Amgen Draws Blood in Anemia-Drug War

Amgen's (Nasdaq: AMGN) sales of its anemia drugs have been, well, anemic. However, its monopolistic grip on that slice of the market just got a transfusion of fresh blood.

Sales of Aranesp fell 13%, and sales of Epogen were flat year over year last quarter, but Amgen finally got some good news: It won't face competition from Roche's Mircera. A judge ruled that the drug infringed on Amgen's patent; the court will institute a permanent injunction against Mircera's U.S. launch as soon as Roche's appeal of a preliminary ruling is resolved.

This is just the latest battle in Roche's long series of attempts to get its drug, which is already approved by the Food and Drug Administration, onto the market. It lost an earlier patent dispute, but the judge had been trying to get the two companies to work matters out. Earlier this year, the judge suggested that Roche pay Amgen a 22.5% royalty on the drug. That's much higher than the 10% rate Johnson & Johnson (NYSE: JNJ) pays to sell Procrit, its version of Epogen, but Amgen still balked at the idea. After all, Mircera would more directly compete against Amgen's drugs than Johnson & Johnson, which only sells to markets outside of dialysis patients.

Amgen really needs to remain competition-free in the U.S., since it's facing plenty of competition in Europe. Mircera is on the market there already, and more importantly, Europe now has a pathway to approve sales of biosimilars -- generic versions of biotech drugs. Novartis (NYSE: NVS), Hospira (NYSE: HSP), and Teva Pharmaceuticals (Nasdaq: TEVA) have already taken advantage of the new system, and I would only expect the number of approvals to continue.

Amgen and other companies that are heavily into biologics, such as Genentech (NYSE: DNA), will likely remain competition-free in the U.S. for the foreseeable future. There are several bills in Congress to push through a pathway to get generic biologics approved, but legislators been talking circles around the issue for quite a while.

As long as Congress cooperates, Amgen's future looks bright in the anemia market -- especially now that it won't have Roche siphoning away its sales.