When a drug developer reaches the size of Amgen (NASDAQ:AMGN), finding new ways to grow its top and bottom line can be difficult. Amgen has managed to keep up in the sales and earnings race for years, via heavy research and development spending and judicious use of its cash for acquisitions. For instance, in just the past 10 years, Amgen's sales have shot up more than 500% to $14 billion, while its R&D spending has similarly ballooned five times to more than $3 billion. With only one out of every five drug compounds successfully making it to the market, it's smart of Amgen to not have its entire drug pipeline resting on only a few drug candidates.

On Thursday, Amgen released its fourth-quarter financial results. Overall revenue was up 17% year over year in the fourth quarter to $3.8 billion, and sales of Amgen's key Aranesp and Epogen anemia franchise gained a healthy 18% to $1.8 billion. Earnings were barely up 1% to $833 million in the fourth quarter, as margins fell significantly. Amgen's operating margin plummeted from 33.7% to 25.8%, while net margins were down from 25.2% to 21.7%. Margins were hurt by a greater than 50% jump in R&D spending and charges related to previous acquisitions and stock-option expensing. Absent these $184 million worth of charges, earnings expanded a more respectable 14% for the quarter, with adjusted earnings coming in at $0.90 a share. (You can find more of Amgen's Foolish financial information here.)

Amgen's launch of its cancer treatment, Vectibix, has gotten off to a good start, with sales of $39 million in its first quarter on the market. It seems to have made a dent in ImClone's (NASDAQ:IMCL) Erbitux sales, as Imclone's marketing partner, Bristol-Myers Squibb (NYSE:BMY), posted its first sequential decline in quarterly Erbitux sales in the past two years.

On the development side of things, Vectibix did hit one and a half setbacks. Amgen decided to delay a pivotal phase 3 study testing the drug in head and neck cancer. It also announced interim results that showed Vectibix might be ineffective in the front-line setting for colorectal cancer, but since this was only a preliminary 12-week study, there's still time for the drug to show positive results.

Amgen is a tough biotech to get excited about when you consider that earnings and sales only grew in the mid-teens percentage range in 2006, and 2007 guidance is for similar levels of modest growth. With a $71 share price and trading at a forward multiple of roughly 16 times earnings, the stock is not particularly cheap. Still, it's important to remember that Amgen's earnings picture would look a lot rosier if it weren't spending so much on research and development. While not every compound in the clinic produced positive trial results this quarter (nor should investors always expect them to), these are the kinds of expenditures that will hopefully reap rewards for investors down the road -- even if they mean lower earnings today.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.