Stiff Biosimilar Headwinds To Negatively Impact Amgen's Aging Drug Portfolio

Amgen has a very old drug portfolio with G-CSFs, ESAs and Enbrel accounting for over 100 percent of its net income. By 2020, Gal believes Amgen will lose $4.8 billion (22 percent of its revenue), as the market share of key drugs Neupogen, Neulasta, Epogen, and Enbrel will erode by 2020. "We have no reason to assume Sandoz would be able to overcome Biogen Inc BIIB's Enbrel IP, but the concern will likely weigh on the stock starting 2H17 as we approach a trial date," Gal noted.

Gal ended with a 2 percent revenue growth CAGR and a 5 percent EPS CAGR. Amgen has very little room to turn its trajectory around, as it has already committed 60 percent of its net income to investors and "has taken splitting the company off the table," Gal stated. The only major way to improve its position would be to use its cash and buy an OUS based company or merge with a similarly structured large cap company.

"Amgen is a large company facing a patent cliff and the remaining business does not have enough growth to change the trajectory," Gal concluded.