Biotech drug developer Amgen’s 2nd quarter profit slips 3 per cent as research costs climb

THOUSAND OAKS, Calif. – Biotech drugmaker Amgen said Friday that its second-quarter earnings slipped 3 per cent on increased research spending and sales costs for product launches plus falling revenue from a key drug.

The results beat Wall Street estimates and the company said it expects to reach the upper end of its guidance for the full year. Amgen shares rose $1.01, or 1.9 per cent, to $54.44 in afternoon trading.

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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 per cent to $3.96 billion from $3.8 billion a year earlier. Analysts expected $3.77 billion in revenue.

The company’s research and development costs rose 26 per cent to $808 million to pay for late-stage clinical trials. Selling, general and administrative costs climbed 15 per cent 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 per cent to $3.89 billion, but revenue from the anemia drug Epogen tumbled 17 per cent to $543 million. The company cited the start of a bundled payment system.

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

Amgen said it now expects to reach the upper end of its 2011 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.