Amgen Inc.'s quarterly earnings conference call began on a bittersweet note, as outgoing CEO Kevin Sharer made his farewells and paid tribute to George Rathman, Amgen's first CEO, who passed away last weekend.

"The centrality of his contribution and enduring influence on us are everywhere," Sharer said. "His science base, his desire to make big bets on big products that can move the needle, his team leadership and his energy will always be upon us."

Perhaps no stronger tribute could be made to Rathman's legacy and the company he helped to build in his 20-year tenure than the $4 billion in first-quarter revenue reported Tuesday.

Led by strong sales of Xgeva, revenue increased 9 percent for the first quarter of 2012. Adjusted non-GAAP earnings per share (EPS) were $1.61, an increase of 20 percent compared to $1.34 for the first quarter of 2011. The Thousand Oaks, Calif.-based company said its business is in good shape and its pipeline is "developing well."

EPS beat consensus estimates of $1.47 by a comfortable margin. However, strong returns for denosumab drugs Prolia and Xgeva have compensated for weakness in the company's erythropoietin-stimulating agent (ESA) franchise.

"The Epogen business is in transition," Robert Bradway, Amgen's president and chief operating officer, said. "We should continue to see some volatility. We are cautious of new competition, but ready to compete in the marketplace as new products come in."

Product results include a 14 percent bump for cancer agent Xgeva, an increase of 9 percent for osteoporosis drug Prolia and a 9 percent increase for the Neulasta (pegfilgrastim) and Neupogen (filgrastim) franchise.

Sales of Enbrel (etanercept), for arthritis, increased 7 percent compared to the first quarter of 2011, driven mainly by the increase in average net sales price.

Amgen's ESA products have been hit hard in the past years by dosing adjustments, safety issues, label changes, reimbursement hurdles and bundling policies. Aranesp (darbepoetin alfa) took an 11 percent hit overall, with U.S. sales decreasing by 19 percent. Amgen attributed that to a decline in unit demand, offset partially by an increase in average net sales price.

Epogen (epoetin alfa) sales also fell, by 17 percent, reflecting an approximate 30 percent decrease in unit demand due to a reduction in dose utilization, partially offset by reductions in customer discounts under new provider contracts effective Jan. 1, 2012.

BMO Capital Markets analyst Jim Birchenough noted that the first quarter results show strong financial execution and benefits from Amgen's accelerated share repurchase program. However, "longer-term growth remains less certain, in our opinion, with continued erosion of Epogen and Aranesp, emerging competition in dialysis and modest pace of growth for Xgeva and Prolia."

Birchenough also was skeptical regarding success for reduction of all-cause mortality and nonfatal cardiovascular events in Amgen's EVOLVE trial of Sensipar (cinacalcet) for dialysis patients with secondary hyperparathyroidism, due to report in 2012, and talimogene laherparapvec (T-VEC) commercial prospects in melanoma.

"We see limited upside potential absent transformational business development activity," Birchenough wrote.

Piper Jaffray's Ian Somaiya called Amgen's earnings quality "poor" because product sales failed to meet estimates and upside was driven by cost-cutting through reduction in R&D spending. Amgen spent $732 million on R&D, compared to Somaiya's estimate of $807 million.

That R&D spending represented an increase of 3 percent compared to the first quarter of 2011, when it spent $703 million. The higher costs were associated with later-stage clinical programs, including AMG145, AMG785 and T-VEC.

"We believe spending cuts are likely as a way to provide patient investors with upside, while waiting for multiple Phase II and Phase III data readouts in the second half of 2012," Somaiya wrote.

When asked about possible cost cutting in the future, following his assumption of the role of CEO on May 23, 2012, Bradway said, "With respect to my focus, clearly it will be on growth and in particular driving growth through innovation."

"In our view, the revenue beat papered over some of the weaker franchises," said Leerink Swann's Steve Y. Yoo, noting that Epogen sales were down 17 percent year over year and Aranesp was down 11 percent year over year.

Yoo speculated that AMG145, an anti-PCSK9 antibody for hypercholesterolemia, "could potentially reignite interest in Amgen's pipeline due to its possibly large commercial potential."

Pursuant to its stock repurchase plan, Amgen bought about 21 million shares of its common stock at a total cost of $1.4 billion. It has $3.6 billion remaining under its authorized stock repurchase program.

The company's revenue guidance for 2012 is between $16.1 billion and $16.5 billion, with 2012 adjusted EPS between $5.90 and $6.15. Amgen reported cash of $19 billion as of March 31, 2012, a substantial war chest with which to pursue acquisitions.

Amgen Acquires Turkish Pharma Company

One of Bradway's biggest priorities for Amgen going forward is to expand internationally, particularly into countries where it does not currently have a presence. With the new acquisition of Istanbul, Turkey-based Mustafa Nevzat Pharmaceuticals (MN), it will be able to cross one of those countries off the list.

Amgen agreed to acquire 95.6 percent of shares in MN for $700 million in cash. MN is the major supplier of injectable medicines in Turkey. It had revenues of about $200 million in 2011, growing at double-digit rates in local currency over the past five years.

Bradway said Amgen's goal is to be present in 75 countries by 2015. It has a presence in 56 countries currently. On the list are Brazil, Russia, China, South Korea, Mexico and Japan.

"Unusually for a company of our size and scale, we have no direct operating presence in Japan," Bradway said. Amgen has three partnerships with companies based in Japan, but those have not organically developed into a physical presence in the country for Amgen, so it will be looking for "sensible ways to enter that market" over the next several years.

Amgen stock (NASDAQ: AMGN) gained $1.44, to close at $70.79.