Amgen Inc. (AMGN) reported a 7.4% decline in first-quarter earnings and lowered its 2009 revenue expectations as increased competition and the troubled economy cut into sales of the biotech giant's drugs.

The disappointing revenue numbers at the Thousand Oaks, Calif., company - highlighted by a 20% decline in sales of arthritis drug Enbrel - increases the need for success of Amgen's experimental bone drug denosumab, which should get an approval decision from the Food and Drug Administration in October.

In a conference call, Chief Executive Kevin Sharer blamed economic conditions for causing patients to postpone doctor visits, stop taking medicines and decline to pay for expensive insurance co-pays.

"We now know that, for the first time, the biopharmaceutical industry is not exempt from these economic factors," Sharer said.

Leerink Swann analyst Jonas Alsenas called the results "a little bit surprising" and described Amgen's recent earnings performance as a leaky bucket because it faces sales pressure on multiple fronts - safety and regulatory concerns of its anemia treatments, Aranesp and Epogen; increased competition for Enbrel; and European biosimilar competition for Neupogen, which wards off infections in chemotherapy patients.

In after-hours trading, Amgen shares - down 19% for the year - fell 2.5% to $45.67.

For the three months ended March 31, Amgen reported net income of $1.02 billion, or 98 cents a share, down from year-ago earnings of $1.1 billion, or $1.01 a share. Excluding items, earnings were $1.08 a share, well below the average analyst estimate of $1.15, according to Thomson Reuters.

Revenue dropped 8.5% to $3.31 billion, also far below Street expectations of $3.63 billion.

The disappointing quarter led Amgen to cut its 2009 revenue projection to a range of $14.4 billion to $14.8 billion from its previous estimate of $14.8 billion to $15.2 billion. Wall Street had expected $14.9 billion.

Despite the drop in the topline projections, Amgen backed its adjusted earnings per-share guidance of $4.55 to $4.75, a sign of the company's ability to control costs in order to maintain profits. Analysts currently project annual earnings of $4.62 a share.

Even before the disappointing quarter, Wall Street has been focused on Amgen's lead pipeline candidate denosumab, the future growth driver that is estimated to have peak yearly sales from $1 billion to up to $10 billion.

"Now more than ever, denosumab is critical to future earnings growth for Amgen," Alsenas said, noting that an unsuccessful launch of the drug may force the company into a merger or takeover.

The FDA is reviewing the drug's application for use in osteoporosis patients and data on the drug's use in cancer patients whose disease has spread to the bone are expected later this year, providing another possible market for the drug.

In the first quarter, Aranesp sales dropped 18% to $626 million, coming far below a Wall Street consensus estimate of $659 million, according to MDRx Financial, a health-care market research firm. Sales of Epogen, an earlier version of Aranesp, rose 2% to $565 million, also missing expectations of $614 million.

The drop in Aranesp is surprising, but the anemia franchise has been a difficult area for the past two years because studies showed the drugs may be overused, increase cardiovascular risks and fuel certain kinds of cancer.

More surprising is the 20% drop in Enbrel sales to $758 million, which was below an MDRx analyst consensus estimate of $906 million. Amgen sells Enbrel in North America, and Wyeth Inc. (WYE) distributes it elsewhere.

On the call, Sharer said the drug was hit hard by economic troubles as patients had trouble paying their insurance co-pay in order to receive the drug. The drug also faced a difficult comparison to the year-ago quarter, which got a boost from a inventory distribution change, although sales were down 17% from the fourth quarter of 2008.

In recent years, Enbrel has continued to grow in the face of competition from Abbott Laboratories' (ABT) Humira. Alsenas noted that Enbrel likely benefited from total market growth, even though it was losing its share of that market to Humira.

Combined first-quarter sales of Neulasta and Neupogen, used to prevent infections in patients receiving chemotherapy, rose 1% to $1.07 billion, also falling short of Wall Street expectations of $1.17 billion.

In pipeline news, Amgen said the FDA agreed with a revised late-stage study protocol for motesanib in treating advanced lung cancer.

The drug, in development with Takeda Pharmaceutical Co. (4502.TO), suffered a setback late last year when the trial was suspended due to higher death rates in patients.

-Thomas Gryta; Dow Jones Newswires; 201-938-2053; thomas.gryta@dowjones.com