Amgen Inc. (NASDAQ:AMGN)

The profitability profile exhibits a distinct cyclical pattern characterized by a period of initial stability, a significant contraction between late 2023 and mid-2024, and a subsequent phased recovery extending through early 2026.

Gross Profit Margin

Margins remained stable above 72% from March 2022 through September 2023. A sharp decline began in December 2023, reaching a minimum of 58.71% in September 2024. Since that trough, a consistent upward trend has been observed, with the margin recovering to 66.72% by March 2026.

Operating Profit Margin

Operating efficiency peaked in September 2022 at 39.31% before entering a period of decline. A steep contraction occurred between December 2023 (29.35%) and September 2024 (19.97%). The margin subsequently recovered, trending upward to reach 29.77% by the end of the analyzed period.

Net Profit Margin

Net margins showed strength in the first year, peaking at 31.77% in March 2023. A substantial decline followed, bottoming at 10.60% in June 2024. A steady recovery phase is evident from September 2024 onwards, with margins returning to 21.98% by March 2026.

Return on Equity (ROE)

ROE experienced a dramatic compression, falling from an initial high of 624.78% in March 2022 to a low of 52.83% in June 2024. Following this decline, ROE rebounded to peak at 95.59% in March 2025 before stabilizing in the 84% to 89% range toward the end of the period.

Return on Assets (ROA)

ROA remained relatively stable between 8% and 11% until late 2023. A significant dip to 3.44% was recorded in June 2024. A gradual recovery followed, with the ratio climbing back to 8.43% by March 2026, closely mirroring the recovery trends seen in the margin ratios.

Analysis of the profitability ratios reveals a distinct three-phase cycle in gross profit margins between March 2022 and March 2026. The period is characterized by an initial phase of high stability, a subsequent sharp contraction, and a final phase of steady recovery.

Stability and Initial Performance

From March 2022 through September 2023, gross profit margins remained consistently high, fluctuating within a narrow range between 72.35% and 74.17%. During this window, product sales grew modestly, and the cost of goods sold was managed proportionally to revenue.

Significant Margin Contraction

A notable downward trend emerged starting in December 2023, with margins dropping to 68.60% and continuing to decline sharply until reaching a trough of 58.71% in September 2024. This compression occurred despite a simultaneous increase in product sales, which rose from 7.83 billion in December 2023 to 8.15 billion in September 2024, indicating that the costs associated with product sales grew at a significantly faster rate than revenue.

Recovery and Margin Expansion

A sustained recovery is observed from December 2024 through March 2026. The gross profit margin climbed steadily from 59.85% in September 2024 to 66.72% by March 2026. This recovery phase aligned with the company's highest recorded product sales levels, which peaked at 9.37 billion in December 2025, suggesting improved operational efficiencies or a more favorable product mix.

Relationship Between Revenue and Absolute Profit

Despite the volatility in the margin percentage, absolute gross profit from product sales showed a long-term upward trajectory. Gross profit increased from 4.17 billion in March 2022 to a peak of 6.39 billion in December 2025, before settling at 5.47 billion in March 2026. This indicates that the growth in total product sales volume was sufficient to offset the impact of the margin compression experienced in 2023 and 2024.

The operating performance over the analyzed period is characterized by a significant cycle of margin expansion, a period of sharp contraction, and a subsequent recovery phase. While product sales generally trended upward, operating profitability experienced substantial volatility, indicating a period where operating expenses grew at a rate exceeding revenue growth before stabilizing.

Operating Profit Margin Trends

The operating profit margin reached a peak of 39.31% in September 2022. Following this peak, a prolonged downward trend occurred, with margins contracting to a low of 19.97% by June 30, 2024. This represents a significant reduction in operational efficiency, as the margin declined by approximately 19.34 percentage points from its highest point to its trough.

Revenue and Operating Income Divergence

Product sales exhibited a consistent growth trajectory, increasing from 5,731 million in March 2022 to a high of 9,367 million in December 2025. Despite this growth in top-line revenue, operating income experienced a severe dip during the 2023-2024 period, falling to a minimum of 991 million in March 2024. This divergence highlights a phase of compressed profitability where increased sales did not translate into immediate operating leverage.

Recovery and Stabilization Phase

A recovery in operational efficiency is evident starting in the latter half of 2024. The operating profit margin began a steady ascent from 22.66% in December 2024, climbing to 29.77% by March 31, 2026. This recovery was supported by operating income returning to a range between 2,526 million and 2,720 million during the 2025 calendar year, suggesting a successful realignment of cost structures relative to revenue.

The net profit margin exhibits a cyclical pattern characterized by an initial period of expansion, a significant contraction, and a subsequent steady recovery over the analyzed period from March 2022 to March 2026.

Profitability Expansion and Peak

Between March 2022 and March 2023, a consistent upward trend in profitability is observed, with the net profit margin increasing from 23.42% to a peak of 31.77%. This phase represents the period of maximum operational efficiency relative to revenue during the analyzed timeframe.

Margin Contraction and Volatility

A notable decline in margins began in the second quarter of 2023, falling to 24.96% by December 2023. This downward trajectory accelerated sharply in the first half of 2024, reaching a low of 10.60% in June 2024. This contraction occurred despite a general increase in product sales, suggesting that increased operating costs or non-operating expenses disproportionately affected net income during this interval.

Recovery and Stabilization Phase

From July 2024 through March 2026, a sustained recovery in the net profit margin is evident. The margin climbed steadily from 13.58% to 21.98%. This recovery aligns with a period of significant growth in product sales, which rose from 8,151 million USD in September 2024 to a peak of 9,367 million USD in December 2025, indicating a return to improved cost management and profitability scaling.

Revenue and Profitability Correlation

An inverse relationship is observed between revenue growth and profit margins during the 2023-2024 period, where rising product sales coincided with falling margins. However, by 2025 and early 2026, the correlation returned to a positive trajectory, where increased sales volume supported a gradual restoration of the net profit margin toward historical levels.

A significant downward trend in Return on Equity (ROE) is observed from March 2022 through June 2024, followed by a period of relative stabilization. The ROE declined from an initial peak of 624.78% to a low of 52.83%, before fluctuating between approximately 72% and 95% through March 2026.

Equity Base Expansion

The primary driver for the compression of ROE is the substantial and consistent increase in stockholders' equity. Equity grew from 916 million USD in March 2022 to 9,190 million USD by March 2026. This rapid expansion of the equity denominator exerted significant downward pressure on the ROE percentage, neutralizing the impact of positive net income growth.

Net Income Volatility

Net income exhibited considerable fluctuation throughout the period. Performance peaked in September 2025 at 3,216 million USD, but also experienced a sharp contraction in March 2024, resulting in a net loss of 113 million USD. This specific loss corresponds with a notable dip in the ROE trajectory during the first quarter of 2024.

ROE Normalization

Following the period of extreme volatility observed between 2022 and 2024, the ROE entered a more stable phase. From December 2024 through March 2026, the ratio remained within a range of 72.82% to 95.59%. This suggests a normalization of the relationship between earnings and the capital base after the initial period of rapid equity accumulation.

The analysis of profitability ratios from March 2022 through March 2026 reveals a distinct three-phase cycle characterized by an initial period of high efficiency, a subsequent decline following a significant expansion of the asset base, and a gradual recovery in asset utilization.

Asset Base Expansion and Initial ROA Compression

A substantial increase in total assets is observed between December 31, 2022, and March 31, 2023, where assets rose from 65,121 million USD to 88,720 million USD. This rapid expansion of the balance sheet coincided with a downward trend in Return on Assets (ROA). While ROA remained above 10% for most of 2022, it began a steady decline starting in early 2023, falling from 8.92% in March 2023 to a low of 3.44% by June 30, 2024.

Net Income Volatility

Net income exhibited significant fluctuations throughout the analyzed period. A notable contraction occurred in the first quarter of 2024, resulting in a net loss of 113 million USD, which contributed to the ROA trough. However, strong performance peaks were recorded in September 2024 (2,830 million USD) and September 2025 (3,216 million USD), indicating periods of high operational profitability despite the larger asset base.

Recovery and Stabilization Trend

Starting in the third quarter of 2024, a consistent recovery in ROA is evident. The ratio climbed from 4.65% in September 2024 to 8.43% by March 31, 2026. This upward trajectory suggests an improvement in the company's ability to generate earnings from its expanded asset base, as the ROA trend lines move back toward the levels observed prior to the 2023 asset increase.