Obama Keeps Target of Generic Biologics: Focus on Anemia (AMGN, JNJ, NVS)
Politics and healthcare are two words which bring about unquantifiable risks for many biohealth investors. In President Obama’s speech today, he did say how he wanted biologic drugs to have an easier path for generic competition in the field. This is not necessarily a new call from the administration, but it is a continued push against the biotech field. That was a broad statement where you never know how far it can or how far it will ultimately go. But the president did specifically note anemia as a target for the generic competition. Again, this is a repeat, but it means a further direct push that is not being let up on. That puts Amgen Inc. (NASDAQ: AMGN) for its Aranesp and Epogen as a front and center assault target of the administration if you take the statements at face value.
Amgen generated $15.003 billion in 2008 total revenues. Its growth petered out as the 2007 revenues were $14.771 billion and the 2006 revenues were $14.268 billion. Aranesp, for the treatment of anemia associated with CRF (both in patients on dialysis and patients not on dialysis), had global sales of $3.1 billion for all of 2008. EPOGEN, for the treatment of anemic adult and pediatric patients with CRF who are on dialysis, sales in the United States were roughly $2.5 billion for each of the last three years.
Amgen’s Neulasta and NEUPOGEN are indicated for reducing the incidence of infection associated with chemotherapy-induced neutropenia in cancer patients with non-myeloid malignancies. Neulasta global sales in 2008 were roughly $3.3 billion and NEUPOGEN global sales in 2008 were about $1.3 billion.
That being said, we can directly tie more than one-third of Amgen sales as being under fire from the administration if generics will come on stronger here for anemia drugs. And if we widen the scope to be more broad-based as all blood-disorder drugs tied to chemotherapy issues then more than two-thirds of Amgen’s franchise could further come under attack.
Johnson & Johnson (NYSE: JNJ) is much more diversified as Procrit is one of a dozen key drugs. Procrit/Eprex was roughly $2.5 billion in 2008 sales for J&J, which is about 10% of its pharmaceutical sales of $24.6 billion. That compares to a total revenue base of $63.747 billion.
Amgen’s stock was already down with the broad market today at $49.95 during the Obama speech. Shares have slid further to down by 1.7% at $49.55 today.
Novartis AG (NYSE: NVS) has already taken action to access the generic treatment of anemia.
Jon C. Ogg
June 15, 2009
