Geographical market strategy
Amgen (AMGN) has a presence in 75 countries around the world. In addition to focusing on developed markets, the company has a target of earning about $2 billion in revenue from new and emerging markets by 2018.
The above graph shows the markets in which Amgen currently offers its products. Biotechnology companies such as Amgen, Celgene (CELG), Gilead Sciences (GILD), and Biogen (BIIB) have adopted the strategy of diversifying their markets to increase profitability and reduce their overreliance on any specific market.
High growth market strategy
Amgen has established a strong presence in international markets as it plans to effectively capitalize on the product launches of Blincyto, Repatha, and Corlanor. With a strong portfolio of existing and new drugs, Amgen plans to penetrate Japan, China, and other high-growth emerging markets in Latin America and the Middle East. The company aims to earn about $1 billion in revenue by 2015 from these markets.
Amgen has already exceeded its quarterly revenue targets in these markets for the first two quarters of 2015. By 2018, the company further aims to increase its revenue at a compound annualized growth rate of 24%.
Mergers and acquisitions strategy
Amgen has strengthened its presence in international markets by adopting a disciplined mergers and acquisitions strategy. The company has entered into a partnership with Astellas Pharma, a research-oriented company based in Tokyo, to form a joint venture termed Amgen Astellas BioPharm. This joint venture is responsible for codeveloping and co-commercializing Amgen’s late-stage pipeline drugs in Japan, as it has more knowledge of Japanese regulations as well as physician and patient needs.
Amgen has also entered into a partnership with Zhejiang Beta Pharma Co. to commercialize the former’s Vectibix drug in the Chinese market. This partnership allows Amgen to leverage Zhejiang Beta Pharma’s local expertise regarding drug development and commercialization in China.
Investors can get diversified exposure to Amgen’s geographical market strategy, yet avoid unique company risks, by investing in the iShares NASDAQ Biotechnology ETF (IBB). IBB maintains 8.53% of its total holdings in Amgen.