ERYTHROPOIETIN

1. AN OVERVIEW ON ERYTHROPOIETIN:

In 1905, Paul Carnot, professor of medicine and Clotilde Deflandre proposed that hormone regulates the production of red blood cells and they attributed this as hemopoietin. Later Eva Bonsdorff and Eeva Jalavisto studied the red cell production and called the hemopoietic substance as “erythropoietin”.

Erythropoietin(EPO) is a hormone produced by the kidney that promotes the formation of red blood cells by the bone marrow. It is a glycoprotein hormone i.e proteins that contains oligosaccharide chains or glycans. Human EPO has a molecular weight of 34kDa(Kilodaltons). It is also known as hematopoietin or hemopoietin. It is produced by interstitial fibroblasts in the kidney. 10% of erythropoietin is produced by liver also.

FUNCTIONS:

Erythropoietin stimulates the bone marrow to produce more red blood cells. The resulting rise in red cells increases the oxygen-carrying capacity of the blood. It also promotes the development of red blood cells(RBC). It initiates the synthesis of hemoglobin, the molecule within RBC that transports xygen. It plays an important role in the brain’s response to neuronal injury and also involved in the wound healing process.

NORMAL ERYTHROPOIETIN LEVEL:

The normal level of erythropoietin range from 4 to 24 mU/ml(milliunits per millimeter).

Effects of abnormal or low level:

Abnormal erythropoietin levels suggest possible disease of bone marrow disorders like polycythemia or kidney disease or erythropoietin abuse. The low level of erythropoietin results in anemia.

MEDICAL USES:

Synthetic erythropoietin like Epogen,Aranesp are used as therapeutic agents and it is used in treating anemia resulting from chronic kidney disease, inflammatory bowel disease, cancer treatment etc.

2. COMPANY PROFILE OF AMGEN:

Amgen(previously Applied Molecular Genetics) is an US multinational biopharmaceutical company hedquarterd in California founded in the year 1980. It has its presence in more than 75 countries worldwide and have reached millions of people in the fight against cancer, kidney disease, rheumatoid arthritis, bone disease and other serious illnesses.

Amgen is primarily marketing its products in the US, Europe and expanding its market in the Latin America and parts of Middle East in oncology, inflammation, nephrology and bone health.

Amgen received its first approval for the recombinant human erythropoietin product called Epogen in 1989. The medication for erythropoietin is known as Epoetin alfa(Epogen,Procrit). Epotin is manufactured by Amogen and is marketed under trade name Epogen.

FINANCIAL DATA OF AMGEN AND EPOGEN:

Epogen is marketed in US for dialysis patients. It is used to treat anemia. Epogen is patented by Amgen as cells that make certain levels of erythropoietin.

CONSOLIDATED STATEMENT OF INCOME DATA FOR THE LAST 5 FY(FROM 2014 TO 2010) IS GIVEN BELOW:

REVENUES FY2014 (In US $ millions)

FY2013(In US $ millions)

FY2012(In US $ millions)

FY2011(In US $ millions)

FY2010(In US $ millions)

Product sales 19,327 18,192 16,639 15,295 14,660Other revenues 736 484 626 287 393Total revenues 20,063 18,676 17,265 15,582 15,053

OPERATING EXPENSES

FY2014 (In US $ millions)

FY2013(In US $ millions)

FY2012(In US $ millions)

FY2011(In US $ millions)

FY2010(In US $ millions)

Cost of sales 4422 3,346 3,199 2,708 2,501Research and development

4297 4083 3380 3167 2894

Selling, general and administrative

4699 5184 4814 4499 3996

Other 454 196 295 896 117Net Income 5158 5081 4345 3683 4627Diluted earnings per share

6.70 6.64 5.52 4.04 4.79

Dividends paid per share

2.44 1.88 1.44 0.56 -

CONSOLIDATED BALANCE SHEET:

Consolidated balance sheet

FY2014 (in US $ millions)

FY2013(In US $ millions)

FY2012(In US $ millions)

FY2011(In US $ millions)

FY2010(In US $ millions)

Total assets 69,009 66,125 54,298 48,871 43,486Total debt 30,715 32,128 26,529 21,428 13,362Total stockholders’ equity

25,778 22,096 19,060 19,029 23,944

Total Epogen sales for the last 5 financial year starting from 2014 to 2010 is given below along with the change in sales from the previous financial years.

(in US million dollars)

PRODUCT FY2014 Change FY2013 Change FY2012 Change FY2011 Change FY2010

EPOGEN 2031 4% 1953 1% 1941 (5)% 2040 (19)% 2524

The decrease in sales of Epogen for the financial years 2012 and 2011 is due to decrease in unit demand, due to reductions in dose utilization, changes to the label and reimbursement environment.

CHALLENGES FOR ERYTHROPOIETIN DRUG MARKET:

Some of the challenges for the erythropoietin drug market are:

Risk of Thrombosis and PRCA(Pure Red Cell Aplasia) Abusive uses of EPO(Eryhtropoietin) Adverse effects of EPO Escalating price pressure Requirement of extensive clinical trials for obtaining approval: Obtaining and maintaining

regulatory approval has been increasingly difficult, time-consuming and costly. The clinical trials will extend upto 10 to 15 years and the drug should be approved by FDA(Food and Drug Administration) in US and by foreign authoritis like EMA. After approval also they have authority to require additional testing perform inspections, change product labeling etc. Failure on this will result in administrative or judicially imposed sanctions.

GROWTH DRIVERS OF ERYTHROPOIETIN DRUG MARKET:

Increasing cases Chronic Kidney Disease(CKD) Global Dialysis Patient population Upcoming patent expiries of original Bio drugs Rising adult population worldwide Rising healthcare expenditure Increasing prevalence of cancer

INCREASING PREVALENCE OF CANCER:

In 2012 about 14.1 million new cases of cancer occurred globally. It caused about 8.2 million deaths or 14.6% of all human deaths. About 165,000 children under 15 years of age were diagnosed with cancer. The risk of cancer increases significantly with age and many cancers occur commonly in developed countries. The financial costs of cancer have been estimated at $1.16 US dollars per year as of 2010. By 2030, the global burden is expected to grow to 21.7 million new cancer cases and 13 million cancer deaths due to growth and aging of population.

REGIONS ATTRIBUTABLE TO CANCER INFECTION:

The data provided below is obtained from the Global Cancer facts and figures with percentages which is attributable to cancer infection:

REGION/COUNTRY PERCENTAGESub-Saharan Africa 33China 26East Asia 23India 21Japan 19Central Asia 17America 20Europe 7Australia, Newzealand and oceania 21North Africa and western asia 13

COSTS OF CANCER:

The direct costs include expenditures for treatment, rehabilitation related to illness etc. In US alone the estimated direct medical cost for cancer in 2011 was $88.7 billion.

CONCLUSION:

From the above growth drivers for erythropoietin drug in the market, increase in the prevalence of cancer is an important factor in increasing the drug market because from the above statistical facts it can be observed that cancer occurs in all ages ranging from children to aged persons. Similarly, In March 2008, a panel of advisers for the US Food and Drug Administration (FDA) supported keeping ESAs from Amgen and Johnson & Johnson on the market for use in cancer patients. The FDA has focused its concern on study results showing an increased risk of death and tumor growth in chemo patients taking the anti-anemia drugs. According to the FDA, evidence for increased rates of mortality exist in various cancers, including breast, lymphoid, cervical, head and neck, and non-small-cell lung cancer. Thus, the increase in cancer infections will drive the growth of Erythropoietin drug in the market.