Amgen Inc. discovers, develops, manufactures, and delivers human therapeutics worldwide. It offers products for the treatment of illness in the areas of oncology/hematology, cardiovascular, inflammation, bone health, nephrology, and neuroscience. The company's products include Evenity to treat osteoporosis in postmenopausal women; Prolia to treat postmenopausal women with osteoporosis; Xgeva for skeletal-related events prevention; Repatha to treat coronary artery diseases; Enbrel to treat plaque psoriasis, rheumatoid arthritis, and psoriatic arthritis; Parsabiv to treat secondary hyperparathyroidism (sHPT); and Erenumab for the prevention of migraine. Its products also comprise Blincyto to treat patients with Philadelphia chromosome-negative relapsed or refractory B-cell precursor acute lymphoblastic leukemia; Kyprolis, a proteasome inhibitor for the treatment of multiple myeloma and small-cell lung cancer; Nplate, a thrombopoietic compound; AMJEVITA to treat psoriatic arthritis and polyarticular juvenile idiopathic arthritis, as well as ankylosing spondylitis and rheumatoid arthritis; ABP 215 for biosimilar candidates; and ABP 980 to treat human epidermal growth factor receptor 2-positive early breast cancer. The company's other marketed products include Neulasta, a pegylated protein to treat cancer patients; Aranesp to treat anemia; Sensipar/Mimpara products to treat sHPT in chronic kidney disease; EPOGEN to treat a lower-than-normal number of red blood cells; NEUPOGEN, a recombinant-methionyl human granulocyte colony-stimulating factor; and IMLYGIC to treat various cancer cells. It serves pharmaceutical wholesale distributors; and physicians or their clinics, dialysis centers, hospitals, and pharmacies, as well as consumers. The company has collaborative agreements with Pfizer Inc.; UCB; Bayer HealthCare Pharmaceuticals Inc.; Array BioPharma Inc.; and Syngene International Limited. Amgen Inc. was founded in 1980 and is headquartered in Thousand Oaks, California.
Business Analysis of Amgen
The Life Sciences Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Amgen compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Amgen to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Amgen with an interactive chart.
- Revenue Growth: Amgen reported a revenue growth of 6.1% year-on-year during 2016. Biotechnology Industry grew at 7.0% in the same period
- COGS share of Revenues: As a percentage of revenue, Amgen spent 18.1% of its total revenues on COGS. Biotechnology industry average (COGS share of revenue) in the same period was 15.0%
- R&D share of Revenues: As a percentage of revenue, Amgen spent 16.7% of its total revenues on R&D. Biotechnology industry average R&D spending in the same period was 23.7%
- SG&A share of Revenues: As a percentage of revenue, Amgen spent 22.0% of its total revenues on Sales, Marketing, and General Administration (SG&A). Biotechnology industry average SG&A spending in the same period was 20.7%
- Inventory share of Revenues: As a percentage of revenue, Amgen spent 11.9% of its total revenues on Inventories. Biotechnology industry average Inventory spending in the same period was 7.5%
- Accounts Payable share of Revenues: As a percentage of revenue, Amgen invested 4.0% of its total revenues on Accounts Payable (A/P) Biotechnology industry average Accounts Payable investment in the same period was 11.8%
- Accounts Receivable share of Revenues: As a percentage of revenue, Amgen invested 13.8% of its total revenues on Accounts Receivable (A/R). Biotechnology industry average Accounts Receivable investment in the same period was 16.6%
- PP&E share of Revenues: As a percentage of revenue, Amgen invested 21.6% of its total revenues on Property, Plants, and Equipments (PP&E). Biotechnology industry average PPE investment in the same period was 17.0%
- Intangibles share of Revenues: As a percentage of revenue, Amgen invested 108.9% of its total revenues on Intangibles. Biotechnology industry average Intangibles investment in the same period was 96.4%
- Net Margins: Amgen Net Margins in the year 2016 were 33.6%. Biotechnology industry average Net Margins in the same period were 26.6%
Sector and Industry Association of Amgen
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
Amgen is associated with Healthcare Sector Group, Life Sciences Sector, and Biotechnology Industry.
Life Sciences sector is comprised of the following industries: Pharmaceuticals; Medical Devices; Biotechnology; Diagnostics & Scientific Instruments. The definitions for each of the industries is as follows:
- Pharmaceuticals industry includes companies that discover, develop, manufacture, and market medicines licensed for use as medications. In general these companies offer pharmaceutical products that can be described as prescription or over-the-counter medicines. Many Pharmaceutical companies also offer a diverse portfolio of animal health products, services and solutions. Many diversified pharmaceutical companies operate in more than two operating segments like consumer health products, medical devices and pharmaceutical.
- Medical Devices industry includes manufacturers and distributors of medical equipments and medical supplies. Medical equipments include large scale capital equipmets such as X-Ray machines and MRI scanners and other nondisposable medical devices like stents and pacemakers. Medical supplies include makers of contact lenses, eyeglass lenses, bandages and other disposable products.
- Biotechnology industry includes Biotechnology product companies, subscription companies, and service companies. Biotechnology product companies offer pharmaceutical drug products that are manufactured in, extracted from, or semi synthesized from biological sources. Subscription-based companies develop genome databases, which can be used to develop medicinal drugs. Service companies offer solutions based on a common technology or generic tool of other large pharmaceutical or biopharmaceutical companies.
- Diagnostics & Scientific Instruments industry includes companies that provide testing products, diagnostic reagents, instruments and diagnostic services to aid in the detection and treatment of a wide range of diseases. It also includes molecular diagnostic and genetic testing companies that develop, manufacture, market and provide diagnostic tests, diagnostic systems and related products and services. Also included are companies that manufacture and market analytical instruments, equipment, reagents and consumables, software and services for research, manufacturing, analysis, discovery and diagnostics.
Industry Ranking of Amgen
With $23 billion revenues, Amgen ranked number 3 of all the companies in the US Biotechnology industry. There were a total of 45 public companies in the US Biotechnology industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Biotechnology industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.