# Amgen (AMGN) Financial Model Free Excel 3-statement financial model and company analysis for Amgen. - Canonical: https://finamodel.com/companies/amgen - Industry: Pharmaceuticals - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/AMGN.xlsx ## Model Purpose This model projects Amgen's long-term cash flows to determine its equity valuation, specifically helping an equity analyst assess whether the rapid growth of the newly acquired Horizon Therapeutics rare disease portfolio can offset the revenue erosion from impending patent cliffs and biosimilar competition for legacy blockbuster drugs like Enbrel, Prolia, and Xgeva. ## Company Overview Amgen discovers, develops, manufactures, and delivers innovative human therapeutics, focusing on areas of high unmet medical need. The company operates globally and utilises advanced human genetics to unravel the complexities of disease and understand the fundamentals of human biology. Amgen operates as a single business segment: Human Therapeutics. Its revenue is generated almost entirely from product sales, with a small fraction coming from other revenues such as royalties and corporate partner payments. The business model is highly intellectual property-driven and requires heavy upfront capital investment in research and development, followed by high-margin manufacturing once a drug is approved. Amgen holds a strong competitive position in oncology, inflammation, bone health, cardiovascular disease, and, following a recent major acquisition, rare diseases. The most significant recent corporate event was the $27.8 billion acquisition of Horizon Therapeutics in late 2023, which added blockbuster rare disease drugs Tepezza, Krystexxa, and Uplizna to its portfolio. ## Revenue Deep Dive Amgen reports revenue primarily by individual product line rather than broad therapeutic areas. * **Enbrel (Inflammation):** * Revenue driver formula: Patient Volume x Net Selling Price. * Historical growth rate: Negative 10% to negative 48% (Q4 2025 saw a 48% YoY decline). * Key levers and headwinds: Severe pricing pressure from the US Medicare Part D redesign, increased 340B Program mix, and unfavourable changes to estimated sales deductions. * Pricing dynamics: Highly competitive, heavily rebated. * **Prolia & Xgeva (Bone Health):** * Revenue driver formula: Patient Volume x Net Selling Price. * Historical growth rate: Prolia growing mid-single digits; Xgeva declining (down 6% in 2025). * Key levers and headwinds: Xgeva is facing accelerated sales erosion in 2026 due to multiple global biosimilar launches. Prolia faces loss of exclusivity later in the decade. * **Repatha (Cardiovascular):** * Revenue driver formula: Patient Volume x Net Selling Price. * Historical growth rate: 30% to 40% CAGR (grew 36% in 2024). * Key levers and headwinds: Massive volume growth (up 43% in 2024) partially offset by lower net selling prices as it expands into broader primary care markets. * **Rare Disease (Tepezza, Krystexxa, Uplizna):** * Revenue driver formula: Patient Volume x Net Selling Price. * Historical growth rate: Acquired in 2023; generated $4.5 billion in 2024. * Key levers and headwinds: International expansion and label expansions. High price points with relatively inelastic demand due to lack of alternative treatments. * **Otezla (Inflammation):** * Revenue driver formula: Patient Volume x Net Selling Price. * Historical growth rate: Flat to low single digits (grew 7% in 2025). * Key levers and headwinds: Volume growth offset by competitive pricing dynamics in the psoriasis market. * **Seasonality:** Q1 is typically the weakest quarter for US product sales due to patient insurance deductible resets and the Medicare Part D coverage gap, which temporarily lowers net selling prices. Revenue recognition occurs when control of the product transfers to wholesalers or distributors. ## Cost Structure ### Variable Costs / COGS * Cost of Sales includes manufacturing costs, raw materials, royalties, profit-sharing expenses, and the amortisation of inventory step-up from acquisitions. * Gross margin range: 74% to 78% on a GAAP basis; typically higher on a non-GAAP basis. * Key input costs include biological raw materials and contract manufacturing fees. * COGS scales relatively linearly with volume, though high-value biologics possess massive operating leverage once fixed manufacturing overheads are covered. ### Operating Expenses * **R&D:** Typically 16% to 18% of revenue ($6.0 billion in 2024). It covers clinical trials, discovery research, and regulatory submissions. Amgen expenses R&D as incurred; it does not capitalise internal drug development costs until regulatory approval is achieved. * **SG&A:** Typically 24% to 26% of revenue. This is heavily driven by sales force headcount, direct-to-consumer marketing, and administrative overhead. * **Amortisation of Intangible Assets:** Extremely high due to the Horizon and Otezla acquisitions. This is a non-cash charge that heavily depresses GAAP operating margins. * **Restructuring / One-time charges:** Frequent in recent years due to acquisition integration and manufacturing footprint optimisation. ### Margin Profile * GAAP Operating Margin: 25% to 35% (depressed by acquisition amortisation). * Non-GAAP Operating Margin: 45% to 47% (46.1% in 2025). * Margin trend: Slightly compressing due to lower net selling prices on legacy drugs and integration costs, though volume growth is stabilising absolute profit dollars. ## Balance Sheet Structure * Total assets: Approximately $90 billion to $100 billion. * Key asset categories: Cash and marketable securities, accounts receivable, inventory, property, plant and equipment, and intangible assets. * Goodwill & intangibles: Represent over 50% of total assets, driven by the $27.8 billion Horizon acquisition and the $13.4 billion Otezla acquisition. * Working capital profile: * Days Sales Outstanding (DSO): 60 to 75 days. * Days Inventory Outstanding (DIO): 150 to 180 days (biologics require long manufacturing lead times). * Days Payable Outstanding (DPO): 45 to 60 days. * Net working capital is typically positive and requires investment as the company grows volume. * PP&E: Consists of highly specialised biomanufacturing facilities in the US, Puerto Rico, and Ireland. Useful lives range from 10 to 20 years for manufacturing equipment. ## Capital Expenditure & Investment * Capex as % of revenue: 2% to 4%. * Maintenance vs. growth: Approximately 40% maintenance, 60% growth (building new manufacturing facilities in North Carolina and Ohio). * M&A pattern: Transformational acquirer. Amgen uses large-scale M&A to replace revenue lost to patent cliffs. * Typical acquisition multiple: High double-digit revenue multiples for commercial-stage rare disease assets. ## Debt & Capital Structure * Total debt: Approximately $64 billion (as of early 2024, issued heavily to fund the Horizon acquisition). * Debt/EBITDA ratio: Spiked to over 3.5x post-Horizon; target is to deleverage back below 2.5x. * Credit rating: Investment grade (BBB+ / Baa1 range). * Key debt instruments: Senior unsecured notes with staggered maturities. * Interest rate profile: Predominantly fixed-rate bonds. * Share repurchase programme: Historically very active, but paused or significantly reduced during the Horizon integration to prioritise debt paydown. * Dividend policy: Consistent grower. Paid ~$2.25 per quarter in 2024 (a 6% increase), yielding approximately 3%. ## Cash Flow Characteristics * Operating cash flow conversion: Very strong. OCF frequently exceeds GAAP net income due to massive non-cash amortisation charges. * Free cash flow margin: 22% to 30% ($8.1 billion FCF on $36.8 billion revenue in 2025). * Major non-cash items: Amortisation of acquired intangibles, depreciation, and stock-based compensation. * Working capital impact: Inventory build-ups for new product launches can be a significant use of cash. * Cash tax rate: Typically lower than the statutory rate due to manufacturing operations in lower-tax jurisdictions like Puerto Rico and Ireland. ## Sheet Structure 1. **Assumptions:** Hardcoded drivers for macroeconomic factors, tax rates, WACC, and product-level volume/price growth rates. 2. **Revenue Build:** Line-by-line forecasting for Enbrel, Prolia, Xgeva, Otezla, Repatha, Tepezza, Krystexxa, Uplizna, Lumakras, Blincyto, Tezspire, and "Other Products". Calculates total product sales. 3. **Income Statement:** Mirrors Amgen's GAAP reporting. Product Sales, Other Revenues, COGS, R&D, SG&A, Amortisation of Intangibles, Interest Expense, Tax Provision, Net Income. Includes a Non-GAAP reconciliation section at the bottom. 4. **Balance Sheet:** Assets (Cash, Receivables, Inventory, PP&E, Intangibles, Goodwill), Liabilities (Accounts Payable, Accrued Liabilities, Short-term Debt, Long-term Debt), and Equity. 5. **Cash Flow Statement:** Net Income, D&A, Deferred Taxes, SBC, Working Capital changes, Capex, Acquisitions, Debt Issuance/Repayment, Dividends, Share Repurchases. 6. **Debt Schedule:** Tranche-by-tranche breakdown of senior notes, calculating interest expense and tracking maturities. 7. **Working Capital Schedule:** Calculates Receivables, Inventory, and Payables based on DSO, DIO, and DPO assumptions. 8. **DCF Valuation:** Unlevered free cash flow calculation, discount periods, terminal value calculation, and implied share price. ## Key Financial Relationships 1. Enbrel Revenue = Prior Year Enbrel Revenue * (1 + Enbrel Volume Growth + Enbrel Net Price Change) 2. Total Product Sales = Sum of all individual product revenues 3. Total Revenues = Total Product Sales + Other Revenues 4. COGS = Total Revenues * COGS Margin % 5. R&D Expense = Total Revenues * R&D % of Revenue 6. SG&A Expense = Total Revenues * SG&A % of Revenue 7. Non-GAAP Operating Income = Total Revenues - COGS - R&D - SG&A (excluding amortisation of intangibles and acquisition-related expenses) 8. Interest Expense = Average Total Debt * Weighted Average Interest Rate 9. Effective Tax Rate = Tax Provision / EBT 10. Accounts Receivable = (Total Revenues / 365) * DSO 11. Inventory = (COGS / 365) * DIO 12. Free Cash Flow = Operating Cash Flow - Capital Expenditures ## Cross-Sheet Dependencies * The **Revenue Build** sheet is the primary driver and feeds the top line of the **Income Statement**. * The **Income Statement** generates Net Income, which feeds the top line of the **Cash Flow Statement** and the Retained Earnings line on the **Balance Sheet**. * The **Working Capital Schedule** uses Revenue and COGS from the **Income Statement** to calculate balance sheet items, and the period-over-period changes feed the **Cash Flow Statement**. * The **Debt Schedule** calculates interest expense, which feeds the **Income Statement**. This creates a potential circularity if debt repayments are driven by cash sweeps, as interest expense lowers net income, which lowers cash flow, which lowers debt paydown, which increases interest expense. Use a circularity breaker toggle. * The **Cash Flow Statement** calculates the ending cash balance, which feeds the **Balance Sheet**. ## Sign Convention * Revenues, assets, and equity are entered as positive numbers. * On the Income Statement, expenses (COGS, R&D, SG&A, Interest, Taxes) are entered as positive numbers and subtracted in the subtotal formulas. * On the Cash Flow Statement, cash inflows are positive and cash outflows (Capex, dividends, debt repayment) are negative. * On the Balance Sheet, liabilities are positive numbers. Total Liabilities and Equity is a sum of positive numbers. ## Things Most Likely to Go Wrong * Failing to separate volume growth from net price changes. Amgen frequently reports double-digit volume growth that is offset by negative price changes due to rebates. * Underestimating the revenue cliff for Xgeva and Prolia. The model must explicitly model biosimilar erosion curves starting in 2025/2026. * Confusing GAAP and Non-GAAP margins. Amgen's GAAP operating margin is heavily depressed by Horizon amortisation; valuation should be based on cash-generative Non-GAAP metrics. * Ignoring the Medicare Part D redesign impact. This specific regulatory change is causing massive net price compression for Enbrel. * Miscalculating the tax rate. Amgen benefits from a very low effective tax rate (15.5% to 17.0%); using the US statutory 21% rate will severely undervalue the company. * Overestimating share repurchases. Amgen has paused aggressive buybacks to pay down the $64 billion debt load from the Horizon acquisition. * Failing to account for inventory step-up amortisation in COGS, which temporarily depresses gross margins in the years immediately following a major acquisition. * Treating "Other Revenues" as a growth driver. It is primarily lumpy royalty and partnership income and should be held relatively flat. ## Validation Checks * Total Assets must equal Total Liabilities + Equity in every period. * Non-GAAP Operating Margin should remain in the 45% to 47% range based on historical performance. * Free Cash Flow conversion (FCF / Non-GAAP Net Income) should be approximately 75% to 85%. * Effective tax rate must be between 15.5% and 17.0% per management guidance. * Capex as a percentage of revenue should not exceed 4% without a specific growth rationale. * Debt/EBITDA should show a deleveraging trend from >3.0x in 2024 down towards 2.5x by 2027. * Enbrel revenue must show a YoY decline in the near term (flag if the model projects Enbrel growth). * Dividend payout ratio (Dividends Paid / Free Cash Flow) should remain comfortably below 60% to ensure debt service capacity. ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Total Revenue Growth (Near-term) | 8.0 | % | Blends 2025 actual 10% growth with expected Xgeva biosimilar headwinds | | Enbrel Revenue Growth | -30.0 | % | Reflects severe pricing pressure and Medicare Part D redesign impact | | Repatha Volume Growth | 35.0 | % | Continued strong uptake in primary care | | Repatha Net Price Change | -8.0 | % | Rebate pressure to secure formulary access | | Non-GAAP Gross Margin | 76.0 | % | Historical average excluding acquisition step-ups | | R&D as % of Revenue | 17.0 | % | Consistent with 2024 actuals ($6.0B on $33.4B revenue) | | SG&A as % of Revenue | 25.0 | % | Historical average required to support rare disease commercialisation | | Effective Tax Rate | 16.0 | % | Midpoint of management's 15.5% to 17.0% guidance | | Capex as % of Revenue | 3.0 | % | Historical average for biomanufacturing maintenance and expansion | | Days Sales Outstanding (DSO) | 65 | Days | Calculated from historical receivables and revenue | | Days Inventory Outstanding (DIO) | 165 | Days | Reflects long lead times for biologic manufacturing | | Weighted Average Interest Rate | 4.5 | % | Based on current fixed-rate senior note portfolio | | Shares Outstanding | 538 | Millions | Actual count as of late 2025 | | Dividend per Share (Annual) | 9.00 | $ | Based on $2.25 quarterly rate in 2024 | | WACC | 7.5 | % | Standard discount rate for large-cap biopharma | | Terminal Growth Rate | 1.0 | % | Conservative long-term growth assuming continuous patent cycles | ## Data Sources & Benchmarks * Amgen Investor Relations website for quarterly earnings presentations and historical financial reconciliations. * SEC EDGAR database for Amgen's Form 10-K and 10-Q filings. * Key peers for benchmarking margins and valuation multiples: Gilead Sciences (GILD), AbbVie (ABBV), Biogen (BIIB), and Bristol-Myers Squibb (BMY). * IQVIA or Symphony Health for weekly prescription volume data to track Repatha and rare disease uptake. * ClinicalTrials.gov to track the progress of Amgen's obesity pipeline (e.g., MariTide) which could significantly alter long-term growth assumptions. ## Sources * Amgen Inc. Form 10-K for the fiscal year ended December 31, 2024. * Amgen Inc. Q4 and Full Year 2025 Financial Results Press Release (February 3, 2026). * Amgen Inc. Form 10-Q for the quarter ended September 30, 2025. * Amgen Investor Relations Presentations (2024-2025). --- ## Frequently asked questions ### What does Amgen do and what is its core business model? Amgen discovers, develops, manufactures, and delivers innovative human therapeutics globally, focusing on areas of high unmet medical need. Its business model is highly intellectual property-driven, requiring heavy upfront capital investment in R&D, followed by high-margin manufacturing once a drug is approved. ### How does Amgen generate revenue, and what are its primary product drivers? Amgen generates revenue almost entirely from product sales, with a small fraction coming from other revenues like royalties. Revenue for key products like Enbrel, Prolia, Xgeva, and Repatha is driven by patient volume and net selling price, with recent growth bolstered by the acquired rare disease portfolio. ### What are the key financial assumptions used in the Amgen financial model? The Amgen financial model incorporates a revenue growth rate of approximately 4.8% and projects Cost of Goods Sold (COGS) at about 24.4% of revenue. Selling, General, and Administrative (SGA) expenses are assumed to be around 21.5% of revenue, while Capital Expenditure (Capex) is set at approximately 3.2% of revenue. ### What is the main purpose of the Amgen financial model, and what does it aim to assess? The Amgen financial model projects the company's long-term cash flows to determine its equity valuation. It specifically aims to assess whether the rapid growth of the newly acquired Horizon Therapeutics rare disease portfolio can offset revenue erosion from impending patent cliffs and biosimilar competition for legacy drugs. ### Can I download an Excel financial model for Amgen, and what is its forecast horizon? Yes, an Excel financial model for Amgen is available for download. This model provides a comprehensive forecast horizon covering the fiscal years FY2026 through FY2030. ### How has Amgen's acquisition of Horizon Therapeutics impacted its business and balance sheet? The $27.8 billion acquisition of Horizon Therapeutics significantly expanded Amgen's portfolio with blockbuster rare disease drugs like Tepezza, Krystexxa, and Uplizna. This acquisition also substantially increased goodwill and intangible assets, which now represent over 50% of Amgen's total assets. [Interactive forecast calculator](https://finamodel.com/companies/amgen/forecast)