How Could Prolia Drive Amgen’s Valuations in 2016?
Will Amgen's Blockbuster Drugs and Clinical Trials Drive Growth?
Expanding market share
Amgen’s (AMGN) leading bone health drug, Prolia, is expected to aggressively penetrate US and European markets in 2016. This trend was also witnessed in 2015 when the drug managed to earn about $1.3 billion annual revenues, driven mainly by strong growth in sales volumes. To know more about Prolia, please refer to Amgen: Exploring Opportunities in the Bone Segment.
Wall Street analysts have projected that in 2016, revenues from sales of Prolia will be about $1.5 billion, which is a year-over-year growth of 13%. In 2015, Prolia earned about 64% of its total revenues from US markets. On the other hand, competitor osteoporosis drug Eli Lilly’s (LLY) Forteo managed to earn the majority of its sales from international markets.
On December 14, 2015, Amgen reacquired all rights from GlaxoSmithKline (GSK) to market Prolia in 48 countries outside the United States. This is indicative of the company’s increased focus on strong positioning of the drug in international markets.
If Amgen proves successful in increasing Prolia sales in non-US markets, it will also boost share prices of the iShares Russell 1000 Growth ETF (IWF). Amgen accounts for about 1% of IWF’s total portfolio holdings.
New research
Amgen is also waiting for data from its Phase 3 clinical trial exploring the use of Prolia for patients suffering with glucocorticoid-induced osteoporosis. According to Medscape, “Glucocorticoids are quite commonly used in the treatment of many diseases and are one of the most common causes of secondary osteoporosis. Osteoporosis associated with chronic steroid therapy, appears to be an important medical problem.”
With millions of people using glococorticoid therapy for treating inflammatory and autoimmune conditions, this may prove to be a strong growth opportunity for Prolia. Prolia is also expected to be a strong competitor for other osteoporosis drugs such as Novartis’s (NVS) Reclast and Merck & Co.’s Fosamax.
In the next part of this series, we’ll explore romosozumab, Amgen’s investigational bone health drug.
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