Valuation

Assumptions
The cost of equity capital was calculated using the formula Risk Free Rate + Levered
Market Beta*Risk Free Rate. With the risk free rate being the current rate of return
on 30yr Treasury Bonds 3.97% (Source: Federal Reserve of St. Louis). The Equity
Beta (Levered) used was 0.88 which is the Pharamacuetical Industry average
globally. With a Market Premium of 4.96%. Which gives us a cost of capital of
8.33% which is not too far off from the industry average of 8.64%.
We also assumed a long-term growth rate of 3% stemming from analyst reports.
Comparables Valuation
In order to choose comparable companies, we looked at the product lines of
BioTech/Pharmaceutical companies and selected those with drugs similar to the
ones Amgen has developed. The peer group comprises of the following companies:

AbbVie (ABBV)

a research-based biopharmaceutical company. Created in 2013 after a

separation from Abbott Laboratories. AbbVie's Humira drug competes with
Amgen's Enbrel drug which treats arthritis

Biogen Idec (BIIB)

Global Biotech company that sells a number of drugs to treat patients with
multiple sclerosis, hemophilia, or leukemia.

Celegene (CELG)

An American biotechnology company that manufactures drugs for cancer

and inflammatory disorders. Celegen's Revlimid drug which treats myeloma
competes with Amgen's Kyprolis drug (gained after the acquisition of Onyx in
2013)

Johnson & Johnson

(JNJ)

An American multinational company that makes medical devices,

pharmaceutical & consumer goods. J&J's Procit is a direct competitor to
Amgen's Aranesp drug, which helps to treat anemia.

Teva Pharmaceutical
(TEVA)

An international pharmaceutical company that develops, manufactures, and

markets generic and branded human pharmaceuticals. They created a
generic drug that boosts the production of white blood cells in certain cancer
patients. This is a copy of Amgen's Neupogen drug of which the patent has
recently expired.