Amgen 2025 10-K: Revenue Growth Offset by Pricing Headwinds and Biosimilar Competition

What happened

Amgen delivered 10% revenue growth in 2025, reaching $36.8 billion, driven by robust 13% volume growth across its product portfolio. This volume expansion was partially offset by 3% net selling price declines reflecting increased 340B Program utilization, Medicare Part D redesign impacts, and higher commercial discounts. ENBREL sales fell 33% to $2.2 billion, driven primarily by a 36% decline in net selling price from these pricing pressures. In contrast, newer products demonstrated strong growth: Repatha sales increased 36% to $3.0 billion, EVENITY grew 34% to $2.1 billion, and TEZSPIRE surged 52% to $1.5 billion, all driven by volume expansion. Operating income increased 25% to $9.1 billion despite a $1.2 billion Otezla intangible asset impairment charge triggered by CMS selection of Otezla for Medicare price setting beginning in 2027. The improvement reflected lower cost of sales (32.8% of revenue versus 38.5% in 2024) as amortization expense from Horizon acquisition-related assets declined, including the prior-year impact of inventory fair value step-up. R&D expense increased 22% to $7.3 billion, driven by investments in later-stage clinical programs including six global Phase 3 studies initiated for MariTide. Net income surged 89% to $7.7 billion, benefiting from net unrealized gains on equity investments (primarily BeOne) compared to prior-year losses, and lower interest expense as the company retired $6.0 billion of debt. Patents for RANKL antibodies covering Prolia and XGEVA expired in February 2025 in the United States and November 2025 in select European countries, with multiple biosimilars launched. CMS set Medicare Part D prices for ENBREL effective January 2026 and Otezla effective 2027, both at significantly lower prices. The company announced actions to satisfy components of the July 2025 MFN Letter from the Administration, including MFN pricing requests, though ultimate effects on pricing, reimbursement, and profitability remain uncertain. Cash from operations totaled $10.0 billion, supporting $1.9 billion in capital expenditures, $5.1 billion in dividends, and $6.0 billion in debt reduction ($5.0 billion repayments and $683 million repurchases generating a $264 million gain).

Why it matters for investors

The results illustrate Amgen's transition from a mature product-driven model to one increasingly reliant on newer therapies amid structural pricing pressure. Volume growth of 13% demonstrates continued commercial execution and the strength of the newer product portfolio, but net price declines of 3% reflect the compounding impact of government pricing actions including Medicare Part D redesign, expanded 340B utilization, and IRA-mandated price setting. The 33% decline in ENBREL sales signals the severity of pricing headwinds even before biosimilar entry, while the expiration of Prolia/XGEVA patents and launch of multiple biosimilars in both the United States and Europe will accelerate erosion in 2026. Medicare price setting for ENBREL (2026) and Otezla (2027) introduces further downside risk, as evidenced by the $1.2 billion Otezla impairment charge. The 25% increase in operating income despite the impairment reflects operational leverage as prior-year acquisition costs rolled off and manufacturing efficiency improved, though this was partially offset by 22% growth in R&D expense to support pipeline advancement including MariTide. The 89% surge in net income was amplified by favorable non-operating items, including unrealized gains on equity investments and lower interest expense from debt reduction. The $6.0 billion debt reduction and restoration of leverage to pre-acquisition levels demonstrates strong cash generation and disciplined capital allocation, though the company remains vulnerable to volume-based growth being overwhelmed by pricing pressures. The ongoing IRS tax dispute seeking $3.6 billion (2010-2012) and $5.1 billion plus $2.0 billion in penalties (2013-2015) related to profit allocation between U.S. and Puerto Rico entities represents a material contingent liability, with a U.S. Tax Court decision expected no earlier than the second half of 2026. The concentration of manufacturing in Puerto Rico (substantial majority of commercial production) and Thousand Oaks (substantial majority of clinical production) creates operational concentration risk.

Key highlights

Amgen's 2025 results reflected strong volume-driven growth offset by accelerating pricing pressures and biosimilar competition. Total revenues increased 10% to $36.8 billion, driven by 13% volume growth partially offset by 3% net selling price declines. Operating income increased 25% to $9.1 billion despite a $1.2 billion Otezla intangible asset impairment charge, as cost of sales improved to 32.8% of revenue from 38.5% in 2024 due to lower amortization expense from acquisition-related assets. Net income surged 89% to $7.7 billion, benefiting from net unrealized gains on equity investments and lower interest expense from debt reduction. The company generated $10.0 billion in operating cash flow and retired $6.0 billion of debt. Newer products delivered robust growth: Repatha sales increased 36% to $3.0 billion, EVENITY grew 34% to $2.1 billion, and TEZSPIRE surged 52% to $1.5 billion. However, ENBREL sales fell 33% to $2.2 billion driven primarily by a 36% net price decline from increased 340B Program mix, Medicare Part D redesign, and higher commercial discounts. Patents for RANKL antibodies covering Prolia and XGEVA expired in 2025 in the United States and select European countries, with multiple biosimilars launched and accelerated erosion expected in 2026. CMS set Medicare Part D prices for ENBREL (effective 2026) and Otezla (effective 2027) at significantly lower prices. The company announced actions to satisfy MFN pricing requests from the Administration, though ultimate effects remain uncertain. The ongoing IRS tax dispute seeks $3.6 billion for 2010-2012 and $5.1 billion plus $2.0 billion in penalties for 2013-2015, with a U.S. Tax Court decision expected no earlier than the second half of 2026.

Management commentary

Management noted that in 2025, the company generated strong sales growth across its product portfolio and regions, advanced its innovative pipeline, and continued to expand and enhance its world-class manufacturing network while maintaining a strategic and disciplined approach to capital allocation, including retiring $6.0 billion of debt. Management stated that total product sales increased 10% in 2025, driven by volume growth of 13%, partially offset by declines in net selling price of 3%. For 2026, management expects volume growth from certain brands to be partially offset by net selling price declines, and noted that the first quarter historically represents the lowest product sales quarter due to plan changes, insurance reverifications, and higher co-pay expenses as U.S. patients work through deductibles. Management indicated that R&D expense is expected to continue to grow as the company advances its pipeline, with investments in later-stage clinical programs. Management stated that the company achieved several significant regulatory, clinical, and operational milestones in 2025, including multiple regulatory approvals, the initiation of six global Phase 3 clinical studies for MariTide, and continued investment in expanding and enhancing manufacturing capacity. Management noted that provisions of the IRA, as well as expanded utilization of the 340B Program, have negatively affected, and are likely to continue to negatively affect, the business. Management stated that CMS has selected ENBREL and Otezla for Medicare price setting beginning in 2026 and 2027, respectively, and that CMS has set Medicare Part D prices for ENBREL and Otezla at significantly lower prices that are expected to negatively impact their profitability in Medicare. Management indicated that in December 2025, the company announced that it is taking actions that satisfy the components outlined in the July MFN Letter, including the Administration's MFN pricing requests, though the ultimate effects on pricing, reimbursement, net sales, and profitability remain uncertain in light of evolving regulatory and policy expectations. Management stated that the company firmly believes that the IRS positions set forth in the 2010-2012 and 2013-2015 Notices are without merit and continues to contest these Notices through the judicial process, with a U.S. Tax Court decision expected no earlier than the second half of 2026.

What to watch next

Investors should monitor:

• The pace and severity of biosimilar erosion for Prolia and XGEVA in 2026 following patent expirations in February 2025 (United States) and November 2025 (select European countries), with the company stating it expects accelerated sales erosion driven by increased competition as multiple biosimilars have launched in the United States and ROW.

• The impact of Medicare price setting for ENBREL beginning in January 2026 and Otezla beginning in 2027, both set at significantly lower prices expected to negatively impact profitability, with Otezla's selection triggering a $1.2 billion intangible asset impairment charge in 2025 and management noting further net price declines expected beginning in 2027.

• The ultimate effects of MFN pricing actions announced in December 2025 on pricing, reimbursement, net sales, and profitability, particularly in light of evolving regulatory and policy expectations, and whether the Administration pursues legislative codification of MFN Terms that could apply to a broader range of products, payers, or pricing arrangements for a longer period.

• The outcome of the consolidated IRS tax dispute in U.S. Tax Court, with a decision expected no earlier than the second half of 2026, concerning profit allocation between U.S. and Puerto Rico entities for 2010-2015, with the IRS seeking $3.6 billion in additional federal tax for 2010-2012 and $5.1 billion plus $2.0 billion in penalties for 2013-2015.

• Progress of MariTide in six global Phase 3 clinical studies initiated in 2025, as R&D expense increased 22% to $7.3 billion and is expected to continue to grow to support pipeline advancement, with success critical to offsetting erosion from mature products and justifying elevated R&D investments.

This summary is based solely on excerpts from the company's Form 10-K filing.