutical poses a longer-term threat with a biosimilar version of Neulasta coming soon. Will Onyx pay off for Amgen? Let's take an early look at what's been happening with Amgen over the past quarter and what we're likely to see in its report.

Stats on Amgen

Analyst EPS Estimate

$1.79

Change From Year-Ago EPS

7.2%

Revenue Estimate

$4.60 billion

Change From Year-Ago Revenue

6.5%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Amgen earnings grow faster?
In recent months, analysts have marked down their views on Amgen earnings somewhat, keeping their third-quarter estimates stable but cutting fourth-quarter 2013 and full-year 2014 projections by 2% to 4%. The stock has done well, though, climbing 10% since mid-July.

Almost all of the attention on Amgen this quarter focused on its saga to acquire Onyx. Having had a $120 per share bid rejected, Amgen finally got Onyx to agree to take $125 per share, holding off speculation that Gilead Sciences might come in with a rival bid. The acquisition will inevitably help Amgen boost its oncology business by introducing direct cancer treatments to its lineup, supplementing its existing treatments of cancer symptoms and side effects. That could be very useful, given the competitive pressures that Amgen has seen from Teva and others against its Aranesp and Epogen treatment for kidney disease related to cancer and other conditions.

But Amgen also has to worry about its imminent patent cliff. In November, Teva Pharmaceutical is expected to bring a biosimilar version of Neulasta to the U.S. market. Although an already-available product in Europe hasn't put a big dent in Amgen's results so far, Teva's move to the U.S. could have a larger impact. Amgen hopes to have a longer-lasting success with blockbuster Enbrel, which appears more secure with its patent extension all the way to 2028.

Amgen is trying to use the biosimilar market to turn the tables on some of its competitors. Attempts to launch biosimilars in 2017 and beyond will include equivalents to big-name treatments like Roche's Herceptin and Rituxan, as well as AbbVie's Humira. If Amgen is successful with those treatments, it could add up to a huge new business for the biotech that could help it keep Gilead at bay and invade Teva's traditional space.

In the Amgen earnings report, watch closely for the company to describe further how its Onyx acquisition will affect its overall strategic plan. With several avenues from growth, describing Amgen as a boring growth has-been could well be premature.

Will Amgen be the big cancer-fighting winner?
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