Revenue growth is slowing at biotech giant Amgen (NASDAQ:AMGN), and yet the shares are trading near a record high. The share price is a reflection of years of revenue, profit, and a portfolio of more than 20 products. In the world of biotech, where many companies are still in the clinical or pre-clinical stage and any revenue source is years down the road, there is value in a portfolio the size of Amgen's. The biotech company has also steadily increased its dividend since 2011. And investors are clearly paying for that. But now the question is: Can the stock move higher from here?

Amgen focuses on diseases that affect large portions of the population, such as asthma, rheumatoid arthritis, and cardiovascular disease, to name a few. The company has about 45 drug candidates in clinical trials, and nearly half of them are in phase 3 studies. Amgen is also working in the up-and-coming area of biosimilars, or drugs that are highly similar to an already approved biological treatment. Amgen has four approved biosimilars and others in the pipeline.

A researcher holds up a red pill.

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Profitable for years

From a financial perspective, Amgen has been profitable for years, with blockbuster drugs Neulasta, a bone marrow stimulant for cancer patients, and Enbrel, approved for rheumatoid arthritis among other conditions, driving growth. Amgen won a patent case regarding Enbrel last year, although Sandoz, a company of Novartis, vowed to appeal the decision in order to bring its biosimilar to patients. In spite of that victory, competition has started to threaten some of the company's drugs, and that is showing in the latest earnings reports.

Though Amgen's adjusted earnings per share (that is, not using generally accepted accounting principles) increased 6% in the fourth quarter to $3.64, surpassing analysts' estimates, quarterly revenue has gone down on a year-over-year basis each of the past three quarters. As a result, the company reported a 1% decrease in revenue for the fourth quarter and a 2% decline for the year to $23.4 billion. Product sales fell 1% for the year. Neulasta, which used to generate more than $1 billion in a quarter, saw quarterly revenue fall to $665 million in this most recent earnings report. Sales of Neulasta slid 43%, while sales of Neupogen, a second bone-marrow stimulant, fell 17%. Amgen cited competition as a reason for the declines in both drugs. Since the drugs came off patent in recent years, the U.S. Food and Drug Administration has approved competing products such as Pfizer's Nivestym, a Neupogen biosimilar, and Coherus Biosciences' Udenyca, a Neulasta biosimilar, which have cut into revenue.

When a billion-dollar drug no longer brings in billions

Now the question is how to boost revenue when a billion-dollar drug no longer brings in billions. Though the obvious answer seems to be "through newer drugs," there is the possibility that the new products won't be as successful as older ones. As mentioned earlier, Amgen has a full pipeline, and the company expects data from various studies this year, including results from a phase 3 trial of heart-failure drug omecamtiv mecarbil in the fourth quarter of this year. GlobalData expects the heart failure market to represent $16.1 billion by 2026. Though Amgen's executive vice president of research and development, David M. Reese, said during the earnings call that the heart-failure treatment landscape is changing based on data from other drug classes, he considers there is still plenty of unmet need to be addressed.

In addition to clinical-stage drugs, Amgen is also seeking to expand the use of already marketed drugs, like psoriasis treatment Otezla. The company expects an FDA decision on the expansion of prescribing information to include data from a scalp psoriasis study in April. Though Otezla only represented 3% of total product sales in the quarter, the psoriasis market isn't negligible. The global psoriasis market is expected to reach $46.6 billion by 2022, according to a report by The Business Research Company.

Another important step Amgen has taken is in the area of partnerships, and its recent one in China, a large and growing oncology market, is encouraging. The company announced late last year that it would collaborate with BeiGene to increase its oncology presence in China, and the two companies recently launched their work together. As part of the deal, BeiGene will commercialize three of Amgen's cancer drugs in China and the two companies will equally share profits and losses. The companies will also advance 20 of Amgen's oncology drug candidates globally. The agreement also involved Amgen taking a 20.5% stake in BeiGene. The oncology drug market in China, growing at a compound annual growth rate of 8.7%, is expected to reach $12.7 billion by 2026, according to Allied Market Research.

Is Amgen a stock to buy?

Amgen shares are close to their highest ever, and Wall Street sees 6% upside from here. At the same time, the shares trade at about 18 times earnings, while peers such as Sanofi and Novo Nordisk each trade at about 26. Though Amgen shares may not gain in leaps and bounds, for a long-term investor who wants a solid dividend-paying stock, Amgen makes a good addition to a biotech portfolio. The company's efforts in the pipeline and partnerships indicate that the current earnings slowdown is transient, and as for dividends, the 2019 total dividend was $5.80 a share, for a yield around 3% with a well-supported payout ratio around 45%. The stock lost 10% in January, offering investors a decent entry point for shares they will want to hold on to for a long while.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.