Amgen Faces Biosimilar Threat, Gains Credit Boost.

Introduction
Amgen (AMGN) hit the news this week as two material, concrete developments converged: the U.S. FDA cleared denosumab biosimilars that directly compete with Prolia and XGEVA, while Fitch Ratings upgraded Amgen’s credit to BBB+ (Stable). Together with solid Q3 2025 financials and active debt reduction, these events create a balanced picture — one of growing competitive pressure on specific products but greater financial flexibility across the company.

FDA clears Prolia/XGEVA biosimilars

Approvals and timing

On December 22, 2025, the FDA approved denosumab biosimilars referencing Amgen’s Prolia and XGEVA. The approvals — for products marketed by other manufacturers — provide U.S. entry for lower‑cost alternatives to two of Amgen’s established bone‑health brands.

Practical impact on AMGN revenue

Prolia and XGEVA rank among Amgen’s higher‑revenue oncology/osteoporosis assets; biosimilar competition typically drives price declines and share erosion in relatively short order. The immediate market moved modestly, reflecting investor expectations that Amgen’s scale, diversified portfolio, and cash flow can absorb near‑term shocks. However, revenue trajectories for those brands will likely require reassessment in multi‑year models as payer contracts and uptake evolve.

Fitch upgrade underscores improving balance sheet

What changed

Fitch upgraded Amgen’s long‑term issuer default rating to BBB+ with a Stable outlook in late December 2025. The agency cited meaningful debt reduction since the Horizon acquisition and strengthened free cash flow generation as key drivers behind the move.

Why it matters

A higher credit rating lowers borrowing costs and expands strategic optionality. For investors, the upgrade signals a lower financial risk profile and supports continued capital returns — dividends and share repurchases — even while the company navigates competitive pressures from biosimilars.

Q3 2025 financial snapshot

Amgen reported robust results in the third quarter of 2025 that help contextualize the recent headlines:

• Revenue: approximately $9.6 billion, up 12% year‑over‑year, driven primarily by volume gains.
• GAAP EPS: $5.93; non‑GAAP EPS: $5.64.
• Free cash flow: roughly $4.2 billion in the quarter.
• Debt reduction: management retired $1.6 billion of debt in the quarter and has repaid several billion since the Horizon deal.
• Guidance: full‑year revenue guidance reaffirmed in the roughly $35.8–$36.6 billion range with EPS guidance reflecting ongoing margin dynamics.

These figures illustrate healthy cash generation and operational momentum even as net selling prices showed some pressure — a dynamic consistent with an industry facing both volume growth and pricing headwinds.

U.S. drug‑pricing developments and implications

Recent policy moves

In mid‑December, Amgen participated in a price‑reduction agreement announced by the administration and several leading biopharma firms. Separately, discussions around Medicare pilot programs leveraging international reference pricing remain active. These measures are concrete policy developments that could compress pricing for high‑cost medicines over time.

Effect on Amgen

Because Amgen’s portfolio includes several high‑priced specialty medicines, pricing reforms and payer negotiations can influence margins and net revenue per unit. The scale of any near‑term impact will depend on final program design, implementation timelines, and Amgen’s ability to negotiate formulary placement and real‑world value evidence for its products.

Investor takeaways and strategic outlook

• Biosimilar approvals create a tangible headwind for Prolia/XGEVA revenue; model adjustments should reflect accelerating price competition in those franchises.
• The Fitch upgrade is a clear positive: lower borrowing costs, enhanced flexibility for capital returns, and a stronger balance sheet to weather product‑specific shocks.
• Solid cash flow and ongoing deleveraging give Amgen room to invest in R&D, pursue bolt‑on deals, or maintain shareholder distributions even with near‑term revenue pressure.
• Policy shifts on pricing are a real variable; scenario planning should include downside cases where reimbursement reforms amplify pricing pressure on high‑cost therapies.

Conclusion

Last week’s developments present a mixed but actionable picture for AMGN: FDA clearance of denosumab biosimilars marks a clear competitive inflection for specific brands, while a higher credit rating and strong quarterly cash flow bolster Amgen’s overall financial resilience. Investors should update assumptions for Prolia/XGEVA revenues and monitor how Amgen redeploys capital and adjusts pricing strategies to offset biosimilar pressure amid evolving U.S. drug‑pricing policy.