Amgen's 2Q profit falls 3 pct on rising R&D costs

AP News
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Posted: Jul 29, 2011 9:58 AM
Amgen's 2Q profit falls 3 pct on rising R&D costs

Biotech drugmaker Amgen said Friday that its second-quarter earnings slipped 3 percent on increased research spending and sales costs for product launches plus falling revenue from a key drug.

The Thousand Oaks, Calif., company reported net income of $1.17 billion, or $1.25 per share, in the three months that ended June 30. That compares with $1.2 billion, or $1.25 per share, a year ago.

Adjusted earnings were $1.37 per share. Analysts surveyed by FactSet expected, on average, adjusted earnings of $1.29 per share.

Revenue climbed 4 percent to $3.96 billion from $3.8 billion a year earlier. Analysts expected $3.77 billion in revenue.

Its shares slipped 4 cents to $53.39 a share in morning trading.

The company's research and development costs rose 26 percent to $808 million to pay for late-stage clinical trials. Selling, general and administrative costs climbed 15 percent to $1.11 billion. Amgen attributed this in part to costs tied to new drug launches, international expansion and a $47 million federal excise fee from the U.S. health care overhaul, a massive law that aims to eventually cover millions of uninsured people.

Total product revenue climbed 8 percent to $3.89 billion, but revenue from the anemia drug Epogen tumbled 17 percent to $543 million. The company cited the start of a bundled payment system.

Sales of another anemia drug, Aranesp, fell 3 percent to $585 million, as U.S. sales dropped 10 percent.

Amgen said it now expects 2011 net income and revenue to be at the upper end of previous guidance, which forecast earnings ranging from $5 to $5.20 per share on revenue of between $15.1 billion and $15.5 billion.

Analysts expect earnings of $5.16 per share on $15.26 billion in revenue.