Amgen's Fourth Quarter Rally Hides Patent Erosion Risks
PILLAR DIAGNOSTIC // WEEK 06
“A robust earnings beat and tape-driven rally are masking looming revenue erosion from upcoming patent expirations and regulatory pressures that many investors have yet to price in, suggesting the current momentum may falter as biosimilar competition intensifies.”
Proposed action
Avoid chasing the rally and consider trimming exposure or hedging into strength.
THE MECHANICS
Tape & flow
Stock exhibited a sharp 8.2% rally on the tape following the results release, signaling a surge in buying pressure.
THE MACHINE
Operational momentum
Full-year revenues rose roughly 10% to about $36.8 billion and Q4 sales increased about 9% to near $9.9 billion, with blockbuster products like Repatha, EVENITY and TEZSPIRE each growing over 30%. Adjusted EPS beat consensus at $5.29 and management guided 2026 revenues of $37.0–38.4 billion and non-GAAP EPS of $21.60–23.00, while boosting R&D and manufacturing investments to support upcoming pipeline launches.
THE MAP
Structure & constraints
Legacy osteoporosis and oncology drugs face steep biosimilar-driven erosion after patent expirations in 2025–26, compounded by price declines and 340B program legal risks. FDA scrutiny over Tavneos and participation in government pricing programs add regulatory friction. To offset these headwinds, the company is advancing multiple Phase III trials across obesity, diabetes, autoimmune, and rare disease indications.
THE MOOD
Consensus & positioning
Analyst upgrades and strong Q4 revenue and earnings have bolstered investor confidence in AMGN’s growth narrative, with mid-teens forward multiples framing valuation as reasonable, even as hold recommendations and diverse narrative-based fair value assumptions reflect pockets of caution.