Amgen's Stock Slides as Horizon Acquisition Falls Short of Expectations

Amgen's recent trajectory has been undergoing scrutiny following its strategic acquisition of Horizon Therapeutics for approximately $27.8 billion. This deal, completed in October 2023, represented a significant investment aimed at offsetting the looming patent cliffs of key products like Enbrel and addressing potential risks from the Inflation Reduction Act's pricing negotiations.

Nevertheless, the Q1 2025 financial report reveals that Horizon’s anticipated revenue contributions have fallen short. Earnings from Horizon's three rare disease drugs — Tepezza, Uplizna, and Krystexxa — did not meet market expectations. Tepezza's sales of $381 million were $69 million below forecasts, Uplizna was $20 million shy of projections at $91 million, and Krystexxa fell short by $57 million, with revenue reaching $236 million.

This underperformance is concerning as other Amgen treatments have exceeded forecasts for the quarter. The initial enthusiasm surrounding the acquisition, one of the largest deals in the pharmaceutical industry in 2022, is now tempered by investor anxiety about the future viability and profitability of Horizon's assets.

Historically, Amgen has relied on strategic acquisitions to bolster its product pipeline, such as its 2001 acquisition of Immunex Corp for $16 billion, which secured Enbrel, and more recently its purchase of Celgene's Otezla rights for $13.4 billion. The Horizon deal, however, underscores challenges that come with integrating and realizing synergies from newly acquired assets.

Amgen faces the dual challenge of underwhelming performance from its recent acquisition and impending patent expirations. The company must swiftly enhance the marginal returns of Horizon's drugs while accelerating the commercialization of its late-stage pipeline products. CEO Murdo Gordon emphasized the importance of overcoming recent sales disruptions and expressed confidence in the long-term potential of the acquired Horizon drugs.

As Amgen navigates these challenges, it represents a broader industry trend of rapidly adapting business strategies to focus on core competencies and navigate the landscape of evolving market requirements. Despite the hurdles of debt and integration inefficiencies, Amgen's commitment to innovation and strategic focus aims to secure its competitive position amidst these pressures.