Incyte's Faster Growth Ignites Questions About Amgen's Premium Multiple
Incyte is growing its revenue faster than Amgen, but investors are paying more for less growth when it comes to the biotech giant. While Amgen offers a diversified growth engine with 17 products annualizing at over $1 billion in sales, its premium multiple has widened significantly over the past year. This raises questions about what exactly the premium buys.
Amgen's defense of its premium starts with its sheer scale and diversification. Management points to its '6 key growth drivers,' a group of newer products that grew at an aggregate rate of 26% year-over-year and now represent nearly 70% of the company's product sales. The company also has a high-stakes, late-stage pipeline, including potential mega-blockbusters like MariTide and Olpasiran.
In contrast, Incyte offers faster current growth, positive business momentum, and a much lower valuation. While Amgen's premium buys a diversified, cash-flowing giant that is funding a pipeline with the potential to address some of the largest markets in medicine, Incyte provides a cheaper option for investors who prefer demonstrated commercial success.
The key numbers reveal that Incyte grew revenue 26.9% over the last twelve months, far outpacing Amgen's 9.1%. However, Amgen's premium multiple has widened significantly over the past year, with an operating margin of 30.0% slightly behind Incyte's 31.6%.