The corporation finds some protection from industry medicine price-cutting strategies

The pharmaceutical industry is outraged by Congress's latest proposal to curb prescription medicine pricing. The long-term impact of the Inflation Reduction Act is being debated
By: Alpha Alliance Capital
 
WAN CHAI, Hong Kong - Nov. 8, 2022 - PRLog -- However, it will undoubtedly have an impact on corporations with top-selling Medicare medications. Should we revalue Amgen Inc. (AMGN) in light of the new laws, given that it is a big biotechnology player? Let us investigate.

Prolia, a bone density medication, is used to treat osteoporosis in women after menopause in order to lower the risk of bone fracture. Prolia is AMGN's second best-selling medicine, with $3.3 billion in sales expected in 2021. AMGN's lone medicine to make Medicare's top ten pharmaceuticals by sales, coming in near the top of the Part B list with $1.6 billion in government sales in 2020.

However, Prolia's patent duration makes it unlikely that the medicine would be targeted by the new drug price law. The government's authority to negotiate prescription pricing will take effect gradually, beginning in 2026 and incorporating Part B pharmaceuticals like Prolia in 2028. However, AMGN's domestic patents will expire far sooner, implying that there would already be generic competition on the market, making the medicine ineligible for price negotiations.

In the next months, the corporation will get a taste of what to expect when Prolia's patent expires. The European patent just recently expired in June. Early treatment and production patents will expire in the United States this year and next, however the core U.S. patent on the antibody will be valid until 2025.

AMGN has little exposure to Medicare because the majority of its revenues come from the domestic market. With the United States accounting for nearly 70% of total revenues, the corporation will always be subject to changing governmental choices.

Several elements contribute to an extra layer of security. The product mix is diverse, with Enbrel, the company's best-selling autoimmune medication, accounting for only 16% of overall sales in the second quarter. AMGN has several novel therapies on the verge of becoming blockbusters, but not always industry superstars.

AMGN has recently been somewhat flat in terms of both corporate growth and total investment return. The stock price hasn't risen significantly in recent years and has been stuck around its present level since the run-up in recession-proof healthcare equities earlier this year. This reflects the company's sluggish sales growth, which was 1% year over year in the second quarter and has averaged just under 3% each year over the last five years.

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