Biosimilars And Targeted Therapies Will Expand Global Chronic Care Markets

Key Takeaways

• Expanding product volumes and AI-driven R&D advancements position Amgen to exceed revenue and margin expectations through frequent, high-impact new launches across key therapeutic areas.
  
• Strong resilience to industry pricing pressures, global expansion, and ample M&A capacity enable Amgen to unlock long-term earnings growth and broaden its market reach.
  
• Policy uncertainty, patent expirations, rising R&D costs, acquisition risks, and biosimilar competition threaten long-term revenue growth, profit margins, and earnings stability.

Catalysts

Amgen Inc. discovers, develops, manufactures, and delivers human therapeutics worldwide.

• Analyst consensus believes Amgen's volume-led sales growth will drive strong revenue, but this likely understates the true trajectory, as double-digit volume expansion now spans 15 products and is accelerating in obesity, rare disease, and biosimilars; this breadth positions Amgen to consistently outperform revenue expectations and deliver operating leverage.
  
• Consensus highlights pipeline momentum, but the combination of accelerated AI-enabled R&D, streamlined dose-escalation strategies, and a robust global late-stage pipeline-spanning obesity (MariTide), oncology (BiTE platform), inflammation, and rare diseases-suggests new product launches will not only be more frequent but also deliver higher peak sales and superior long-term margins than currently recognized.
  
• Amgen's unique resilience to pricing pressures and payer obstacles, aided by leadership in biologics and biosimilars, provides a powerful buffer in an industry facing ongoing net price erosion; this should result in higher-than-expected net margins and free cash flow as biologic adoption increases globally and biosimilar regulations further soften.
  
• The company's extensive global footprint, growing access initiatives, and direct-to-consumer strategies position its therapies for accelerated uptake among the rapidly expanding populations affected by aging and lifestyle-related chronic diseases, supporting a step-change in addressable market size and multi-year top-line compounding growth.
  
• With an increasingly unlevered balance sheet post-Horizon acquisition, Amgen now has exceptional capacity to execute bolt-on M&A and scale pipeline investments in underserved segments like cardiometabolic and genomic medicine, creating upside optionality for sustained earnings growth and outperformance relative to forecasted capital allocation returns.

Amgen Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Amgen compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Amgen's revenue will grow by 7.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 17.4% today to 32.0% in 3 years time.
• The bullish analysts expect earnings to reach $13.5 billion (and earnings per share of $24.81) by about August 2028, up from $5.9 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 19.6x on those 2028 earnings, down from 27.2x today. This future PE is greater than the current PE for the US Biotechs industry at 16.7x.
• Analysts expect the number of shares outstanding to grow by 0.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.12%, as per the Simply Wall St company report.

Amgen Future Earnings Per Share Growth

Risks

• Intensifying global efforts to regulate and cap drug prices, highlighted by frequent references to ongoing discussions with government officials and the shifting policy landscape, may restrain Amgen's ability to realize price increases, putting long-term pressure on revenue growth and net margins.
  
• Patent expirations and the rise of biosimilars are already impacting legacy brands like Prolia, which declined in revenue due to lower net selling price and early biosimilar launches; this trend threatens to accelerate as more cornerstone products lose exclusivity, leading to heightened competition and shrinking profit margins.
  
• Elevated research and development expenses are repeatedly mentioned as Amgen ramps investment in late-stage pipeline assets to offset legacy declines-however, increased R&D spending may not consistently yield commercialized products, which could negatively affect earnings stability if clinical failures or delays occur.
  
• The company's strategy includes large-scale acquisitions such as Horizon Therapeutics, with management explicitly acknowledging ongoing integration efforts and additional business development transactions-this raises the risk that anticipated synergies may not materialize, potentially resulting in balance sheet strain and diminished return on invested capital over the long term.
  
• Amgen's growing focus on biosimilars exposes it to industry-wide commoditization and regulatory complexity, with executives noting that market and regulatory environments remain volatile-a reduction in barriers may benefit initial volume but could ultimately drive pricing downward and compress operating margins as competition in the biosimilars space intensifies.

Valuation

• The assumed bullish price target for Amgen is $400.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Amgen's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $400.0, and the most bearish reporting a price target of just $185.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $42.2 billion, earnings will come to $13.5 billion, and it would be trading on a PE ratio of 19.6x, assuming you use a discount rate of 7.1%.
  
• Given the current share price of $300.08, the bullish analyst price target of $400.0 is 25.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.