Stock Watch: Rare Diseases Beget Rare Profitability

During a West Coast bus tour for investors in the summer of 2002, I asked Amgen, Inc.’s recently appointed director of sales and marketing about the contrasts he was finding between big pharmaceutical and biotechnology companies. George Morrow was confronting the difference between his experience in big pharma where sales reps typically detailed primary care physicians on two products (and even a third with a leave piece), and Amgen’s sales force dynamics. At that time Amgen’s reps were conducting mutually exclusive single product calls with three different physician groups. These were Epogen (epoetin alfa) – and its successor Aranesp (darbepoetin alfa) – to nephrologists, Neupogen (filgrastim) to oncologists and Kineret (anakinra) to rheumatologists. While Morrow was diplomatic about the implications for sales force productivity, it was difficult for either of us to be too judgmental because compared with big pharmaceutical companies, Amgen was very profitable.

In 2002 Amgen was illustrative of the then sharp delineation between pharmaceutical and biotechnology companies. Pharmaceutical companies typically sold hundreds...