Amgen (Nasdaq: AMGN) reported adjusted earnings per share (EPS) of $1.49 for the third quarter of 2009, an increase of 21 percent compared to $1.23 for the third quarter of 2008. Adjusted net income increased 16 percent to $1,518 million in the third quarter of 2009 compared to $1,308 million in the third quarter of 2008. Total revenue decreased 2 percent during the third quarter of 2009 to $3,812 million versus $3,875 million in the third quarter of 2008.
"Our third quarter results reflect the continued stability of our core businesses in the face of increased competition," said Kevin Sharer, chairman & chief executive officer. "We are pleased by the results of clinical studies for denosumab and Vectibix that we recently presented at a scientific meeting, and look forward to making these innovative medicines available to patients in their respective indications."
Adjusted EPS and adjusted net income for the third quarter of 2009 and 2008 exclude, for the applicable periods, stock option expense, certain expenses related to acquisitions, a strategic decision to change manufacturing processes and the resolution of certain non-routine transfer pricing issues with the Internal Revenue Service (IRS), and certain other items. In addition, adjusted EPS and adjusted net income for the third quarter of 2009 and 2008 exclude the incremental non-cash interest expense resulting from a change in accounting for convertible debt as discussed below. These expenses and other items are itemized on the attached reconciliation tables.
On a reported basis and calculated in accordance with United States (U.S.) Generally Accepted Accounting Principles (GAAP), Amgen's GAAP EPS were $1.36 in the third quarter of 2009, a 30 percent increase compared to $1.05 in the same quarter last year. GAAP net income increased 24 percent to $1,386 million in the third quarter of 2009 from $1,121 million in the third quarter of 2008. GAAP net income for the third quarter of 2008 was negatively impacted by an $84 million inventory write-off resulting from a strategic decision to change manufacturing processes. Effective Jan. 1, 2009, Amgen adopted a new accounting standard which changed the method of accounting for the Company's convertible notes. In addition, as required, the Company also revised its previously reported financial statements to apply this change in accounting to prior periods. Under this new accounting method, the Company's GAAP EPS and net income have been reduced as a result of recognizing incremental non-cash interest expense. In connection with adopting this new accounting standard, Amgen recorded $63 million and $59 million of additional non-cash interest expense in the third quarter of 2009 and 2008, respectively. In addition, the Company's previously reported GAAP EPS and net income for the third quarter of 2008 have been reduced by $0.04 per share and $37 million to $1.05 per share and $1,121 million, respectively, as a result of adopting this new accounting method.
Product Sales Performance
During the third quarter of 2009, total product sales decreased 1 percent to $3,736 million from $3,784 million in the third quarter of 2008. Sales in the U.S. totaled $2,918 million in the third quarter of 2009, relatively unchanged versus $2,929 million in the third quarter of 2008. International sales decreased 4 percent to $818 million versus $855 million for the third quarter of 2008. The decline in third quarter 2009 international sales reflects the unfavorable impact of changes in foreign exchange, which were in aggregate approximately $76 million. Excluding the impact of foreign exchange, total product sales increased 1 percent and international product sales increased 5 percent.
Worldwide sales of Aranesp(®) (darbepoetin alfa) decreased 19 percent to $685 million in the third quarter of 2009 versus $845 million during the third quarter of 2008. In the U.S., Aranesp sales decreased 27 percent to $333 million in the third quarter of 2009 versus $458 million in the third quarter of 2008. U.S. sales of Aranesp in the third quarter of 2008 were positively impacted by $54 million due to a change in the accounting estimate related to product sales return reserves. Excluding the positive impact of this prior year change in the accounting estimate, U.S. sales of Aranesp decreased 18 percent in the third quarter of 2009 versus the prior year. The decrease was driven by a decline in demand reflecting the negative impact, primarily in the supportive cancer care setting, of additional product label changes which occurred in August 2008, and a decrease in average net sales price. In addition, the decrease in sales also reflects, to a lesser degree, a slight loss of segment share. International Aranesp sales decreased 9 percent to $352 million in the third quarter of 2009 versus $387 million in the third quarter of 2008 due to the unfavorable impact of changes in foreign exchange, which were in aggregate approximately $29 million and, to a lesser extent, segment decline. Excluding the impact of foreign exchange, international Aranesp product sales decreased 2 percent. Excluding the impact of the change in the accounting estimate related to product sales return reserves and foreign exchange, worldwide product sales decreased 10 percent in the third quarter of 2009 versus the prior year.
Sales of EPOGEN(®) (Epoetin alfa) increased 5 percent to $663 million in the third quarter of 2009 versus $634 million in the third quarter of 2008 due to an increase in demand. The increase in demand is principally due to patient population growth and, to a lesser extent, increases in average net sales price and dose/utilization.
Combined worldwide sales of Neulasta(®) (pegfilgrastim) and NEUPOGEN(®) (Filgrastim) increased 2 percent to $1,210 million in the third quarter of 2009 versus $1,192 million for the third quarter of 2008. Combined sales of Neulasta and NEUPOGEN in the U.S. were $897 million in the third quarter of 2009 versus $856 million in the third quarter of 2008, an increase of 5 percent due primarily to an increase in demand. The increase in demand was driven by an increase in units sold and an increase in average net sales price. Combined international sales decreased 7 percent to $313 million in the third quarter of 2009 versus $336 million for the third quarter of 2008. This decline is due to the unfavorable impact of changes in foreign exchange, which were in aggregate approximately $33 million, partially offset by an increase in demand driven by segment growth and by the continued conversion from NEUPOGEN to Neulasta. Excluding the impact of foreign exchange, combined worldwide product sales of Neulasta and NEUPOGEN increased 4 percent and international product sales increased 3 percent.
Sales of Enbrel(®) (etanercept) increased 3 percent in the third quarter of 2009 to $924 million versus $893 million in the third quarter of 2008, driven primarily by an increase in demand, partially offset by a favorable change in the accounting estimate recorded in the third quarter 2008 related to accruals for sale incentives. The increase in demand was principally due to a high single digit increase in the average net sales price partially offset by a decrease in units sold due to share declines as a result of increased competitive activity in dermatology. ENBREL continues to maintain a leading position in both the rheumatology and dermatology segments.
Worldwide sales of Sensipar(®) (cinacalcet) increased 2 percent to $165 million in the third quarter of 2009 versus $161 million during the third quarter of 2008, primarily as a result of increased international demand. U.S. sales declined 3 percent driven by a decrease in units sold.
Vectibix(®) (panitumumab) sales for the third quarter of 2009 were $58 million as compared to $41 million in the third quarter of 2008. Sales growth for the third quarter was driven by international demand as a result of recent launches of Vectibix in Europe. U.S. sales declined 12 percent driven by a decrease in units sold.
About Amgen
Amgen discovers, develops, manufactures and delivers innovative human therapeutics. A biotechnology pioneer since 1980, Amgen was one of the first companies to realize the new science's promise by bringing safe and effective medicines from lab, to manufacturing plant, to patient. Amgen therapeutics have changed the practice of medicine, helping millions of people around the world in the fight against cancer, kidney disease, rheumatoid arthritis and other serious illnesses. With a deep and broad pipeline of potential new medicines, Amgen remains committed to advancing science to dramatically improve people's lives. To learn more about our pioneering science and our vital medicines, visit www.amgen.com.