Moody's affirms Amgen

Moody's Investors Service said it affirmed the ratings of Amgen Inc., including its A2 senior unsecured debt rating and Prime-1 short-term rating for commercial paper.

The outlook is stable.

The rating affirmation follows the recent merger agreement in which Amgen will acquire Abgenix Inc. for $2.2 billion in cash plus the assumption of debt. As of Sept. 30, Amgen reported $5.6 billion of cash and short-term investments. Consequently, Moody's said it believes the company's liquidity is sufficient to close the transaction without debt issuance.

Amgen's ratings reflect strong cash coverage of debt after consideration of the cost of the acquisition, excellent cash flow from operations and free cash flow due to the strong growth of Amgen's core products, and potential revenue diversity that could be provided if Amgen is successful in launching panitumumab for colorectal cancer and other indications, the agency said.

These strengths are offset by high product concentration risk, the potential for slowing growth in core products amid a number of changing reimbursement dynamics and increasing competition and the possibility that Amgen's response to slower growth may lead to additional acquisition activity or larger share repurchases, the agency said.

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