Amgen Posts Unexpected 4% Increase in Earnings

Amgen in Thousand Oaks said that first-quarter earnings rose 4%, beating expectations, as government restrictions on Medicare payments for one of its two major drugs hurt sales less than investors had feared.

Amgen’s net income rose to $187.3 million, or 71 cents a diluted share, from $180.3 million or 65 cents a year earlier.

The government last year said that Medicare would not pay to use Amgen’s Epogen to treat anemic dialysis patients whose red blood-cell count exceeded a certain level during a 90-day period. Last month, the Clinton administration loosened that restriction.

“It looks like Epogen’s worst days are behind us,” said Lesley Wright, an analyst with Banc-America Robertson Stephens, which has a long-term accumulate rating on Amgen. “There’s just been a great deal of uncertainty surrounding Epogen sales. Now we’re beginning to get a little more comfortable with how sales will go.”

Epogen sales, paid for almost entirely by Medicare, accounted for about half of Amgen’s $2.4 billion in 1997 revenue.

The Clinton administration’s March 10 easing of the reimbursement restrictions on Epogen should allow Amgen to report “high single-digit growth” for the drug in 1998, said company Chairman and Chief Executive Gordon Binder.

Revenue rose 5% to $605.4 million in the first quarter from $575.5 million a year earlier.

Sales of Amgen’s other major drug, Neupogen, which is used to treat a weakened immune system, rose 7% to $261 million during the quarter.

The company said sales of its third drug, the hepatitis treatment Infergen, totaled $1 million during the first quarter. It reported 1997 sales of about $3 million after introducing the drug in October.