The Economy Strikes Again

Looks like Amgen (Nasdaq: AMGN  ) has more in common with Celgene (Nasdaq: CELG  ) than it does with Gilead Sciences (Nasdaq: GILD  ) .

HIV drugs from Gilead may be recession-proof, but cancer drugs from Celgene and Amgen's anemia and rheumatoid arthritis drugs aren't.

Amgen's sales fell 8% in the first quarter. The most troublesome loser was a 20% plunge in sales of rheumatoid arthritis treatment Enbrel, which is sold in partnership with Wyeth (NYSE: WYE  ) . It's not surprising that patients are cutting back on their medication; Abbott Labs (NYSE: ABT  ) posted a 17% increase in sales of Humira, but that was below expected 25% growth, and Johnson & Johnson (NYSE: JNJ  ) saw sales of its rheumatoid arthritis treatment Remicade increase by only 3%. But the magnitude of the decrease is quite surprising. Amgen blamed a majority of the decline on "changes in wholesaler inventory." Give the company a free pass, if you must, but keep a close eye on the sales of Enbrel.

Amgen's anemia franchise is also hurting, but the economy can't take as much of the blame. Changes to Aranesp's label are mostly to blame for the 18% decline in sales of the blockbuster.

Earnings didn't look quite as bad, with earnings per share falling just 3%. The company is still sticking with its adjusted earnings guidance of $4.55 to $4.75 per share, but that looks like it may be difficult to make. At the low end Amgen is trading at less than 11 times guidance, which seems reasonable as long as Amgen can turn things around.

At this point Amgen seems to be just treading water, waiting for osteoporosis drug denosumab to be approved. If it can gain FDA approval later this year and show that the drug also works well in cancer patients, Amgen should be able to get back to growing revenue again -- even if the economy doesn't turn around.

Our Foolishness is never anemic:

• A proposal for higher taxes that you might like.
• These investments don't stand a chance.
• This is your dare-to-be-great moment.