UPDATE: Amgen 2Q Profit Drops 5.3% As Cost Rise

(Updates throughout with details, background) By Thomas Gryta Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Amgen Inc. (AMGN) reported a 5.3% drop in second-quarter net income, as total sales of its products dropped and spending rose in preparation of a key product launch. The Thousand Oaks, Calif., drug maker's results exceeded analyst expectations for both profit and revenue, although it lowered its 2010 revenue projection because of weakness in the Euro's value compared to the dollar. Product sales of the quarter dropped by 1%, but Wall Street's focus has been on the company's recent launch of osteoporosis drug Prolia, which was approved in late May in Europe and June 1 in the U.S. The sales of the drug in the quarter were immaterial for the latest quarter, coming in at only $3 million, but the drug is important to the future growth of Amgen. Lazard Capital Markets currently projects worldwide sales to exceed $1 billion next year. Amgen has teamed with GlaxoSmithKline Plc. (GSK) to sell the drug in Europe. The effort is Amgen's first at selling a product to general practice physicians and it has had to build a suitable sales force to do it. In the quarter, its Selling, General and Administrative cost rose 9% to $968 million, primary from effort around the launch. Looking forward, the company now expects full-year revenue to come in "slightly below" $15.1 billion, citing the Euro. It has previously projected $15.1 billion to $15.5 billion and analysts estimated $15.08 billion, according to Thomson Reuters. The company continues to expect U.S. healthcare reform to hit 2010 revenue by $200 million to $250 million. Because of its hedging program that minimizes the impact of currency swings on its profits, Amgen still expects 2010 adjusted earnings to be at the lower end of $5.05 to $5.25, compared to Wall Street expectations of $5.12. For the three months ended June 30, Amgen reported net income of $1.2 billion, or $1.25 a share, down from earnings of $1.27 billion, or $1.25 a share, a year ago. Excluding items, earnings were $1.380 a share, well above a Wall Street estimate of $1.30. In the quarter, Amgen repurchased about 10 million shares for $600 million, which follows buying back $1.7 billion worth of shares in the previous quarter. Revenue in the quarter rose 2.5% to $3.8 billion, below the average Street estimate of $3.74 billion. Sales of anemia treatment Aranesp fell 13% to $603 million in the quarter, and fell short of a Wall Street consensus estimate of $633 million, according to MDRx Financial. The drop came from a decline in demand in both the U.S. and Europe. Sales of Epogen, an earlier version of Aranesp, rose 3% to $657 million, slightly above expectations. Combined first-quarter sales of Neulasta and Neupogen, used to prevent infections in patients receiving chemotherapy, rose 1% to $1.17 billion. Sales of Enbrel--sold in North America by Amgen and distributed elsewhere by Pfizer Inc. (PFE)--were down 2% to $877 million for the quarter. -By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com (END) Dow Jones Newswires July 29, 2010 17:15 ET (21:15 GMT)