PHILADELPHIA - Attendees of the BIO 2005 conference here might have left the event with Amgen Inc.'s name in their heads, caught there like a jingle.
That was Amgen's plan, of course. It was a major sponsor of the event and also wanted to promote its 25th anniversary to BIO registrants. Having grown up with - and at times, fueled - the industry itself and regarded as the biggest, most successful biotech company on the planet for most of its existence, the years look good on the firm.
In 2004, Amgen recorded a record high for total revenues of $10.6 billion, and with 40 products in its pipeline to back up its line of blockbuster drugs, 27 analysts with a strong buy, buy or hold ranking on the stock this month (no sells or strong sells), some might say the company is at the top of its game.
Amgen's executive vice president, Dennis Fenton, has been there since the beginning, having been hired by George Rathmann after Rathmann was installed as president and CEO in 1980. In a hotel conference room adjoining the Pennsylvania Convention Center at BIO 2005, Fenton sat down to talk about biotech issues and Amgen in general.
A panel session at the conference, titled "Outsourcing Biopharmaceutical Manufacturing Globally: Advantages and Challenges," dealt with the rise of manufacturing in India and China. That's happening across many industries, including biotech, but don't look for Amgen to move in that direction.
"Manufacturing [large molecules is] incredibly complex and difficult," Fenton told BioWorld Financial Watch, adding that there "may be a lower cost" associated with outsourcing, but "the risks are higher."
Small molecules can be globally outsourced, but "the process defines the product in our industry."
"I'd be concerned about taking my manufacturing into that environment," he said. "Amgen will not start pursuing that."
The industry also currently is struggling over issues related to follow-on biologics. At question is whether generic drug makers should be required to conduct safety trials of their own, or simply rely on the data gathered by the innovator company.
"Patient safety has to come first," Fenton said. "The follow-on biologics that are made have to be safe" and generic companies must do additional safety trials.
"Look at what's happened with Eprex," he said.
Eprex (Epoetin alfa) is manufactured by Ortho Biologics LLC and available only outside the U.S., where it is sold by Janssen-Cilag and its partners. Both are units of Johnson & Johnson. There has been a rise in incidents of pure red cell aplasia (PRCA) in patients who have chronic renal failure and who are taking recombinant erythropoietic proteins, such as Eprex.
Amgen, of course, made its name on the blockbuster recombinant erythropoietic protein Epogen. The drug brought Amgen about $2.6 billion in 2004 and $583 million in 2005's first quarter. Amgen maintains that while Epogen and Eprex have the "same international non-proprietary name" of epoetin alfa, they are not equivalent.
"The products are manufactured by different companies in different facilities, using different methods and formulations," Amgen said.
Of the two drugs, Eprex has the more troubled history with PRCA in the marketplace. Amgen's literature shows that Epogen has been linked to a confirmed five cases of PRCA from 1989 through March. Eprex has been linked to 184 cases from 1990 through November 2004, as reported by Johnson & Johnson.
The generic drug industry plays an important part for patients, however, and cheaper drugs are at the forefront of today's politics. But it's the FDA, not Amgen, that "needs to create the path" forward for follow-on biologics, Fenton said - Amgen can only stand on the sidelines and express its safety concerns.
Legacy Of Immunex Acquisition Lives On
In late 2001, when Amgen announced it was buying Immunex Corp. for $16 billion in a stock and cash deal, there was applause as well as skepticism - the world's largest biotech firm in terms of market cap was buying No. 3, and while there was little doubt Immunex was worth getting, some gasped at the $16 billion price tag.
Immunex's gem was Enbrel, which was approved for rheumatoid arthritis and polyarticular-course juvenile rheumatoid arthritis at the time the acquisition was announced. Through the first three months of 2001, it had brought Immunex $545.6 million, although the firm was having trouble manufacturing enough Enbrel to meet demand.
Under Amgen's guiding hand, Enbrel (etanercept) gained approvals for ankylosing spondylitis, psoriatic arthritis and chronic moderate to severe psoriasis. Amgen immediately went to work on the manufacturing issues and in 2002 received FDA approval to manufacture Enbrel in a 250,000-square-foot Rhode Island facility that employed about 550 people. Thus, after "$1 billion in capital on the ground in Rhode Island," Fenton said, the supply problem was solved, and Enbrel began the growth pattern that pushed sales to $1.9 billion in 2004. Those who scoffed at Amgen Chairman and CEO Kevin Sharer's claim, when the Immunex acquisition was announced, that the drug would reach peak sales of $3 billion, take note - Enbrel had 46 percent growth over 2003 and the drug sold $592 million in the first quarter of 2005, up nearly 50 percent from the first quarter in 2004.
The final cost of the Immunex acquisition rose to about $17.8 billion when it officially closed in 2002. When asked at BIO about the purchase price that brought Enbrel in-house, Fenton smiled.
"We knew it was a good one," he said. "We knew it was a tremendous drug."
Industry Has Grown With Amgen
By the close of BIO 2005, Genentech Inc. had a market capitalization of about $86 billion; Amgen was holding down the No. 2 spot with a market cap of nearly $77 billion. Gilead Sciences Inc., the third-ranked biotech firm by market cap, was a distant third at just less than $20 billion.
Amgen reigned as the largest and brightest biotech star in the sky for so long, it actually drew notice when Genentech in April became valued more highly, although Amgen's revenues still trump all others - Genentech in 2004 had total operating revenues of $4.6 billion.
But this is science and not baseball and rankings - especially on perceived value - do not matter. Having two companies so well thought of by investors is instead a "sign of the maturing of our business and our industry," Fenton said. "I think it gives hope to small biotech CEOs to see [the sector's] growth."
Fenton's period with Amgen has been "a tremendous experience for me personally," he said. He's been part of a company that has treated more than 8 million patients with its drugs. When he was hired, imagining where Amgen and the industry would be 25 years later - Amgen with its cadre of blockbusters, the industry flowering worldwide and at the top of every region's economic wish list - would have been impossible. Predicting what the next 25 years will hold is equally difficult, but Fenton sees biofuels and industrial enzymes as exciting areas, and he anticipates the further global growth of biotech.
"It's an industry you want," he said. "It's got high-paying jobs and it's low impact on the environment."
And what will Amgen be like in 2030?
"I can only imagine where we'll be," he said.