Edgar Filing: AMGEN INC

AMGN-12.31.2014-10K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)



ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-12477

Amgen Inc.

(Exact name of registrant as specified in its charter)



Delaware		95-3540776
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Amgen Center Drive,		91320-1799
Thousand Oaks, California		(Zip Code)
(Address of principal executive offices)

(805) 447-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class		Name of Each Exchange on Which Registered
Common stock, $0.0001 par value		The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ¨ No ý

The approximate aggregate market value of voting and non-voting stock held by non-affiliates of the registrant was $89,797,013,692 as of June 30, 2014^(A)


(A)	Excludes 805,131 shares of common stock held by directors and executive officers at June 30, 2014. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, directly or indirectly, to direct or cause the direction of the management or policies of the registrant, or that such person is controlled by or under common control with the registrant.

758,861,306

(Number of shares of common stock outstanding as of February 12, 2015)

DOCUMENTS INCORPORATED BY REFERENCE

Specified portions of the registrant’s Proxy Statement with respect to the 2015 Annual Meeting of stockholders to be held May 14, 2015, are incorporated by reference into Part III of this annual report.

INDEX



		Page No.
PART I		1
Item 1.	BUSINESS	1
	Significant Developments	1
	Marketing, Distribution and Selected Marketed Products	4
	Reimbursement	8
	Manufacturing, Distribution and Raw Materials	9
	Government Regulation	10
	Research and Development and Selected Product Candidates	14
	Business Relationships	20
	Human Resources	21
	Executive Officers of the Registrant	21
	Geographic Area Financial Information	22
	Investor Information	23
Item 1A.	RISK FACTORS	23
Item 1B.	UNRESOLVED STAFF COMMENTS	36
Item 2.	PROPERTIES	37
Item 3.	LEGAL PROCEEDINGS	37
Item 4.	MINE SAFETY DISCLOSURES	37
PART II		38
Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	38
Item 6.	SELECTED FINANCIAL DATA	41
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	42
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	59
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	61
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES	61
Item 9A.	CONTROLS AND PROCEDURES	61
Item 9B.	OTHER INFORMATION	63
PART III		64
Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT	64
Item 11.	EXECUTIVE COMPENSATION	64
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	65
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	66
Item 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	66
PART IV		67
Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	67
SIGNATURES		73

PART I



Item 1.	BUSINESS

Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics. This approach begins by using tools like advanced human genetics to unravel the complexities of disease and understand the fundamentals of human biology.

Amgen focuses on areas of high unmet medical need and leverages its biologics manufacturing expertise to strive for solutions that improve health outcomes and dramatically improve people's lives. A biotechnology pioneer, Amgen has grown to be one of the world's leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.

Amgen was incorporated in California in 1980 and became a Delaware corporation in 1987. Amgen operates in one business segment: human therapeutics.

Significant Developments

Following is a summary of significant developments that occurred in 2014 and early 2015 affecting our business.

Products/Pipeline

Cardiovascular

Repatha^™ (evolocumab)*


•	In August 2014, we announced that the phase 3 YUKAWA-2 (StudY of LDL-Cholesterol Reduction Using a Monoclonal PCSK9 Antibody in Japanese Patients With Advanced Cardiovascular Risk) study evaluating evolocumab in combination with statin therapy in Japanese patients with high cardiovascular risk and high cholesterol met its co-primary endpoints.


•	In September 2014, we announced that we submitted a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for the treatment of high cholesterol.


•	In November 2014, we announced that the U.S. Food and Drug Administration (FDA) accepted for review our Biologics License Application (BLA) for evolocumab for the treatment of high cholesterol.

Corlanor^®(ivabradine)*


•	In August 2014, we announced that the FDA granted priority review designation for the treatment of chronic heart failure.


•	In January 2015, we announced a three-month extension of the Prescription Drug User Fee Act (PDUFA) target action date due to a request from the FDA for submission of additional existing clinical data, which has been submitted.

Inflammation

Brodalumab


•	In April 2014, we announced the initiation of two phase 3 studies in patients with psoriatic arthritis.


•	In 2014, we and AstraZeneca Plc. (AstraZeneca) announced that all three phase 3 AMAGINE^™trials evaluating brodalumab in patients with moderate-to-severe plaque psoriasis met all their primary endpoints.

Nephrology

AMG 416


•	In July 2014, we announced that a phase 3 study evaluating AMG 416 for the treatment of secondary hyperparathyroidism in patients with chronic kidney disease (CKD) receiving hemodialysis, met its primary and all secondary endpoints.


•	In August 2014, we announced that a second placebo-controlled phase 3 study evaluating AMG 416 for the treatment of secondary hyperparathyroidism in patients with CKD, receiving hemodialysis, met its primary and all secondary endpoints.

* FDA provisionally approved trade name

Oncology

BLINCYTO^™ (blinatumomab)


•	In October 2014, we announced that we submitted an MAA to the EMA for the treatment of adults with Philadelphia-negative relapsed/refractory B-precursor acute lymphoblastic leukemia (ALL), a rapidly progressing cancer of the blood and bone marrow.

•

In December 2014, we announced that the FDA has granted approval of BLINCYTO^™ for the treatment of patients with Philadelphia chromosome-negative (Ph-) relapsed or refractory B-cell precursor ALL. This indication is approved under accelerated approval and continued approval for this indication may be contingent upon verification of clinical benefit in subsequent trials. Commercial sales launched in December 2014.

Kyprolis^®(carfilzomib) for Injection

•

In August 2014, we and our subsidiary Onyx Pharmaceuticals, Inc. (Onyx) announced that a planned interim analysis demonstrated that the phase 3 clinical trial ASPIRE (CArfilzomib, Lenalidomide, and DexamethaSone versus Lenalidomide and Dexamethasone for the treatment of PatIents with Relapsed Multiple MyEloma) met its primary endpoint of progression-free survival (PFS). While the data for overall survival, a secondary endpoint, are not yet mature, the analysis showed a trend in favor of Kyprolis^® in combination with REVLIMID^® (lenalidomide) and low-dose dexamethasone that did not reach statistical significance.


•	In August 2014, we and Onyx announced that the phase 3 clinical trial FOCUS (CarFilzOmib for AdvanCed Refractory MUltiple Myeloma European Study) did not meet its primary endpoint of improving overall survival.

•

In January 2015, we and Onyx announced the submission of a supplemental New Drug Application (sNDA) to the FDA and an MAA to the EMA for Kyprolis^® to seek approval for the treatment of patients with relapsed multiple myeloma who have received at least one prior therapy. In the United States, the sNDA is designed to support the conversion of accelerated approval to full approval and expand the current approved indication. In the European Union (EU), Kyprolis^® received orphan drug designation and the MAA has been granted accelerated assessment.

Neulasta^®(pegfilgrastim)


•	In December 2014, the FDA granted approval of the Neulasta^®Delivery Kit, including the On-body Injector for Neulasta^®.

Rilotumumab


•	In November 2014, we announced the termination of all Amgen-sponsored clinical studies of rilotumumab in advanced gastric cancer, including the phase 3 RILOMET-1 and RILOMET-2 studies.

Talimogene laherparepvec


•	In July 2014, we announced that we submitted a BLA in the United States for regionally and distantly metastatic melanoma.


•	In September 2014, we announced that we submitted an MAA to the EMA for the treatment of adults with regionally and distantly metastatic melanoma.


•	In January 2015, we announced a three-month extension of the PDUFA target action date for our BLA due to a request from the FDA for submission of additional existing manufacturing data, which has been submitted.

Trebananib

•

In November 2014, we announced the top-line secondary endpoint results of overall survival from the phase 3 TRINOVA-1 trial in women with recurrent platinum-resistant ovarian cancer. The study, which evaluated trebananib plus paclitaxel versus placebo plus paclitaxel, did not demonstrate a statistically significant improvement in overall survival. We have terminated the clinical development program in recurrent ovarian cancer.

Biosimilars


•	In October 2014, we announced that the phase 3 study evaluating efficacy and safety of biosimilar candidate ABP 501 compared with Humira^® (adalimumab) in patients with moderate-to-severe plaque psoriasis met its primary endpoint.


•	In February 2015, we announced that the phase 3 study evaluating efficacy and safety of biosimilar candidate ABP 501 compared with Humira^® in patients with moderate-to-severe rheumatoid arthritis (RA) met its primary and key secondary endpoints.

Next-Generation Biomanufacturing


•	In 2014, we completed facilities construction and entered the licensure process for a Next-Generation Biomanufacturing facility in Singapore. We believe, when licensed, this facility will enable us to increase our manufacturing productivity versus conventional alternatives at lower capital costs and operating expense.

Reallocating Resources to Drive Growth

•

During the second half of 2014, we announced a restructuring plan which will reduce staff by between 3,500 and 4,000 positions by the end of 2015. In addition, we will close our facilities in the states of Washington and Colorado, and will reduce the number of buildings at our headquarters in Thousand Oaks, California. The total pre-tax restructuring charges are expected to range between approximately $935 million and $1,035 million. As of December 31, 2014, $558 million of these charges have been incurred.

Marketing, Distribution and Selected Marketed Products

Our sales and marketing forces are mainly located in the United States and Europe. Additionally, we continue to expand the commercialization and marketing of our products into new geographic markets, including Latin America and parts of the Middle East. This is achieved either through the establishment of our own sales and marketing force, acquisition of existing third-party operations or product licenses, or in partnership with third parties. See Business Relationships. Together with our partners, we market our products to healthcare providers, including physicians or their clinics, dialysis centers, hospitals and pharmacies.

In the United States, we sell primarily to pharmaceutical wholesale distributors. We utilize those wholesale distributors as the principal means of distributing our products to healthcare providers. We also market certain products directly to consumers through direct-to-consumer print and television advertising, as well as through the Internet. For further discussion, see Government Regulation—Regulation of Product Marketing and Promotion. Outside the United States, we sell principally to healthcare providers and/or pharmaceutical wholesale distributors depending on the distribution practice in each country.

Our product sales to three large wholesalers, AmerisourceBergen Corporation, McKesson Corporation and Cardinal Health, Inc., each accounted for more than 10% of total revenues for each of the years ended December 31, 2014, 2013 and 2012. On a combined basis, these wholesalers accounted for approximately 94%, 93% and 94% of our U.S. gross product sales, respectively, and approximately 77%, 75% and 76% of our worldwide gross revenues, respectively. We monitor the financial condition of our larger customers, and we limit our credit exposure by setting credit limits and, for certain circumstances, requiring letters of credit.

For financial information related to our one business segment, see Part IV—Consolidated Statements of Income, Consolidated Balance Sheets and Note 19, Segment information, to the Consolidated Financial Statements.

We market our principal products primarily in the United States in oncology, inflammation, nephrology and bone health. The following chart shows our product sales by principal product and by geography for the years ended December 31, 2014, 2013 and 2012.

Neulasta^® (pegfilgrastim)/NEUPOGEN^®(filgrastim)

We market Neulasta^®, a pegylated protein based on the filgrastim molecule, primarily in the United States and Europe. Neulasta^® was launched in 2002 and is indicated to decrease the incidence of infection associated with chemotherapy-induced febrile neutropenia in cancer patients with non-myeloid malignancies. In December 2014, the FDA granted approval of the Neulasta^®Delivery Kit, including the On-body Injector for Neulasta^®. We market NEUPOGEN^®, a recombinant-methionyl human granulocyte colony-stimulating factor (G-CSF), primarily in the United States, Canada and Europe. NEUPOGEN^® was launched in 1991 and is used primarily in the indication for reducing the incidence of infection as manifested by febrile neutropenia for patients with non-myeloid malignancies undergoing myelosuppressive chemotherapy associated with a significant incidence of severe neutropenia with fever.

Enbrel^® (etanercept)

We market ENBREL primarily in the United States. It was launched in 1998 and is used primarily in the indications for the treatment of adult patients with the following conditions:


•	moderately to severely active RA,


•	chronic moderate-to-severe plaque psoriasis patients who are candidates for systemic therapy or phototherapy, and


•	active psoriatic arthritis.

The rights to market and sell ENBREL outside the United States and Canada are reserved to Pfizer Inc. (Pfizer).

XGEVA^®/Prolia^® (denosumab)

We market XGEVA^® and Prolia^® primarily in the United States and Europe. Both products contain the same active ingredient but are approved for different indications, patient populations, doses and frequencies of administration.

XGEVA^® was launched in the United States in 2010 and is used primarily in the indication for the prevention of skeletal-related events (SREs) (pathological fracture, radiation to bone, spinal cord compression or surgery to bone) in patients with bone metastases from solid tumors. It is not indicated for the prevention of SREs in patients with multiple myeloma. XGEVA^® was launched in Europe in 2011 and is used primarily in the indication for the prevention of SREs in adults with bone metastases from solid tumors.

Prolia^® was launched in the United States and Europe in 2010. In the United States, it is used primarily in the indication for the treatment of postmenopausal women with osteoporosis at high risk for fracture, defined as a history of osteoporotic fracture, or multiple risk factors for fracture, or patients who have failed or are intolerant to other available osteoporosis therapy. In Europe, Prolia^® is used primarily for the treatment of osteoporosis in postmenopausal women at increased risk of fractures.

ESAs (erythropoiesis-stimulating agents)

EPOGEN^®(epoetin alfa)

We market EPOGEN^® in the United States for dialysis patients. It was launched in 1989, and we market it for the indication to treat a lower-than-normal number of red blood cells (anemia) caused by CKD in patients on dialysis to lessen the need for red blood cell transfusions. The majority of our sales are to two large dialysis providers.

Aranesp^®(darbepoetin alfa)

We market Aranesp^® primarily in Europe and in the United States. It was launched in 2001 and is indicated for the treatment of anemia associated with CKD (in both patients on dialysis and patients not on dialysis) and the treatment of anemia due to concomitant myelosuppressive chemotherapy in patients with non-myeloid malignancies.

Sensipar^®/Mimpara^® (cinacalcet)

We market cinacalcet as Sensipar^® primarily in the United States and as Mimpara^® primarily in Europe. It was launched in 2004 and is used primarily in the indication for the treatment of secondary hyperparathyroidism in CKD patients on dialysis.

Other Marketed Products

We market several other products including Kyprolis^® (marketed by Onyx, an Amgen subsidiary), Nplate^® (romiplostim), Vectibix^® (panitumumab) and BLINCYTO^™.

Patents

The following table describes our outstanding material patents for the indicated product by territory, general subject matter and latest expiry date. One or more patents with the same or earlier expiry date may fall under the same “general subject matter” and are not separately listed.



Product	Territory	General Subject Matter	Expiration
Neulasta^®(pegfilgrastim)	U.S.	Pegylated G-CSF	10/20/2015
Neulasta^®(pegfilgrastim)	Europe	Pegylated G-CSF⁽¹⁾	2/8/2015
Enbrel^® (etanercept)	U.S.	Methods of treating psoriasis	8/13/2019
	U.S.	Aqueous formulation and methods of treatment using the formulation⁽²⁾	6/8/2023
	U.S.	Fusion protein, and pharmaceutical compositions	11/22/2028
	U.S.	DNA encoding fusion protein, and methods of making fusion protein	4/24/2029
Prolia^®/ XGEVA^®(denosumab)	U.S.	RANKL antibodies; and methods of use⁽³⁾	12/22/2017
	U.S.	Methods of treatment	6/25/2022
	U.S.	Nucleic acids encoding RANKL antibodies, and methods of producing RANKL antibodies	11/30/2023
	U.S.	RANKL antibodies including sequences	2/19/2025
	Europe	RANKL antibodies⁽¹⁾	12/22/2017
	Europe	Medical use of RANKL antibodies⁽¹⁾	4/15/2018
	Europe	RANKL antibodies including epitope binding	2/23/2021
	Europe	RANKL antibodies including sequences⁽¹⁾	6/25/2022
EPOGEN^® (epoetin alfa)	U.S.	Cells that make certain levels of erythropoietin	5/26/2015
Aranesp^®(darbepoetin alfa)	U.S.	Glycosylation analogs of erythropoietin proteins	5/15/2024
Aranesp^®(darbepoetin alfa)	Europe	Glycosylation analogs of erythropoietin proteins⁽¹⁾	8/16/2014
Sensipar^®/ Mimpara^®(cinacalcet)	U.S.	Calcium receptor-active molecules including species	10/23/2015
	U.S.	Methods of treatment	12/14/2016
	U.S.	Calcium receptor-active molecules	3/8/2018
	Europe	Calcium receptor-active molecules⁽¹⁾	10/23/2015
Vectibix^®(panitumumab)	U.S.	Human monoclonal antibodies to epidermal growth factor receptor (EGFr)	4/8/2020
Vectibix^®(panitumumab)	Europe	Human monoclonal antibodies to EGFr⁽¹⁾	5/5/2018
Nplate^®(romiplostim)	U.S.	Thrombopoietic compounds	1/19/2022
Nplate^®(romiplostim)	Europe	Thrombopoietic compounds⁽¹⁾	10/22/2019
Kyprolis^®(carfilzomib)	U.S.	Compositions, and methods of treatment⁽⁴⁾	4/14/2025
Kyprolis^®(carfilzomib)	Europe	Compositions	8/8/2025
BLINCYTO^™(blinatumomab)	U.S.	Bifunctional polypeptides⁽⁴⁾	4/21/2019
	U.S.	Method of administration	9/28/2027
	Europe	Bifunctional polypeptides	4/21/2019
	Europe	Method of administration	11/29/2026


⁽¹⁾	A European patent with this subject matter may also be entitled to supplemental protection in one or more countries in Europe and the length of any such extension will vary by country. For example, supplementary protection certificates have been issued related to the indicated products for patents in at least the following countries:


•	pegfilgrastim - France, Germany, Italy, Spain, and the United Kingdom, expiring in 2017


•	darbepoetin alfa - France, Germany, Italy, Spain, and the United Kingdom, expiring in 2016


•	denosumab - France, Italy and Spain, expiring in 2025


•	cinacalcet - France, Germany, Italy, Spain, and the United Kingdom, expiring in 2019


•	panitumumab - France, Germany, Italy, Spain, and the United Kingdom, expiring in 2022


•	romiplostim - France, Italy, Spain, and the United Kingdom, expiring in 2024


⁽²⁾	This formulation patent relates to the currently approved liquid formulation of ENBREL, which formulation accounts for the majority of ENBREL sales in the United States. However, ENBREL is also sold as an alternative lyophilized formulation that requires reconstituting before it can be administered to the patient.


⁽³⁾	The U.S. Patent and Trademark Office has issued a Notice of Final Determination that a patent with this subject matter is eligible for patent term extension with an expiry of September 17, 2021.


⁽⁴⁾	A patent with this subject matter may be entitled to patent term extension in the United States.

Competition

We operate in a highly competitive environment. Our products compete with other products or treatments for diseases for which our products may be indicated. Our competitors market products or are actively engaged in R&D in areas where we have products, where we are developing product candidates or new indications for existing products. Our competitive positions may be based on, among other things, safety, efficacy, reliability, availability, patient convenience/delivery devices, price, reimbursement, timing of market entry and patent position and expiration.

Certain of the existing patents on our principal products have recently expired or will expire this year or over the next few years, and we expect to face increasing competition thereafter, including from biosimilars. A biosimilar is another version of a biological product for which marketing approval is sought or has been obtained based on a demonstration that it is “biosimilar” to the original reference product. See Government Regulation. We may also compete against biosimilar or generic versions of our competitors’ products. In the EU, we continue to face competition from biosimilars. In the United States after patent expiration, we expect to face greater competition than today, including from manufacturers with biosimilars approved in Europe, which may seek to obtain U.S. approval.

Some of our products compete with each other. For example, Aranesp^® and EPOGEN^®compete in the United States, primarily in the dialysis setting. Neulasta^® competes with NEUPOGEN^®,as Neulasta^® is administered as a single dose per chemotherapy cycle while NEUPOGEN^® requires more frequent dosing. NEUPOGEN^® sales have been adversely impacted by conversion to Neulasta^®, which we believe is substantially complete.

The introduction of new products, the development of new processes or technologies by competitors or the emergence of new information about existing products may result in increased competition for our marketed products, even for those protected by patents, or in a reduction of the price that we receive from selling our products. In addition, the development of new treatment options or standards of care may reduce the use of our products or may limit the utility and application of ongoing clinical trials for our product candidates. For further discussion, see Item 1A. Risk Factors—We expect to face increasing competition from biosimilars and Item 1A. Risk Factors—Our products face substantial competition.

The following table reflects our significant competitors and is not exhaustive.



Product	Territory	Competitor Marketed Product	Competitors
Neulasta^®/ NEUPOGEN^®	U.S.	Granix^®(1)	Teva Pharmaceutical Industries Ltd. (Teva)
	Europe	Lonquex^®(2)	Teva
	Europe	Filgrastim biosimilars⁽³⁾	Various
ENBREL	U.S. & Canada	REMICADE^®	Janssen Biotech, Inc. (Janssen)⁽⁸⁾/Merck & Company, Inc.
	U.S. & Canada	HUMIRA^®	AbbVie Inc.
	U.S. & Canada	STELARA^®(4)	Janssen⁽⁸⁾
XGEVA^®	U.S. & Europe	Zometa^®	Novartis AG (Novartis)
XGEVA^®	U.S. & Europe	Zoledronate generics	Various
Prolia^®	U.S. & Europe	Alendronate generics	Various
	U.S. & Europe	Raloxifene generics	Various
	U.S. & Europe	Zoledronate generics	Various
EPOGEN^®	U.S.	MIRCERA^®(5)	F. Hoffmann-La Roche Ltd. (Roche)
Aranesp^®	U.S.	PROCRIT^®(6)	Janssen⁽⁸⁾
	Europe	EPREX^®/ERYPO^®	Janssen-Cilag⁽⁸⁾
	Europe	Epoetin alfa biosimilars⁽³⁾	Various
	Europe	MIRCERA^®(5)	Roche



Product	Territory	Competitor Marketed Product	Competitors
Sensipar^®(7)/ Mimpara^®	U.S. & Europe	Active Vitamin D analogs	Various
Vectibix^®	U.S. & Europe	Erbitux^®	Eli Lilly/Bristol-Myers Squibb Company (BMS); Merck KGaA
Vectibix^®	U.S. & Europe	Avastin^®	Genentech, Inc. (a Member of the Roche Group)
Nplate^®	U.S. & Europe	Promacta^®/Revolade^®	GlaxoSmithKline plc
Kyprolis^®	U.S.	VELCADE^®	Millennium Pharmaceuticals, Inc.⁽⁹⁾
	U.S.	REVLIMID^®	Celgene Corporation
	U.S.	POMALYST^®	Celgene Corporation


⁽¹⁾	Granix^® launched at the end of 2013 and could have an impact over time on sales of NEUPOGEN^® and, to a lesser extent, Neulasta^®.


⁽²⁾	Lonquex^® is a long-acting filgrastim product launched in Europe.


⁽³⁾	Approved via the EU biosimilar regulatory pathway.


⁽⁴⁾	Dermatology only.


⁽⁵⁾	MIRCERA^® has been approved by the FDA for the treatment of anemia associated with chronic renal failure in patients on and not on dialysis. Roche began selling MIRCERA^® in October 2014 in the United States under terms of a limited patent license obtained from Amgen in connection with the settlement of patent litigation. It competes with Aranesp^® in the nephrology segment only.


⁽⁶⁾	PROCRIT^® competes with Aranesp^® in the supportive cancer care and pre-dialysis settings.


⁽⁷⁾	Teva and Barr Pharmaceuticals have received tentative approval from the FDA for generic versions of Sensipar^® that could compete with Sensipar^® in the future. There is an injunction prohibiting them from commercializing in the United States until expiration of the patents.


⁽⁸⁾	A subsidiary of Johnson & Johnson (J&J).


⁽⁹⁾	A wholly-owned subsidiary of Takeda Pharmaceutical Company Limited.

Future Biosimilar Competition

Neulasta^®/NEUPOGEN^®

Apotex, Inc. announced that the FDA accepted for filing their applications, under the abbreviated pathway, for pegfilgrastim, a biosimilar version of Neulasta^®, on December 17, 2014, and for filgrastim, a biosimilar version of NEUPOGEN^®, on February 17, 2015. On January 7, 2015, Sandoz, a Novartis company, announced that the FDA Oncologic Drugs Advisory Committee (ODAC) recommended approval of its investigational biosimilar filgrastim, to be known in the United States as ZARXIO^™. The Committee also recommended approval of the biosimilar for use in all indications included in the reference product’s (NEUPOGEN^®) label. If approved, we anticipate NEUPOGEN^® may begin to face competition from the launch of ZARXIO^™ in the United States. The Sandoz biosimilar filgrastim is the subject of ongoing litigation between us and Sandoz. See Part IV—Note 18, Contingencies and commitments, to the Consolidated Financial Statements.

EPOGEN^®

On December 16, 2014, Hospira, Inc. submitted a BLA to the FDA for Retacrit^™, a proposed biosimilar to EPOGEN^®, under the abbreviated pathway.

Reimbursement

Sales of our principal products are dependent on the availability and extent of coverage and reimbursement from third-party payers. In the United States, healthcare providers are reimbursed for covered services and products they use through Medicare, Medicaid and other government healthcare programs as well as through private payers. We are required to provide specified rebates or discounts to certain of these government funded programs. For many years, federal and state governments in the United States have pursued methods to reduce the cost of these programs. For example, in 2010 the United States enacted major healthcare reform legislation (known as the “Patient Protection and Affordable Care Act” or “ACA”) that had significant impacts which include: a requirement to offer discounts for Medicare Part D drugs in the coverage gap, an increase in the rebates we pay for our

products that are covered and reimbursed by state Medicaid programs, a requirement to pay rebates on Medicaid managed care utilization, the expansion of entities eligible for discounts under the 340B Drug Pricing Program, and a new fee (the U.S. healthcare reform federal excise fee on Branded Prescription Pharmaceutical Manufacturers and Importers (BPD fee)). Such changes have had, and are expected to continue to have, a material adverse impact on our business. At present, Medicare payment rates are affected by across-the-board federal budget cuts commonly referred to as “sequestration”. Under sequestration, the Centers for Medicare & Medicaid Services (CMS), the federal agency responsible for administering Medicare and Medicaid, reduced Medicare payments to providers by 2% beginning in 2013. In addition, in the effort to contain the U.S. federal deficit, our industry could be considered a potential source of savings via legislative proposals that have been debated but not enacted. It remains uncertain as to what proposals, if any, may be included as part of future federal budget deficit reduction actions that would directly or indirectly affect us and our business.

Particular legislative and regulatory developments that would have a significant impact on Amgen include: changes to how the Medicare program covers and reimburses current and future drugs for patients with End-Stage Renal Disease (ESRD) (including Sensipar^®), changes in the payment rate or new rebate requirements for covered drugs (which could impact many of our principal products, including Aranesp^®, Neulasta^®, NEUPOGEN^®, Prolia^® and XGEVA^®) and policies for payment and coverage of biosimilars.

Efforts are also being made in the private sector to reduce healthcare costs, notably by healthcare payers and providers, which have instituted various cost reduction and containment measures. We expect insurers and providers to continue efforts to reduce the cost and/or utilization of healthcare products, including our products. These measures include consolidation of insurers in the United States and the emergence of large integrated (insurer-provider) delivery networks to consolidate purchasing and negotiating power.

Generally, in countries outside the United States, government-sponsored healthcare systems are the primary payers for drugs and biologics. With increased budgetary constraints, payers in many countries employ a variety of measures to exert downward price pressure. These measures can include mandatory price controls, price referencing, therapeutic reference pricing, increasing mandates or incentives for generic substitution and biosimilar usage, and government-mandated price cuts. In addition, healthcare reform and related legislative proposals in such countries as France, Germany and Poland, as well as austerity plans in a number of countries, including Spain, Greece, Italy, Ireland and Portugal, have targeted the pharmaceutical sector with multiple mechanisms to reduce government healthcare expenditures. We expect that countries will continue to take aggressive actions to reduce expenditures on drugs and biologics. Similarly, fiscal constraints may also impact the extent to which countries are willing to approve new innovative therapies and/or allow access to new technologies. For example, many Health Technology Assessment (HTA) organizations use formal economic metrics such as cost-effectiveness to determine coverage and reimbursement of new therapies, and these organizations are proliferating in established and emerging markets.

See Item 1A. Risk Factors—Our sales depend on coverage and reimbursement from third-party payers.

Manufacturing, Distribution and Raw Materials

Manufacturing

The products we manufacture include both biologics and small molecule drugs. The majority of our products are biologics which are produced in living cells and are inherently complex due to naturally-occurring molecular variations. Highly specialized knowledge and extensive process and product characterization are required to transform laboratory-scale processes into reproducible commercial manufacturing processes. For additional information regarding manufacturing facilities, see Item 2. Properties.

We perform most of our bulk manufacturing, formulation, fill and finish activities in our Puerto Rico facility and also conduct finish activities in the Netherlands. We also utilize third-party contract manufacturers:


•	to manufacture Sensipar^®/Mimpara^®, except for certain fill and finish activities performed by us in Puerto Rico;


•	to supplement commercial bulk manufacturing, as needed, for ENBREL, Prolia^®, XGEVA^® and Vectibix^®;


•	to supplement certain portions of fill and finish for ENBREL; and


•	to supplement formulation, fill and finish of Nplate^®.

In addition, we utilize single-source third-party contract manufacturers for Kyprolis^®.

Clinical bulk, formulation, fill and finish manufacturing facilities are operated primarily in our Thousand Oaks, California, and West Greenwich, Rhode Island locations. We also utilize third-party contract manufacturers for certain clinical products.

See Item 1A. Risk Factors for a discussion of the factors that could adversely impact our manufacturing operations and the global supply of our products.

Distribution

We operate distribution centers in the United States—principally in Kentucky and California—and the Netherlands for worldwide distribution of the majority of our commercial and clinical products. We also use third-party distributors to supplement distribution of our products worldwide.

Other

In addition to the manufacturing and distribution activities noted above, our operations in the United States, Puerto Rico and the Netherlands include key manufacturing support functions, including quality control, process development, procurement, production scheduling and warehousing. Certain of those manufacturing and distribution activities are highly regulated by the FDA as well as other international regulatory agencies. See Government Regulation—Regulation of Manufacturing Standards.

Manufacturing Initiatives

We have multiple ongoing initiatives that are designed to optimize our manufacturing network and/or mitigate manufacturing risks while continuing to ensure adequate supply of our products. These initiatives include the licensure of a new formulation and fill facility at our Puerto Rico site; and as part of a risk mitigation strategy, full licensure of our formulation, fill and finish site in Ireland to manufacture our products. Both of these new facilities will require qualification and licensure by various regulatory authorities.

In 2014, we completed construction of the planned monoclonal antibody manufacturing facility in Singapore. Upon licensure, this facility will expand our capability to manufacture monoclonal antibodies utilizing new technology and innovation. The facility will be fully reconfigurable, providing efficient manufacturing capabilities to help ensure supply of our products worldwide. We also announced plans to build an additional new facility at the site in Singapore to enable the manufacture of the active pharmaceutical ingredient for Kyprolis^®.

In addition to these initiatives, we have projects designed to optimize manufacturing asset utilization, to continue our use of third-party contract manufacturers and to maintain a state of regulatory compliance. This includes manufacturing network consolidation initiatives as well as process improvements surrounding manufacturing. See Item 1A. Risk Factors—Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.

Raw Materials and Medical Devices

Certain raw materials, medical devices and components necessary for the commercial and/or clinical manufacturing of our products are provided by and are the proprietary products of unaffiliated third-party suppliers, certain of which may be our only sources for such materials. We currently attempt to manage the risk associated with such suppliers by inventory management, relationship management and evaluation of alternative sources when feasible. We also monitor the financial condition of certain suppliers and their ability to supply our needs. See Item 1A. Risk Factors—We rely on third-party suppliers for certain of our raw materials, medical devices and components.

We perform various procedures to assist in authenticating the source of raw materials, including intermediary materials used in the manufacture of our products, which include verification of the country of origin. These procedures are incorporated into the manufacturing processes we and our third-party contract manufacturers perform.

Government Regulation

Regulation by government authorities in the United States and other countries is a significant factor in the production and marketing of our products and our ongoing research and development (R&D) activities. In order to clinically test, manufacture and market products for therapeutic use, we must satisfy mandatory procedures and safety and effectiveness standards established by various regulatory bodies.

Regulation in the United States

In the United States, the Public Health Service Act, the Federal Food, Drug, and Cosmetic Act (FDCA) and the regulations promulgated thereunder, as well as other federal and state statutes and regulations govern, among other things, the production, research, development, testing, manufacture, quality control, labeling, storage, record keeping, approval, advertising and promotion, reporting of certain payments and other transfers of value, and distribution of our products. Failure to comply with applicable regulatory requirements may subject us to administrative and/or judicially imposed sanctions. The sanctions could include the FDA’s refusal to approve pending applications, withdrawals of approvals, delay or suspension of clinical trials, warning

letters, product recalls, product seizures, total or partial suspension of our operations, injunctions, fines, civil penalties and/or criminal prosecution.

Clinical Development and Product Approval. Drug development in our industry is complex, challenging and risky; and failure rates are high. Product development cycles are very long - approximately 10 to 15 years from discovery to market. A potential new medicine must undergo many years of preclinical and clinical testing to establish its safety and efficacy for use in humans at appropriate dosing levels and with an acceptable benefit-risk profile.

After laboratory analysis and preclinical testing in animals, we file an Investigational New Drug Application (IND) with the FDA to begin human testing. Typically, we undertake an FDA-designated three-phase human clinical testing program.


•	In phase 1, we conduct small clinical trials to investigate the safety and proper dose ranges of our product candidates in a small number of human subjects.


•	In phase 2, we conduct clinical trials to investigate side effect profiles and the efficacy of our product candidates in a larger number of patients who have the disease or condition under study.


•	In phase 3, we conduct clinical trials to investigate the safety and efficacy of our product candidates in a large number of patients who have the disease or condition under study.

The FDA monitors the progress of each trial conducted under an IND and may, at its discretion, re-evaluate, alter, suspend or terminate the testing based on the data accumulated to that point and the FDA’s risk/benefit assessment with regard to the patients enrolled in the trial. The results of preclinical and clinical trials are submitted to the FDA in the form of a BLA for biologic products or a New Drug Application for small molecule products. We cannot market or promote a new product until our marketing application has been approved by the FDA.

See Item 1A. Risk Factors for a discussion of the factors that could adversely impact our development of commercial products.

Approval of Biosimilars. The ACA authorized the FDA to approve biosimilars via a separate, abbreviated pathway. In many cases, this allows biosimilars to be brought to market without conducting the full suite of clinical trials typically required of originators. The law establishes a period of 12 years of data exclusivity for reference products in order to preserve incentives for future innovation and outlines statutory criteria for science-based biosimilar approval standards that take into account patient safety considerations. Under this framework, data exclusivity protects the data in the innovator’s regulatory application by prohibiting others, for a period of 12 years, from gaining FDA approval based in part on reliance on or reference to the innovator’s data in their application to the FDA. The law does not change the duration of patents granted on biologic products. Since February 2012, the FDA has released six draft guidance documents as part of the implementation of the abbreviated approval pathway for biosimilars and these have not yet been finalized. In early February 2014, the FDA released its planned agenda for 2014, which included the possible publication of new draft guidance documents relating to biosimilar interchangeability and biosimilars labeling. Four manufacturers have announced the filing of five separate marketing applications to the FDA under the biosimilar pathway. These marketing applications include two for filgrastim, one for pegfilgrastim, and one for epoetin alfa, which if approved would compete with our NEUPOGEN^®, Neulasta^® and EPOGEN^® products, respectively. As of the end of 2014, no biosimilar applications had been approved by the FDA. In January 2015, Sandoz, a Novartis company, announced that the FDA ODAC recommended approval of its investigational biosimilar filgrastim for use in all indications included in the reference product’s (NEUPOGEN^®) label.

Regulation of Product Marketing and Promotion. The FDA regulates the marketing and promotion of products. Our product promotion for approved product indications must comply with the statutory standards of the FDCA, and the FDA’s implementing regulations and standards. The FDA’s review of marketing and promotional activities encompasses, but is not limited to, direct-to-consumer advertising, healthcare provider-directed advertising and promotion, sales representative communications to healthcare professionals, promotional programming and promotional activities involving the Internet. The FDA may also review industry-sponsored scientific and educational activities that make representations regarding product safety or efficacy in a promotional context. The FDA may take enforcement action against a company for promoting unapproved uses of a product or for other violations of its advertising and labeling laws and regulations. Enforcement action may include product seizures, injunctions, civil or criminal penalties or regulatory letters, which may require corrective advertising or other corrective communications to healthcare professionals. Failure to comply with the FDA’s regulations also can result in adverse publicity or increased scrutiny of company activities by the U.S. Congress or other legislators. Additionally, as described below, such failure may lead to additional liability under U.S. health care fraud and abuse laws.

Regulation of Manufacturing Standards. The FDA regulates and inspects equipment, facilities, laboratories and processes used in the manufacturing and testing of products prior to providing approval to market products. If after receiving approval from the FDA, we make a material change in manufacturing equipment, location or process, additional regulatory review may be required. We also must adhere to current Good Manufacturing Practice regulations and product-specific regulations enforced by

the FDA through its facilities inspection program. The FDA conducts regular, periodic visits to re-inspect our equipment, facilities, laboratories and processes following an initial approval. If the FDA determines that we no longer comply with applicable regulations and conditions of approval, they may seek civil, criminal or administrative sanctions and/or remedies against us, including suspension of our manufacturing operations. Such issues may also delay the approval of new products undergoing FDA review.

Regulation of Combination Products. Combination products are defined by the FDA to include products comprised of two or more regulated components (e.g., a biologic and/or drug and a device). Biologics/Drugs and devices each have their own regulatory requirements, and combination products may have additional requirements. A number of our marketed products meet this definition and are regulated under this framework, and we expect that a number of our pipeline product candidates will be evaluated for regulatory approval under this framework as well.

Regulation Outside the United States

In the EU countries, Switzerland, Canada, Australia, and Japan, regulatory requirements and approval processes are similar in principle to those in the United States. In the EU, depending on the type of drug for which approval is sought, there are currently two potential tracks for marketing approval, including a decentralized and centralized procedure. In the decentralized procedure, identical applications for marketing authorization are submitted simultaneously to the national regulatory agencies. The application is assessed by an initial national agency (Reference Member State) and those of chosen countries (Concerned Member States). Regulatory review is led by the Reference Member State and acknowledged by the Concerned Member States leading to a single approval in all relevant countries. In the centralized procedure, which is required of all products derived from biotechnology, a company submits a single MAA to the EMA, which conducts a thorough product evaluation, drawing from its scientific resources across Europe. If the drug product is proven to fulfill the requirements for quality, safety and efficacy, the Committee for Medicinal Products for Human Use (CHMP) adopts a positive opinion, which is transmitted to the European Commission (EC) for final approval of the marketing authorization. Subsequent commercialization is enabled by country-by-country reimbursement approval. While the EC generally follows the CHMP's opinion, it is not bound to do so. In Japan, additional local clinical trials may be required as part of the drug registration process, which can add to the drug registration timelines.

In the EU, biosimilars have been approved under a specialized pathway of the centralized procedure. The pathway allows sponsors of a biosimilar to seek and obtain regulatory approval based in part on the non-clinical and clinical trial data of an originator product to which the biosimilar has been demonstrated to be “similar.” The relevance of demonstrating similarity is that it allows biosimilars to be brought to market without conducting the full suite of clinical trials typically required of originator products, as benefit-risk has previously been established.

Emerging Markets

Other countries such as Russia, Turkey and those in Latin America and the Middle East have review processes and data requirements similar to those of the EU, and in some cases rely on prior marketing approval from United States or EU regulatory authorities. The regulatory process in these countries includes manufacturing/testing facility inspections, testing of drug product upon importation and other domestic requirements.

In Asia, a number of countries such as China, South Korea, and Taiwan may require local clinical trials as part of the drug registration process in addition to the global clinical trials which can add to the drug registration timelines. In most Asian markets, registration timelines are dependent on marketing approval in the United States or EU. However, in some emerging markets in Asia, such as China, the regulatory landscape is evolving and the regulatory timelines can be less predictable.

Post-approval Phase

After approval, we continue to monitor adverse events reported following the use of our products through post marketing routine pharmacovigilance surveillance and studies when applicable. We report such events to the appropriate regulatory agencies, as required per local regulations for individual cases and aggregate reports. We proactively monitor (according to good pharmacovigilance practices) and ensure the implementation of signal detection, assessment and communication of adverse events that may be associated with the use of our products. We may also be required by regulatory agencies to conduct further clinical trials on our marketed products as a condition of their approval or to provide additional information on safety and efficacy. Failure to implement these pharmacovigilance activities, including the conduct of post approval commitments for trials in a timely manner, may result in substantial civil or criminal penalties. Failure to comply with these requirements may also have an adverse effect on our pricing and reimbursement. Health authorities, including the FDA, have authority to mandate labeling changes to products at any point in a product’s lifecycle based on new safety information or as part of an evolving label change to a particular class of products.

Health authorities, including the FDA, also have the authority, before or after approval, to require companies to implement a risk management program for a product to ensure that the benefits of the drug outweigh the risks. Each risk management program is unique and varies depending on the specific factors required. In the United States, a risk management program is known as a

risk evaluation and mitigation strategy, or REMS; failure to comply with a REMS may result in substantial civil or criminal penalties and can result in additional limitations being placed on a product’s use or withdrawal of the product from the market. We currently have REMS for our ESAs, Prolia^®, Nplate^®and BLINCYTO^™. Similarly, in the EU, failure to meet risk management commitments may result in substantial financial penalties, reputational loss, or license withdrawal and in serious cases may result in criminal prosecution.

Other Regulation

We are also subject to various laws pertaining to healthcare “fraud and abuse,” including anti-kickback laws and false claims laws. Anti-kickback laws make it illegal to solicit, offer, receive or pay any remuneration in exchange for or to induce the referral of business, including the purchase or prescription of a particular drug that is reimbursed by a state or federal program. False claims laws prohibit knowingly and willingly presenting, or causing to be presented for payment to third-party payers (including Medicare and Medicaid) any claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed or claims for medically unnecessary items or services. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines and civil monetary penalties, as well as the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid). Liability under the false claims laws may also arise when a violation of certain laws or regulations related to the underlying products (for example, violations regarding improper promotional activity or unlawful payments) contributes to the submission of a false claim.

On December 19, 2012, Amgen announced that it had finalized a settlement agreement with the U.S. government and various other parties regarding allegations that Amgen's promotional, contracting, sales and marketing activities and arrangements caused the submission of various false claims under the Federal Civil False Claims Act and various State False Claims Acts. In connection with entering into the settlement agreement, Amgen also entered into a corporate integrity agreement with the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services that requires Amgen to maintain its corporate compliance program and to undertake a set of defined corporate integrity obligations for a period of five years. Due to the breadth of the statutory provisions and the absence of guidance in the form of regulations or court decisions addressing some of our practices, it is possible that in the future our practices might be further challenged under anti-kickback or similar laws.

We are also subject to regulation under the Occupational Safety and Health Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other current and potential future federal, state or local laws, rules and/or regulations. Our R&D activities involve the controlled use of hazardous materials, chemicals, biological materials and various radioactive compounds. We believe our procedures comply with the standards prescribed by federal, state or local laws, rules and/or regulations; however, the risk of injury or accidental contamination cannot be completely eliminated. While we are not required to do so, we strive to conduct our research and manufacturing activities in a manner that meets the intents and purposes of the National Institutes of Health Guidelines for Recombinant DNA Research.

Additionally, the U.S. Foreign Corrupt Practices Act (FCPA) prohibits U.S. corporations and their representatives from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad. The scope of the FCPA includes interactions with certain healthcare professionals in many countries. Other countries have enacted similar anti-corruption laws and/or regulations.

Our business has been and will continue to be subject to various other U.S. and foreign laws, rules and/or regulations.

Research and Development and Selected Product Candidates

We focus our R&D on novel human therapeutics for the treatment of grievous illness in the areas of oncology, hematology, inflammation, bone health, nephrology, cardiovascular and general medicine, which includes neuroscience. We take a modality-independent approach to R&D with a focus on biologics. Our discovery research programs may therefore yield targets that lead to the development of human therapeutics delivered as large molecules, small molecules, or other combination or new modalities. For the years ended December 31, 2014, 2013 and 2012, our R&D expenses were $4.3 billion, $4.1 billion and $3.4 billion, respectively.

We have major R&D centers in several locations throughout the United States and in the United Kingdom, as well as smaller research centers and development facilities globally. See Item 2. Properties.

We conduct clinical trial activities using both our internal staff and third-party contract clinical trial service providers. To increase the number of patients available for enrollment in our clinical trials, we have opened clinical sites and will continue to open clinical sites and to enroll patients in a number of geographic locations. See Government Regulation—Clinical Development and Product Approval for a discussion of government regulation over clinical development. Also see Item 1A. Risk Factors—We must conduct clinical trials in humans before we can commercialize and sell any of our product candidates or existing products for new indications.

Some of our competitors are actively engaged in R&D in areas where we have products or where we are developing product candidates or new indications for existing products. For example, we compete with other clinical trials for eligible patients, which may limit the number of available patients who meet the criteria for certain clinical trials. The competitive marketplace for our product candidates is significantly dependent on the timing of entry into the market. Early entry may have important advantages in gaining product acceptance, thereby contributing to the product’s eventual success and profitability. Accordingly, we expect that in some cases, the relative speed with which we can develop products, complete clinical testing, receive regulatory approval and supply commercial quantities of the product to the market will be important to our competitive position.

In addition to product candidates and marketed products generated from our internal R&D efforts, we acquire companies, acquire and license certain product and R&D technology rights and establish R&D arrangements with third parties to enhance our strategic position within our industry by strengthening and diversifying our R&D capabilities, product pipeline and marketed product base. In pursuing these R&D arrangements and licensing or acquisition activities, we face competition from other pharmaceutical and biotechnology companies that also seek to license or acquire technologies, product candidates or marketed products from those entities performing the R&D.

The following table is a selection of certain of our product candidates by phase of development in our therapeutic areas of focus as of February 12, 2015, unless otherwise indicated. Additional product candidate information can be found on our website at www.amgen.com. The website address is not intended to function as a hyperlink, and the information contained on our website is not intended to be a part of this filing. The information in this section does not include other, non-registrational clinical trials that we may conduct for purposes other than for submission to regulatory agencies for their approval of a new product indication. We may conduct non-registrational clinical trials for various reasons including to evaluate real-world outcomes or to collect additional safety information with the use of our products. In addition, the table does not include the biosimilar products we are developing, which are discussed later in this section.



Molecule		Disease/Condition
Phase 3 Programs
AMG 416		Secondary hyperparathyroidism in patients with CKD receiving dialysis
Aranesp^®		Myelodysplastic syndromes
BLINCYTO^™		ALL
Brodalumab		Psoriasis; Psoriatic arthritis
Evolocumab		Dyslipidemia
Kyprolis^®*		Multiple myeloma
Prolia^®		Glucocorticoid-induced osteoporosis
Romosozumab		Postmenopausal osteoporosis Male osteoporosis
Talimogene laherparepvec		Metastatic melanoma
Trebananib		First-line ovarian cancer
Vectibix^®		Metastatic colorectal cancer (mCRC) (US only)
XGEVA^®		Delay or prevention of bone metastases in breast cancer; Cancer-related bone damage in patients with multiple myeloma
Phase 2 Programs
AMG 139		Inflammatory diseases
AMG 157		Asthma
AMG 181		Inflammatory bowel diseases
AMG 334		Migraine
AMG 337		Gastric cancer
BLINCYTO^™		Diffuse Large B-Cell Lymphoma (DLBCL)
Brodalumab		Inflammatory diseases
Kyprolis^®*		Small-cell lung cancer
Omecamtiv mecarbil		Heart failure
Oprozomib*		Hematologic malignancies
XGEVA^®		Metastatic non-small cell lung cancer (NSCLC)
Phase 1 Programs
AMG 172		Renal cell carcinoma
AMG 208		Various cancer types
AMG 211		Various cancer types
AMG 232		Various cancer types
AMG 282		Asthma
AMG 319		Hematologic malignancies
AMG 357		Autoimmune diseases
AMG 557		Systemic lupus erythematosus
AMG 581		Schizophrenia
AMG 595		Glioblastoma
AMG 780		Various cancer types
AMG 811		Systemic lupus erythematosus
AMG 820		Various cancer types
AMG 876		Type 2 diabetes
AMG 900		Various cancer types
Oprozomib*		Solid tumors


*	Being developed by Onyx, an Amgen subsidiary.



Phase 3	clinical trials investigate the safety and efficacy of a product candidate in a large number of patients who have the disease or condition under study.
Phase 2	clinical trials investigate side effect profiles and efficacy of a product candidate in a large number of patients who have the disease or condition under study.
Phase 1	clinical trials investigate safety and proper dose ranges of a product candidate in a small number of human subjects.

Phase 3 Product Candidate Program Changes

As of February 17, 2014, we had 16 phase 3 programs. As of February 12, 2015, we had 15 phase 3 programs, as two programs advanced into phase 3 trials, one program was approved, and two programs were terminated or concluded. These changes are set forth in the following table:



Molecule	Disease / Condition	Program Change
Brodalumab	Psoriatic arthritis	Advanced to phase 3
Prolia^®	Male osteoporosis (EU only)	Approved by EMA
Rilotumumab	Gastric cancer	Terminated
Romosozumab	Male osteoporosis	Advanced to phase 3
Sensipar^®/ Mimpara^®	Post renal transplant	Concluded - No longer pursuing indication

Phase 3 Product Candidate Patent Information

The following table describes our outstanding composition of matter patents that have issued thus far for our product candidates in phase 3 development that have yet to be approved for any indication. Patents for products already approved for one or more indications but currently undergoing phase 3 clinical trials for additional indications are previously described. See Marketing, Distribution and Selected Marketed Products—Patents.



Molecule	Territory	General Subject Matter	Estimated Expiration*
Brodalumab	U.S.	Polynucleotides and polypeptides	2027
	Europe	Polynucleotides and polypeptides	2027
Evolocumab	U.S.	Polypeptides	2029
Romosozumab	U.S.	Polypeptides	2026
	Europe	Polypeptides	2026
Talimogene laherparepvec	U.S.	Modified HSV-1 compounds and strains	2021
	Europe	Modified HSV-1 compounds and strains	2021
Trebananib	U.S.	Polynucleotides and polypeptides	2025
	Europe	Polynucleotides and polypeptides	2022
AMG 416	U.S.	Compound	2030

Patent expiration estimates are based on issued patents, which may be challenged, invalidated, or circumvented by competitors. The patent expiration estimates do not include any term adjustments, extensions or supplemental protection certificates that may be obtained in the future and extend these dates. Corresponding patent applications are pending in other jurisdictions. Additional patents may be filed or issued and may provide additional exclusivity for the product candidate or its use.

Phase 3 and 2 Program Descriptions

The following text provides additional information about selected product candidates that have advanced into human clinical trials.

AMG 416

AMG 416 is a peptide agonist of the human cell surface CaSR.

In July and August 2014, we announced results from two phase 3 studies evaluating AMG 416 for the treatment of secondary hyperparathyroidism in patients with CKD, receiving hemodialysis. Both studies met their primary and all secondary endpoints.

Aranesp^®

Aranesp^® is a recombinant human protein agonist of the erythropoietin receptor.

The phase 3 study of Aranesp^®for the treatment of low risk myelodysplastic syndromes is ongoing.

BLINCYTO^™

BLINCYTO^™ is an anti-CD19 x anti-CD3 (BiTE^®) bispecific antibody.

In December 2014, we received FDA accelerated approval of BLINCYTO^™for the treatment of patients with Ph- relapsed or refractory B-cell precursor ALL.

A phase 3 study in adult patients with relapsed/refractory ALL is ongoing. Phase 2 studies in adult patients with relapsed/refractory Philadelphia chromosome-positive (Ph+) and minimal residual disease of ALL are ongoing. A phase 2 study in adult patients with DLBCL is ongoing.

Brodalumab

Brodalumab is a human monoclonal antibody that inhibits the interleukin-17 receptor. It is being investigated as a treatment for a variety of inflammatory diseases. Brodalumab is being jointly developed in collaboration with AstraZeneca.

In 2014, we and AstraZeneca announced results from three phase 3 studies evaluating brodalumab in patients with moderate-to-severe plaque psoriasis met their primary endpoints.

Two phase 3 studies evaluating brodalumab for the treatment of psoriatic arthritis initiated enrollment in 2014. A phase 2 study evaluating brodalumab for the treatment of asthma is ongoing.

Denosumab

Denosumab is a human monoclonal antibody that inhibits RANKL.

Prolia^®

In June 2014, we received EMA approval for Prolia^® for the treatment of osteoporosis in men at increased risk of fracture.

A phase 3 study of Prolia^® for the treatment of glucocorticoid-induced osteoporosis is ongoing.

XGEVA^®

In December 2014, we received FDA approval for XGEVA^®for the treatment of hypercalcemia of malignancy refractory to bisphosphonate therapy.

Phase 3 studies for the delay or prevention of bone metastases in patients with adjuvant breast cancer and prevention of SREs in patients with multiple myeloma are ongoing. A phase 2 study in NSCLC is ongoing.

Evolocumab

Evolocumab is a human monoclonal antibody that inhibits Proprotein Convertase Subtilisin/Kexin Type 9 (PCSK9). It is being investigated as a treatment for dyslipidemia.

In August 2014, we submitted a BLA to the FDA for evolocumab seeking approval for the treatment in high cholesterol and was accepted for review by the FDA in November 2014. In September 2014, our MAA submitted to the EMA was accepted for review.

In March and August 2014, we also announced results from two phase 3 lipid lowering clinical studies evaluating evolocumab in combination with statin therapy in Japanese patients and in homozygous familial hypercholesterolemia patients. Both studies met their co-primary endpoints.

Additional phase 3 studies to evaluate evolocumab for cardiovascular outcomes, on cognitive function, in statin-intolerant subjects, in subjects with genetic low-density lipoprotein disorders, and with intravascular ultrasound are ongoing.

Romosozumab

Romosozumab is a humanized monoclonal antibody that inhibits the action of sclerostin. It is being investigated as a treatment for bone loss. Romosozumab is being developed in collaboration with UCB.

Phase 3 studies for the treatment of postmenopausal women with osteoporosis are ongoing. A phase 3 study in male osteoporosis was initiated in 2014.

Talimogene laherparepvec

Talimogene laherparepvec is an oncolytic immunotherapy derived from HSV-1. It is being investigated as a cancer treatment.

A BLA has been accepted for review by the FDA as has an MAA by the EMA for talimogene laherparepvec for the treatment of patients with regionally or distantly metastatic melanoma.

In December 2014, we initiated a clinical trial to evaluate talimogene laherparepvec in combination with Merck's anti-PD-1 therapy, KEYTRUDA^® (pembrolizumab), in patients with mid- to late-stage metastatic melanoma.

Trebananib

Trebananib is a peptibody that inhibits Ang1 and Ang2. It is being investigated as a cancer treatment.

In November 2014, we announced secondary endpoint results of overall survival from the phase 3 TRINOVA-1 trial in women with recurrent platinum-resistant ovarian cancer. While the primary endpoint of PFS was met, the secondary endpoint of overall survival was not met. Also in November 2014, we announced results of a second phase 3 study in recurrent ovarian cancer (with or without pegylated liposomal doxorubicin). The primary endpoint of PFS was not met. We have terminated the clinical development program in recurrent ovarian cancer.

A phase 3 study evaluating trebananib in the first-line setting of ovarian cancer is ongoing.

Vectibix^®

Vectibix^®is a human monoclonal antibody antagonist of the EGFr. It is being investigated as a cancer treatment.

In May 2014, we received FDA approval for Vectibix^®for use in combination with FOLFOX, an oxaliplatin-based chemotherapy regimen, as first-line treatment in patients with wild-type KRAS (exon 2) mCRC. In addition, this approval converts the accelerated monotherapy approval to a full approval for Vectibix^®. The FDA also approved the therascreen^® KRAS RGQ PCR Kit developed by QIAGEN (therascreen^® KRAS test) as a companion diagnostic for Vectibix^®.

A phase 3 study evaluating the survival benefit of Vectibix^® plus best supportive care (BSC) compared with BSC alone in subjects with chemorefractory, wild-type KRAS exon 2 mCRC is ongoing.

AMG 139

AMG 139 is a human monoclonal antibody that inhibits the action of IL-23. It is being investigated as a treatment for Crohn’s disease, with a phase 2 study ongoing. AMG 139 is being jointly developed in collaboration with AstraZeneca.

AMG 157

AMG 157 is a human monoclonal antibody that inhibits the action of TSLP. It is being investigated as a treatment for asthma, with a phase 2 study ongoing. AMG 157 is being jointly developed in collaboration with AstraZeneca.

AMG 181

AMG 181 is a human monoclonal antibody that inhibits the action of alpha4/beta7. It is being investigated as a treatment for ulcerative colitis and Crohn's disease, with phase 2 studies ongoing. AMG 181 is being jointly developed in collaboration with AstraZeneca.

AMG 334

AMG 334 is a human monoclonal antibody that inhibits the receptor for Calcitonin Gene-Related Peptide. It is being investigated for the prevention of migraine. The phase 2 study in episodic migraine has completed while the phase 2 study in chronic migraine is ongoing.

AMG 337

AMG 337 is a small molecule inhibitor of MET. It is being investigated as a cancer treatment with a phase 2 study for the treatment of gastric cancer ongoing.

Omecamtiv mecarbil

Omecamtiv mecarbil is a small molecule activator of cardiac myosin. It is being investigated for the treatment of heart failure. We are developing this product in collaboration with Cytokinetics, Inc.

A phase 2 dose escalation study to select and evaluate an oral modified release formulation of omecamtiv mecarbil in subjects with heart failure and left ventricular systolic dysfunction is ongoing.

Onyx Pharmaceuticals

Kyprolis^®

Kyprolis^® is a novel proteasome inhibitor. It is being investigated as a treatment for patients with multiple myeloma and small-cell lung cancer.

In August 2014, we and Onyx announced that a planned interim analysis demonstrated that a phase 3 clinical trial in relapsed multiple myeloma (ASPIRE) met its primary endpoint of PFS. While the data for overall survival, a secondary endpoint, are not yet mature, the analysis showed a trend in favor of Kyprolis^® in combination with REVLIMID^® and low-dose dexamethasone that did not reach statistical significance.

In August 2014, we and Onyx announced that the phase 3 clinical trial in relapsed/refractory multiple myeloma (FOCUS) did not meet its primary endpoint of improving overall survival.

In January 2015, we and Onyx announced the submission of a sNDA to the FDA and an MAA to the EMA for Kyprolis^® to seek approval for the treatment of patients with relapsed multiple myeloma who have received at least one prior therapy. In the United States, the sNDA is designed to support the conversion of accelerated approval to full approval and expand the current approved indication. In the EU, Kyprolis^® received orphan drug designation and the MAA has been granted accelerated assessment.

Phase 3 studies in combination with dexamethasone compared to bortezomib in combination with dexamethasone in relapsed multiple myeloma, and in combination with melphalan and prednisone compared to bortezomib, melphalan and prednisone in newly diagnosed multiple myeloma are ongoing.

Oprozomib

Oprozomib is an oral proteasome inhibitor. It is being investigated for the treatment of hematologic malignancies, with phase 1b/2 studies ongoing.

Amgen Development of Biosimilars

We continue to collaborate with Actavis Inc. to develop and commercialize, on a worldwide basis, four oncology antibody biosimilar medicines. The products our collaboration is pursuing include biosimilar versions of bevacizumab (Avastin^®), trastuzumab (Herceptin^®), rituximab (Rituxan^® / Mabthera^®) and cetuximab (Erbitux^®).

We are also working to develop biosimilar versions of adalimumab (HUMIRA^®) and infliximab (REMICADE^®), in addition to three other biosimilar molecules. Our biosimilar product candidates are in varying stages of regulatory development as described in the following table:



Biosimilar		Status
adalimumab (HUMIRA^®)		Phase 3 psoriasis study met primary endpoint Phase 3 RA study met primary and key secondary endpoints
trastuzumab (Herceptin^®)		Phase 3 breast cancer
bevacizumab (Avastin^®)		Phase 3 NSCLC
infliximab (REMICADE^®)		Phase 1

Business Relationships

From time to time, we enter into business relationships, including joint ventures and collaborative arrangements, for the R&D, manufacture and/or commercialization of products and/or product candidates. In addition, we also acquire product and R&D technology rights and establish R&D collaborations with third parties to enhance our strategic position within our industry by strengthening and diversifying our R&D capabilities, product pipeline and marketed product base. These arrangements generally provide for non-refundable, upfront license fees; development and commercial performance milestone payments; cost sharing; royalty payments and/or profit sharing. The activities under these collaboration agreements are performed with no guarantee of either technological or commercial success, and each is unique in nature.

Trade secret protection for our unpatented confidential and proprietary information is important to us. To protect our trade secrets, we generally require counterparties to execute confidentiality agreements upon the commencement of the business relationship with us. However, others could either develop independently the same or similar information or unlawfully obtain access to our information.

Kirin-Amgen, Inc.

Kirin-Amgen, Inc. (K-A) is a 50-50 joint venture with Kirin Holdings Company, Limited (Kirin). K-A develops and then out-licenses to third parties certain product rights which have been transferred to this joint venture from Amgen and Kirin.

K-A has given us exclusive licenses to manufacture and market: (i) G-CSF and pegfilgrastim in the United States, Europe, Canada, Australia, New Zealand, all Central American, South American and African countries and certain countries in Asia and the Middle East; (ii) darbepoetin alfa, romiplostim and brodalumab in the United States, Europe, Canada, Australia, New Zealand, Mexico, all Central and South American countries and certain countries in Central Asia, Africa and the Middle East; and (iii) recombinant human erythropoietin in the United States. We currently market pegfilgrastim, G-CSF, darbepoetin alfa, recombinant human erythropoietin and romiplostim under the brand names Neulasta^®, NEUPOGEN^®/GRANULOKINE^®, Aranesp^®, EPOGEN^® and Nplate^®, respectively. Under these agreements, we pay K-A royalties based on product sales. In addition, we also receive payments from K-A for milestones earned and for conducting certain R&D activities on its behalf. See Part IV—Note 8, Related party transactions, to the Consolidated Financial Statements.

K-A has also given Kirin exclusive licenses to manufacture and market: (i) G-CSF and pegfilgrastim in Japan, Taiwan and South Korea; (ii) darbepoetin alfa, romiplostim and brodalumab in Japan, China, Taiwan, South Korea and in certain other countries and/or regions in Asia; and (iii) recombinant human erythropoietin in Japan. K-A also gave Kirin and Amgen co-exclusive licenses to manufacture and market G-CSF, pegfilgrastim and recombinant human erythropoietin in China, which Amgen subsequently assigned to Kirin, and as a result, Kirin now exclusively manufactures and markets G-CSF and recombinant human erythropoietin in China. Kirin markets G-CSF, pegfilgrastim, darbepoetin alfa, romiplostim and recombinant human erythropoietin under the brand names GRAN^®/Grasin^®, Peglasta^®/Neulasta^®/G-Lasta^®, NESP^®/Aranesp^®, ROMIPLATE^® and ESPO^®, respectively. Under these agreements, Kirin pays K-A royalties based on product sales. In addition, Kirin also receives payments from K-A for conducting certain R&D activities on its behalf.

K-A has also given J&J exclusive licenses to manufacture and market recombinant human erythropoietin for all geographic areas of the world outside the United States, China and Japan. Under this agreement, J&J pays royalties to K-A based on product sales. K-A gave Roche exclusive licenses to market filgrastim and pegfilgrastim in all territories not then licensed to Amgen and Kirin. Effective January 1, 2014, we acquired Roche’s licenses to market filgrastim and pegfilgrastim. See Part IV—Note 3, Business combinations, to the Consolidated Financial Statements.

Pfizer Inc.

The co-promotion term of our ENBREL collaboration agreement with Pfizer in the United States and Canada expired on October 31, 2013 giving us full ownership of ENBREL promotional rights in the United States and Canada while the rights to market ENBREL outside the United States and Canada are reserved to Pfizer. Under the collaboration agreement, Amgen and Pfizer shared in the agreed-upon selling and marketing expenses approved by a joint committee. We paid Pfizer a percentage of annual gross profits on our ENBREL sales in the United States and Canada on a scale that increased with gross profits; however, we maintained a majority share of ENBREL profits. We are required to pay Pfizer residual royalties based on a declining percentage of annual net ENBREL sales in the United States and Canada for three years, ranging from 12% to 10%. The amounts of such payments are significantly less than what was owed based on the terms of the previous ENBREL profit share. Effective November 1, 2016, there will be no further royalty payments.

Bayer HealthCare Pharmaceuticals Inc.

As a result of our acquisition of Onyx, we are party to a collaboration with Bayer HealthCare Pharmaceuticals Inc. (Bayer) to jointly develop and commercialize Nexavar^® (sorafenib) worldwide, except in Japan. The rights to develop and market Nexavar^® in Japan are reserved to Bayer. Bayer has no obligation to pay royalties to Amgen for sales of Nexavar^® in Japan. Under the agreements, we fund 50% of mutually agreed R&D costs. In the United States we co-promote Nexavar^® with Bayer and share equally in the profits or losses of Nexavar^®. Outside of the United States, excluding Japan, Bayer manages all commercialization activities and incurs all of the sales and marketing expenditures, and we reimburse Bayer for half of those expenditures. In all countries outside of the United States, except Japan, we receive 50% of net profits on sales of Nexavar^® after deducting certain Bayer-related costs.

AstraZeneca Plc.

We are in a collaboration with AstraZeneca to jointly develop and commercialize certain monoclonal antibodies from Amgen's clinical inflammation portfolio, including brodalumab, AMG 139, AMG 157, AMG 181, AMG 557 and AMG 570. The agreement covers the worldwide development and commercialization of these antibodies, except for certain Asian countries for brodalumab and Japan for AMG 557 and AMG 570, which are licensed to other third parties.

Under the terms of the agreement, approximately 65% of related development costs for the 2012-2014 periods were funded by AstraZeneca; now, the companies share costs equally. If approved for sale, Amgen would receive a low-single-digit royalty rate for brodalumab and a mid-single-digit royalty rate for the rest of the portfolio, after which the worldwide commercialization profits and losses related to the collaboration products would be shared equally.

UCB

We are in a collaboration with UCB for the development and commercialization of romosozumab. Under the agreement, we received the rights to commercialize romosozumab for all indications in the United States, Canada, Mexico and Japan. UCB has the rights for all EU members at the time of first regulatory approval, Australia and New Zealand. Prior to commercialization, countries that have not been initially designated will be designated to Amgen or UCB in accordance with the terms of the agreement.

Generally, development costs are shared equally and we will share equally in the worldwide commercialization profits and losses related to the collaboration after accounting for expenses.

DaVita Inc.

We are in a seven-year supply agreement with DaVita that commenced January 1, 2012. Pursuant to this agreement, we will supply EPOGEN^® in amounts necessary to meet no less than 90% of DaVita's and its affiliates' requirements for ESAs used in providing dialysis services in the United States and Puerto Rico. The agreement may be terminated by either party before expiration of its term in the event of certain breaches of the agreement by the other party.

Human Resources

As of December 31, 2014, Amgen had approximately 17,900 staff members. This number includes staff members expected to leave during 2015 in connection with the restructuring plan announced during the second half of 2014, including the closure of facilities. We consider our staff relations to be good.

Executive Officers of the Registrant

The executive officers of the Company as of February 12, 2015 are set forth below.

Mr. Robert A. Bradway, age 52, has served as a director of the Company since October 2011 and Chairman of the Board of Directors since January 1, 2013. Mr. Bradway has been the Company’s President since May 2010 and Chief Executive Officer since May 2012. From May 2010 to May 2012, Mr. Bradway served as the Company’s President and Chief Operating Officer. Mr. Bradway joined the Company in 2006 as Vice President, Operations Strategy and served as Executive Vice President and Chief Financial Officer from April 2007 to May 2010. Prior to joining the Company, he was a Managing Director at Morgan Stanley in London where he had responsibility for the firm’s banking department and corporate finance activities in Europe and focused on healthcare. Mr. Bradway has been a director of Norfolk Southern Corporation, a transportation company, since July 2011.

Mr. Madhavan (“Madhu”) Balachandran, age 64, became Executive Vice President, Operations in August 2012. Mr. Balachandran joined the Company in 1997 and has held leadership positions in engineering, information systems and operations. From October 2007 to August 2012, Mr. Balachandran was Senior Vice President, Manufacturing. From February 2007 to October 2007, Mr. Balachandran was Vice President, Site Operations. From May 2002 to February 2007, Mr. Balachandran was Vice President, Puerto Rico Operations. Prior to 2002, Mr. Balachandran served as Associate Director Capital Projects before his promotion to Director Engineering and then to Vice President, Information Management. Previously, Mr. Balachandran served as Vice President, Engineering at Burroughs Wellcome & Company.

Dr. Sean E. Harper, age 52, became Executive Vice President, Research and Development in February 2012. Dr. Harper joined the Company in 2002, and has held leadership roles in early development, medical sciences and global regulatory and safety. Dr. Harper served as Senior Vice President, Global Development and Corporate Chief Medical Officer from March 2007 to February 2012. Prior to joining the Company, Dr. Harper worked for five years at Merck Research Laboratories.

Mr. Anthony C. Hooper, age 60, became Executive Vice President, Global Commercial Operations in October 2011. From March 2010 to October 2011, Mr. Hooper was Senior Vice President, Commercial Operations and President, U.S., Japan and Intercontinental of BMS. From January 2009 to March 2010, Mr. Hooper was President, Americas of BMS. From January 2004 to January 2009, Mr. Hooper was President, U.S. Pharmaceuticals, Worldwide Pharmaceuticals Group, a division of BMS. Prior to this, Mr. Hooper held various senior leadership positions at BMS. Prior to joining BMS, Mr. Hooper was Assistant Vice President of Global Marketing for Wyeth Laboratories.

Mr. Brian McNamee, age 58, became Executive Vice President, Full Potential Initiatives in October 2013. Mr. McNamee joined the Company in June 2001 as Senior Vice President, Human Resources. From November 1999 to June 2001, Mr. McNamee served as Vice President of Human Resources at Dell Computer Corp. From 1998 to 1999, Mr. McNamee served as Senior Vice President, Human Resources for the National Broadcasting Corporation, a division of the General Electric Company. From July 1988 to November 1999, Mr. McNamee held human resources positions at General Electric.

Mr. David W. Meline, age 57, became Executive Vice President and Chief Financial Officer in July 2014. From April 2011 to July 2014, Mr. Meline served as Senior Vice President and Chief Financial Officer at 3M Company. From September 2008 to March 2011, Mr. Meline served as Vice President, Corporate Controller and Chief Accounting Officer of 3M. Prior to 2008, Mr. Meline served in a variety of senior leadership roles for General Motors Company for over 20 years, with his last position being Vice President and Chief Financial Officer, North America. Mr. Meline has been a director of TRW Automotive Holdings, Corp., a supplier of automotive systems, modules and components, since February 2014.

Ms. Cynthia M. Patton, age 53, became Senior Vice President and Chief Compliance Officer in October 2012. Ms. Patton joined the Company in 2005. From July 2005 to September 2010, Ms. Patton was Associate General Counsel. From September 2010 to October 2012, Ms. Patton was Vice President, Law. Previously, Ms. Patton served as Senior Vice President, General Counsel and Secretary of SCAN Health Plan from 1999 to 2005.

Mr. David A. Piacquad, age 58, became Senior Vice President, Business Development in March 2014. Mr. Piacquad joined the Company in June 2010. From June 2010 to January 2014, Mr. Piacquad served as Vice President, Strategy and Corporate Development. From January 2014 to March 2014, Mr. Piacquad served as Vice President, Business Development. Prior to joining the Company, from December 2009 to June 2010, Mr. Piacquad was Principal of David A. Piacquad Consulting LLC. From March 2006 to December 2009, Mr. Piacquad served as Senior Vice President, Business Development and Licensing for Schering-Plough Corporation. Prior to Schering-Plough, Mr. Piacquad served in a series of leadership roles in finance and business development at J&J, with his last position being Vice President, Ventures and Business Development.

Mr. David J. Scott, age 62, became Senior Vice President, General Counsel and Secretary in March 2004. From May 1999 to February 2004, Mr. Scott served as Senior Vice President and General Counsel of Medtronic, Inc. and also as Secretary from January 2000. From December 1997 to April 1999, Mr. Scott served as General Counsel of London-based United Distillers & Vintners. Mr. Scott also served in executive roles at Grand Metropolitan plc and RJR Nabisco, Inc., and was an attorney in private practice. Mr. Scott has notified the Company that he intends to retire at the end of May 2015.

Dr. Stuart A. Tross, age 48, became Senior Vice President, Human Resources in October 2013. Dr. Tross joined the Company in April 2006 as Vice President, Human Resources. Prior to joining Amgen, from November 1998 to April 2006, Dr. Tross served in a series of roles for BMS, with his last position being Vice President and Global Head of Human Resources of Mead Johnson Nutrition. Prior to joining BMS, Dr. Tross was a management consultant for Towers Perrin.

Geographic Area Financial Information

For financial information concerning the geographic areas in which we operate, see Part IV—Note 19, Segment information—Geographic information, to the Consolidated Financial Statements.

Investor Information

Financial and other information about us is available on our website at www.amgen.com. We make available on our website, free of charge, copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange Commission (SEC). In addition, we have previously filed registration statements and other documents with the SEC. Any document we file may be inspected, without charge, at the SEC’s public reference room at 100 F Street NE, Washington, DC 20549, or at the SEC’s internet address at www.sec.gov. These website addresses are not intended to function as hyperlinks, and the information contained in our website and in the SEC’s website is not intended to be a part of this filing. Information related to the operation of the SEC’s public reference room may be obtained by calling the SEC at 800-SEC-0330.



Item 1A.	RISK FACTORS

Our current products and products in development cannot be sold without regulatory approval.

Our business is subject to extensive regulation by numerous state and federal governmental authorities in the United States, including the FDA, and by foreign regulatory authorities, including the EMA. We are required in the United States and in foreign countries to obtain approval from regulatory authorities before we can manufacture, market and sell our products. Once approved, the FDA and other U.S. and foreign regulatory agencies have substantial authority to require additional testing, perform inspections, change product labeling or mandate withdrawals of our products. Failure to comply with applicable regulatory requirements may subject us to administrative and/or judicially imposed sanctions. The sanctions could include the FDA’s or foreign regulatory authorities’ refusal to approve pending applications, delays in obtaining or withdrawals of approvals, delay or suspension of clinical trials, warning letters, product recalls, product seizures, total or partial suspension of our operations, injunctions, fines, civil penalties and/or criminal prosecution.

Obtaining and maintaining regulatory approval has been and will continue to be increasingly difficult, time-consuming and costly. There may be situations in which demonstrating the efficacy and safety of a product candidate may not be sufficient to gain regulatory approval unless superiority to comparative products can be shown. Also, legislative bodies or regulatory agencies could enact new laws or regulations or change existing laws or regulations at any time, which could affect our ability to obtain or maintain approval of our products or product candidates. For example, the EU recently finalized legislation, which will apply as early as mid-2016, related to the conduct of clinical trials. While the aim of the new legislation is improvement in operational efficiency and a streamlining of the overall clinical trial authorization process, the new requirements also provide for increased transparency of clinical trial results and submission of quality data relating to the products and product candidates used for such trials. Starting in 2015, the EMA will make certain clinical trial reports publicly available, which may limit our ability to protect competitively-sensitive information contained in our clinical trial reports. Failure to comply with new laws or regulations could result in significant monetary penalties as well as reputational and other harms. We are unable to predict when and whether any further changes to laws or regulatory policies affecting our business could occur, such as efforts to reform medical device regulation or the pedigree requirements for medical products or to implement new requirements for combination products, and whether such changes could have a material adverse effect on our business and results of operations.

Regulatory authorities may also question the sufficiency for approval of the endpoints we select for our clinical trials. For example, questions remain about regulatory authorities’ views regarding the adequacy for approval of therapeutic oncology products that have demonstrated a statistically significant improvement in endpoints such as PFS or Durable Response Rate (DRR) but have not shown a statistically significant improvement in overall survival. A number of our products and product candidates have been evaluated in clinical trials using endpoints other than overall survival, such as PFS, DRR, and bone-metastasis-free survival (BMFS). The use of endpoints such as PFS, DRR, or BMFS, in the absence of other measures of clinical benefit, may not be sufficient for approval even when such results are statistically significant. Regulatory authorities could also add new requirements, such as the completion of an outcomes study or a meaningful portion of an outcomes study, as conditions for obtaining approval or obtaining an indication. The imposition of additional requirements may delay our clinical development and regulatory filing

efforts, and delay or prevent us from obtaining regulatory approval for new product candidates, new indications for existing products or maintenance of our current labels.

Some of our products are approved by U.S. and foreign regulatory authorities on a conditional basis with full approval conditioned upon fulfilling the requirements of regulators. For example, in July 2012 our subsidiary Onyx Pharmaceuticals received accelerated approval for Kyprolis^® in the United States, with full approval conditioned on us conducting additional clinical trials of the use of Kyprolis^® as a therapy in treating multiple myeloma. Regulatory authorities are placing greater focus on monitoring products originally approved on an accelerated or conditional basis and on whether the sponsors of such products have met the conditions of the accelerated or conditional approvals. If we are unable to fulfill the requirements of regulators that were conditions of our products' accelerated or conditional approval and/or if regulators re-evaluate the data or risk-benefit profile of our product in connection with a renewal assessment, our conditional approval may be revoked or not renewed or we may not receive full approval for these products or may be required to change the products' labeled indications or even withdraw the products from the market.

Safety problems or signals can arise as our products and product candidates are evaluated in clinical trials, including investigator sponsored studies, or as our marketed products are used in clinical practice. We are required to continuously collect and assess adverse events reported to us and to communicate to regulatory agencies these adverse events and safety signals regarding our products. Regulatory agencies periodically perform inspections of our pharmacovigilance processes, including our adverse event reporting. In 2012, pharmacovigilance legislation became effective in the EU that enhanced the authority of European regulators to require companies to conduct additional post-approval clinical efficacy and safety studies and increased the requirement on sponsor companies to analyze and evaluate the risk-benefit profiles of their products. If regulatory agencies determine that we or other parties (including our clinical trial investigators or licensees of our products) have not complied with the applicable reporting or other pharmacovigilance requirements, we may become subject to additional inspections, warning letters or other enforcement actions, including monetary fines, marketing authorization withdrawal and other penalties. Our product candidates and marketed products can also be affected by safety problems or signals occurring with respect to products that are similar to ours and that implicate an entire class of products. Further, as a result of clinical trials, including sub-analyses or meta-analyses of earlier clinical trials (a meta-analysis involves the use of various statistical methods to combine results from previous separate but related studies) performed by us or others, concerns may arise about the sufficiency of the data or studies underlying a product’s approved label. Such actual or perceived safety problems or concerns can lead to:

•revised or restrictive labeling for our products;


•	requirement of risk management activities or other regulatory agency compliance actions related to the promotion and sale of our products;

•mandated post-marketing commitments or pharmacovigilance programs for our approved products;

•product recalls of our approved products;


•	revocation of approval for our products from the market completely, or within particular therapeutic areas or patient types;

•increased timelines or delays in being approved by the FDA or other regulatory bodies; and/or

•fewer treatments or product candidates being approved by regulatory bodies.

For example, beginning in 2006, adverse safety results involving ESAs were observed and since that time our ESAs have been the subject of ongoing review and scrutiny. Reviews by regulatory authorities of the risk-benefit profile of ESAs has resulted in changes to ESA labeling and usage in both the oncology and nephrology clinical settings.

In addition to our innovative products, we are working to develop and commercialize biosimilar versions of nine products currently manufactured, marketed and sold by other pharmaceutical companies. (See Item 1. Business—Research and Development and Selected Product Candidates—Amgen Development of Biosimilars.) In many markets there is not yet a legislative or regulatory pathway for the approval of biosimilars. In the United States, the ACA provided for such a pathway; while the FDA is working to implement it, significant questions remain as to how products will be approved under the pathway. (See We expect to face increasing competition from biosimilars.) Delays or uncertainties in the development of such pathways could result in delays or difficulties in getting our products approved by regulatory authorities, subject us to unanticipated development costs or otherwise reduce the value of the investments we have made in the biosimilars area. Additionally, biosimilar products may be subject to patent dispute resolution and/or patent infringement litigation, which could delay or prevent the commercial launch of a product.

Some of our products are used with drug delivery or companion diagnostic devices which have their own regulatory, manufacturing and other risks.

Some of our products or product candidates may be used in combination with a drug delivery device, such as an injector or other delivery system. Our product candidates or expanded indications of our products used with such drug delivery devices may not be approved or may be substantially delayed in receiving regulatory approval if such devices do not gain or maintain regulatory approval or clearance. Where approval of the product and device is sought under a single marketing drug application, the increased complexity of the review process may also delay receipt of regulatory approval. In addition, some of these drug delivery devices may be provided by single-source unaffiliated third-party companies. We are dependent on the sustained cooperation and effort of those third-party companies both to supply the devices and, in some cases, to conduct the studies required for approval or clearance by the applicable regulatory agencies. We are also dependent on those third-party companies continuing to meet the applicable regulatory and other requirements to maintain that approval or clearance once it has been received. Failure to successfully develop or supply the devices, delays in or failure of the Amgen or third-party studies, or failure of Amgen or the third-party company to obtain or maintain regulatory approval or clearance of the devices could result in increased development costs, delays in or failure to obtain regulatory approval and/or associated delays in a product candidate reaching the market or the expansion of existing product labels for new indications. Loss of regulatory approval or clearance of a device that is used with our product may also result in the removal of our product from the market. Further, failure to successfully develop, supply, or gain or maintain approval for these devices could adversely affect sales of the related, approved products.

Similarly, some of our products or product candidates may be used in combination with an in vitro companion diagnostic device, such as a test kit. In some cases, our product candidates or expanded indications of our products used with in vitro companion diagnostic devices may not be approved or may be substantially delayed in receiving regulatory approval if such devices do not gain or maintain regulatory approval or clearance. As with drug delivery devices used with our products, our ability to get and maintain the necessary regulatory approvals for our products or product candidates used with in vitro companion diagnostic devices can be substantially dependent on whether the manufacturers of such devices meet their contractual responsibilities to us and/or their obligations to regulatory authorities. Failures by these manufacturers can also result in the significant delays and added costs described above, or even result in the removal of our product from the market.

We may not be able to develop commercial products.

Amgen invests heavily in R&D. Successful product development in the biotechnology industry is highly uncertain, and very few R&D projects produce a commercial product. Product candidates (including biosimilar product candidates) or new indications for existing products (collectively, “product candidates”) that appear promising in the early phases of development may fail to reach the market for a number of reasons, such as:


•	the product candidate did not demonstrate acceptable clinical trial results even though it demonstrated positive preclinical trial results, for reasons that could include changes in the standard of care of medicine;


•	the product candidate was not effective or more effective than currently available therapies in treating a specified condition or illness;

•the product candidate is not cost effective in light of existing therapeutics;

•the product candidate had harmful side effects in humans or animals;

•the necessary regulatory bodies, such as the FDA or EMA, did not approve our product candidate for an intended use;

•the product candidate was not economical for us to manufacture and commercialize;


•	the biosimilar product candidate fails to demonstrate the requisite biosimilarity to the applicable reference product, or is otherwise determined to be unacceptable for purposes of safety or efficacy, to gain approval;


•	other parties have or may have proprietary rights relating to our product candidate, such as patent rights, and will not let us sell it on reasonable terms, or at all;


•	we and certain of our licensees, partners or independent investigators may fail to effectively conduct clinical development or clinical manufacturing activities; and

•the regulatory pathway to approval for product candidates is uncertain or not well-defined.

Several of our product candidates have failed or been discontinued at various stages in the product development process. Inability to bring a product to market or a significant delay in the expected approval and related launch date of a new product for any of the reasons discussed could potentially have a negative impact on our net sales and earnings and could result in a significant impairment of in-process research and development (IPR&D) or other intangible assets.

We must conduct clinical trials in humans before we can commercialize and sell any of our product candidates or existing products for new indications.

Before we can sell any products, we must conduct clinical trials to demonstrate that our product candidates are safe and effective for use in humans. The results of those clinical trials are used as the basis to obtain approval from regulatory authorities such as the FDA and EMA. (See Our current products and products in development cannot be sold without regulatory approval.) We are required to conduct clinical trials using an appropriate number of trial sites and patients to support the product label claims. The length of time, number of trial sites and patients required for clinical trials vary substantially and therefore, we may spend several years and incur substantial expense in completing certain clinical trials. We may have difficulty finding a sufficient number of clinical trial sites and subjects to participate in our clinical trials, particularly if competitors are conducting clinical trials in similar patient populations. Delays in planned clinical trials can result in increased development costs, delays in regulatory approvals, associated delays in product candidates reaching the market and revisions to existing product labels.

In addition, in order to increase the number of patients available for enrollment for our clinical trials, we have and will continue to open clinical sites and enroll patients in a number of new geographic locations where our experience conducting clinical trials is more limited, including Russia, India, China, South Korea, the Philippines, Singapore and some Central and South American countries, either through utilization of third-party contract clinical trial providers entirely or in combination with local staff. Conducting clinical trials in locations where we have limited experience requires substantial time and resources to identify and understand the unique regulatory environments of individual countries. Further, we must ensure the timely production, distribution and delivery of the clinical supply of our product candidates to the numerous and varied clinical trial sites. If we fail to adequately manage the design, execution and diverse regulatory aspects of our large and complex clinical trials or manage the production or distribution of our clinical supply, corresponding regulatory approvals may be delayed or we may fail to gain approval for our product candidates or could lose our ability to market existing products in certain therapeutic areas or altogether. If we are unable to market and sell our product candidates or to obtain approvals in the timeframe needed to execute our product strategies, our business and results of operations could be materially and adversely affected.

We rely on independent third-party clinical investigators to recruit subjects and conduct clinical trials on our behalf in accordance with the applicable study protocols and laws and regulations. Further, we rely on unaffiliated third-party vendors to perform certain aspects of our clinical trial operations. We also may acquire companies that have ongoing clinical trials. These trials may not be conducted to the same standards as ours; however, once an acquisition has been completed we assume responsibility for the conduct of the trial, including any potential risks and liabilities associated with the past and prospective conduct of those trials. If regulatory authorities determine that we or others, including our licensees or the independent investigators selected by us or by a company we have acquired, have not complied with regulations applicable to the clinical trials, those authorities may refuse or reject some or all of the clinical trial data or take other actions which could impair our ability to obtain or maintain marketing approval of the product or indication. If we were unable to market and sell our products or product candidates, our business and results of operations could be materially and adversely affected.

In addition, some of our clinical trials involve drugs manufactured and marketed by other pharmaceutical companies. These drugs may be administered in a clinical trial in combination with one of our products or product candidates or in a head-to-head study comparing the products' or product candidates' relative efficacy and safety. In the event that any of these vendors or pharmaceutical companies have unforeseen issues that negatively impact the quality of their work or creates a shortage of supply, our ability to complete our applicable clinical trials and/or evaluate clinical results may also be negatively impacted. As a result, this could adversely affect our ability to timely file for, gain or maintain regulatory approvals worldwide.

Participants in clinical trials of our products and product candidates may also suffer adverse medical events or side effects that could:

•delay the clinical trial program;

•require additional or longer trials to gain approval;

•prohibit regulatory approval of our product candidates or new indications for existing products; and


•	render the product candidate commercially unfeasible or limit our ability to market existing products completely or in certain therapeutic areas.

Clinical trials must be designed based on the current standard of medical care. However in certain diseases, such as cancer, the standard of care is evolving rapidly. In these diseases, the duration of time needed to complete certain clinical trials may result in the design of such clinical trials being based on standards of medical care that are no longer the current standards when such trials are completed, limiting the utility and application of such trials. We may not obtain favorable clinical trial results and therefore may not be able to obtain regulatory approval for new product candidates, new indications for existing products or maintenance of our current product labels.

Even after a product is on the market, safety concerns may require additional or more extensive clinical trials as part of a risk management plan for our product or for approval of a new indication. For example, in connection with the June 2011 ESA label changes, we also agreed to conduct additional clinical trials examining the use of ESAs in CKD. Additional clinical trials we initiate, including those required by the FDA, could result in substantial additional expense and the outcomes could result in additional label restrictions or the loss of regulatory approval for an approved indication, each of which could have a material adverse effect on the sales of our products, our business and results of operations. Additionally, any negative results from such trials could materially affect the extent of approvals, the use, reimbursement and sales of our products.

We expect to face increasing competition from biosimilars.

We currently face competition in Europe from biosimilars, and we expect to face increasing competition from biosimilars in the future. To the extent that governments adopt more permissive approval frameworks and competitors are able to obtain broader marketing approval for biosimilars, our products will become subject to increased competition. Expiration or successful challenge of applicable patent rights could trigger such competition, and we could face more litigation regarding the validity and/or scope of our patents. Our products may also experience greater competition from lower-cost biosimilars that come to market as branded products that compete with our products lose patent protection.

In the EU, the EC has granted marketing authorizations for several biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued since 2005. In addition, in an effort to spur biosimilar utilization and/or increase potential healthcare savings, some European countries, such as France, have considered and may adopt biosimilar uptake measures such as requiring physician prescribing quotas or automatic substitution by pharmacists of biosimilars for the corresponding reference products. Some EU countries may impose automatic price reductions upon market entry of the second or third biosimilar competitor. We cannot predict to what extent the entry of biosimilars or other competing products will impact future sales of our products in the EU. Our inability to compete effectively could reduce sales, which could have a material adverse effect on our business and results of operations.

In the United States, the ACA authorized the FDA to approve biosimilars via a separate, abbreviated pathway. (See Item 1. Business—Government Regulation—Regulation in the United States—Approval of Biosimilars.) A growing number of companies have announced their intentions to develop biosimilar versions of existing biotechnology products, including a number of our products as well as the biosimilars we are working to develop. Four manufacturers have announced the filing of five separate marketing applications to the FDA under the biosimilar pathway. These marketing applications include two for filgrastim, one for pegfilgrastim, and one for epoetin alfa, which if approved would compete with our NEUPOGEN^®, Neulasta^® and EPOGEN^® products, respectively. Initial FDA approvals for the first U.S. biosimilars may occur as early as 2015. Further, other biosimilar manufacturers with approved products in Europe may seek to obtain U.S. approval now that the regulatory pathway for biosimilars has been enacted. The U.S. pathway includes the option for biosimilar products meeting certain criteria to be approved as interchangeable with their reference products. Some companies currently developing biosimilars may seek to register their products as interchangeable biologics, which could make it easier for prescribers or pharmacists to substitute those biosimilars for our products. In addition, critics of the 12-year exclusivity period in the biosimilar pathway law will likely seek to shorten the data exclusivity period and/or to encourage the FDA to interpret narrowly the law's provisions regarding which new products receive data exclusivity. While we are unable to predict the precise impact of the pending introduction of biosimilars on our products, we expect in the future to face greater competition in the United States as a result of biosimilars and downward pressure on our product prices and sales, subject to our ability to enforce our patents. This additional competition could have a material adverse effect on our business and results of operations.

Our products face substantial competition.

We operate in a highly competitive environment. (See Item 1. Business—Competition.) In the future, we expect that our products will compete with new drugs currently in development, drugs currently approved for other indications that may later be approved for the same indications as those of our products and drugs approved for other indications that are used off-label. Large pharmaceutical companies and generics manufacturers of pharmaceutical products are expanding into the biotechnology field, and some pharmaceutical companies and generics manufacturers have formed partnerships to pursue biosimilars. In addition, some of our competitors may have technical, competitive or other advantages over us for the development of technologies and processes or greater experience in particular therapeutic areas. These advantages may make it difficult for us to compete with them to successfully discover, develop and market new products and for our current products to compete with new products or new product indications that these competitors may bring to market. As a result, our products may compete against products that have lower prices, equivalent or superior performance, better safety profile, are easier to administer or that are otherwise competitive with our products. Our products may also experience greater competition from lower-cost biosimilars or generics that come to market as branded products that compete with our products lose their own patent protection. In November 2013, Teva launched short-acting Granix^® in the U.S. to compete with NEUPOGEN^® and long-acting lipegfilgrastim in Europe to compete with Neulasta^®. In addition, EPOGEN^® and Aranesp^® face competition from the launch of MIRCERA^® in the United States. In October 2014, pursuant to a December 2009 settlement agreement between Amgen and Roche, Roche began selling MIRCERA^® in the

United States under the terms of a limited-license agreement. In addition, our product candidates may face competition from competing products that achieve earlier entry into the market. For example, several of our competitors are working to develop PCSK9 inhibitors at the same time we are developing Repatha^™, our own PCSK9 inhibitor. If a competitor gains marketing approval for its PCSK9 inhibitor and launches its product prior to Repatha^™ receiving marketing approval, the competing product may have an advantage due to its earlier entry into the market.

Our sales depend on coverage and reimbursement from third-party payers.

Sales of our principal products are dependent on the availability and extent of coverage and reimbursement from third-party payers, including government healthcare programs and private insurance plans. Governments and private insurers have pursued, and continue to pursue, aggressive cost containment and utilization management initiatives, including increased focus on comparing the effectiveness, benefits and costs of similar treatments, which could result in lower reimbursement rates for our products or narrower populations for whom our products will be reimbursed by payers.

A substantial portion of our U.S. business relies on reimbursement from U.S. federal government healthcare programs. Further, as the federal agency responsible for administering Medicare, Medicaid and the new Health Insurance Marketplaces (or “Exchanges”), CMS has substantial power to quickly implement policy changes that can significantly affect how our products are covered and reimbursed. Additionally, there is an increased focus in the United States on analyzing the impact of various government programs on the federal deficit, which has resulted in increased pressure on federal programs to reduce costs and could lead to lower payment rates for our products. Additionally, the implementation of ACA’s Exchanges could drive consolidation in the insurance industry. The resulting consolidated entities could have greater leverage in making coverage and reimbursement decisions and exert additional pressure on our ability to price and secure patient access for our products. Further, the current Exchange offerings tend to have very high deductibles and cost-sharing requirements for drugs. Access to our products may be affected by the structure and amount of patient out-of-pocket payments in both plans that operate in Exchanges and also commercial plans. Changes to those out-of-pocket payments, or limitations to payment assistance options, could have a material adverse effect on the sales of our products, our business and results of operations. Private payers, including healthcare insurers and pharmacy benefit managers, also continue to seek to reduce their costs. Healthcare insurers, pharmacy benefit managers and other payers may seek price discounts or rebates in connection with the placement of our products on their formularies or those they manage. They could also impose restrictions on access to our products or future products, and could even choose to exclude coverage entirely. Such discounts, rebates, restrictions or exclusions could materially and adversely affect sales of our affected products.

Outside the United States, we expect that countries will continue to take aggressive actions to reduce their healthcare expenditures. (See Item 1. Business—Reimbursement.) Any deterioration in the coverage and reimbursement available for our products or in the timeliness or certainty of payment by payers to physicians and other providers could negatively impact the ability or willingness of healthcare providers to prescribe our products for their patients or otherwise negatively affect the use of our products or the prices we receive for them. Such changes could have a material adverse effect on the sales of our products, our business and results of operations.

We also face risks relating to the reporting of pricing data that affects the U.S. reimbursement of and discounts for our products. Pricing data that we submit impacts the payment rates for providers, rebates we pay, and discounts we are required to provide under Medicare, Medicaid and other government drug programs, and the calculations are complex. Price reporting regulations require a manufacturer to update certain previously submitted data. Our price reporting data calculations are reviewed on a quarterly basis, and based on such reviews we have on occasion restated previously reported pricing data to reflect changes in calculation methodology, reasonable assumptions, and/or underlying data. If our submitted pricing data are incorrect, we may become subject to substantial fines and penalties or other government enforcement actions, which could have a material adverse impact on our business and results of operations. In addition, if our pricing calculations are incorrect, we also may be required to pay additional rebates and provide additional discounts.

We rely on third-party suppliers for certain of our raw materials, medical devices and components.

We rely on unaffiliated third-party suppliers for certain raw materials, medical devices and components necessary for the manufacturing of our commercial and clinical products. Certain of those raw materials, medical devices and components are the proprietary products of those unaffiliated third-party suppliers and are specifically cited in our drug application with regulatory agencies so that they must be obtained from that specific sole source or sources and could not be obtained from another supplier unless and until the regulatory agency approved such supplier. Also, certain of the raw materials required in the commercial and clinical manufacturing of our products are sourced from other countries and/or derived from biological sources, including mammalian tissues, bovine serum and human serum albumin.

Among the reasons we may be unable to obtain these raw materials, medical devices and components include:

•regulatory requirements or action by regulatory agencies or others;

•adverse financial or other strategic developments at or affecting the supplier;

•unexpected demand for or shortage of raw materials, medical devices or components;


•	failure to comply with our quality standards which results in quality and product failures, product contamination and/or recall;


•	a material shortage, contamination, recall and/or restrictions on the use of certain biologically derived substances or other raw materials;

•discovery of previously unknown or undetected imperfections in raw materials, medical devices or components; and

•labor disputes or shortages, including the effects of a pandemic flu outbreak, natural disaster, or otherwise.

These events could negatively impact our ability to satisfy demand for our products, which could materially and adversely affect our product use and sales and our business and operating results. For example, in prior years we have experienced shortages in certain components necessary for the formulation, fill and finish of certain of our products in our Puerto Rico facility. Further quality issues which result in unexpected additional demand for certain components may lead to shortages of required raw materials or components (such as we have experienced with EPOGEN^® glass vials). We may experience or continue to experience these or other shortages in the future resulting in delayed shipments, supply constraints, contract disputes and/or stock-outs of our products. We continue to investigate alternatives to certain biological sources and alternative manufacturing processes that do not require the use of certain biologically derived substances because such raw materials may be subject to contamination and/or recall. However, any disruptions or delays by us or by third-party suppliers or partners in converting to alternatives to certain biologically derived substances and alternative manufacturing processes or our ability to gain regulatory approval for the alternative materials and manufacturing processes could increase our associated costs or result in the recognition of an impairment in the carrying value of certain related assets, which could have a material and adverse effect on our business and results of operations.

Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.

Manufacturing biologic human therapeutic products is difficult, complex and highly regulated. We currently are involved in the manufacture of all of our principal products and plan to manufacture many of our product candidates. In addition, we currently use third-party contract manufacturers to produce or assist in the production of ENBREL, Prolia^®, Sensipar^®/Mimpara^®, Nplate^®, XGEVA^®, Vectibix^® and Kyprolis^® and plan to use contract manufacturers to produce or assist in the production of a number of our late-stage product candidates. Our ability to adequately and timely manufacture and supply our products and product candidates is dependent on the uninterrupted and efficient operation of our facilities and those of our third-party contract manufacturers, which may be impacted by:

•capacity of our facilities and those of our contract manufacturers;

•contamination by microorganisms or viruses, or foreign particles from the manufacturing process;

•natural or other disasters, including hurricanes, earthquakes, volcanoes or fires;

•labor disputes or shortages, including the effects of a pandemic flu outbreak, natural disaster, or otherwise;

•degree of compliance with regulatory requirements;

•changes in forecasts of future demand;

•timing and actual number of production runs;

•updating of manufacturing specifications;

•production success rates and yields;

•contractual disputes with our suppliers and contract manufacturers; and

•timing and outcome of product quality testing.

If the efficient manufacture and supply of our products or product candidates is interrupted, we may experience delayed shipments, delays in our clinical trials, supply constraints, stock-outs and/or recalls of our products. Over the past several years we have initiated a number of voluntary recalls of certain lots of our products. For example, beginning in September 2010, we

initiated a voluntary recall of certain lots of EPOGEN^® and J&J voluntarily recalled certain lots of PROCRIT^®, manufactured by us, because a small number of vials in each lot were found to contain glass lamellae (extremely thin, barely visible glass flakes) which we believed was a result of the interaction of the product formulation with glass vials during the shelf life of the product. The recalls were executed in close cooperation with the FDA. As an additional example, in July 2014, we initiated a voluntary recall of an Aranesp^® lot distributed in the EU after particles were detected in a quality control sample following distribution of that lot. We may experience the same or other problems in the future, resulting in broader product recalls, adverse event trends, delayed shipments, supply constraints, contract disputes and/or stock-outs of our products. If we are at any time unable to provide an uninterrupted supply of our products to patients, we may lose patients and physicians may elect to prescribe competing therapeutics instead of our products, which could materially and adversely affect our product sales, business and results of operations.

Our manufacturing processes and those of our third-party contract manufacturers must undergo regulatory approval processes and are subject to continued review by the FDA and other regulatory authorities. It can take longer than five years to build, validate and license a new manufacturing plant and it can take longer than three years to qualify and license a new contract manufacturer. Currently, we are completing the construction and qualification of a new formulation and filling facility at our Puerto Rico site, and we are modifying and expanding our recently acquired formulation, fill and finish manufacturing site in Ireland, both of which will require appropriate licensure by regulatory authorities. Additionally, in 2014 we completed construction of the planned monoclonal antibody manufacturing facility in Singapore. This Singapore facility will utilize a novel manufacturing technology that has not been previously approved by the FDA or other regulatory authorities. In 2014, we also announced plans to build an additional facility at the site in Singapore to enable the manufacture of the active pharmaceutical ingredient for Kyprolis^®. These facilities in Singapore will also require licensure by various regulatory authorities. If we are unable to obtain needed licenses for any of these facilities on a timely basis, it could adversely affect our ability to achieve our planned risk mitigation and cost reductions which, as a result, could materially and adversely affect our product sales, business and results of operations.

If regulatory authorities determine that we or our third-party contract manufacturers or certain of our third-party service providers have violated regulations or if they restrict, suspend or revoke our prior approvals, they could prohibit us from manufacturing our products or conducting clinical trials or selling our marketed products until we or the affected third-party contract manufacturers or third-party service providers comply, or indefinitely. Because our third-party contract manufacturers and certain of our third-party service providers are subject to the FDA and foreign regulatory authorities, alternative qualified third-party contract manufacturers and third-party service providers may not be available on a timely basis or at all. If we or our third-party contract manufacturers or third-party service providers cease or interrupt production or if our third-party contract manufacturers and third-party service providers fail to supply materials, products or services to us, we may experience delayed shipments, supply constraints, stock-outs and/or recalls of our products. Additionally, we distribute a substantial volume of our commercial products through our primary distribution centers in Louisville, Kentucky for the United States and in Breda, the Netherlands for Europe and much of the rest of the world. We also conduct all the labeling and packaging of our products distributed in Europe and much of the rest of the world in Breda, the Netherlands. Our ability to timely supply products is dependent on the uninterrupted and efficient operations of our distribution and logistics centers, our third-party logistics providers and our labeling and packaging facility in Breda. Further, we rely on commercial transportation for the distribution of our products to our customers which may be negatively impacted by natural disasters or security threats.

We perform a substantial amount of our commercial manufacturing activities at our Puerto Rico manufacturing facility and a substantial amount of our clinical manufacturing activities at our Thousand Oaks, California manufacturing facility; if significant natural disasters or production failures occur at the Puerto Rico facility, we may not be able to supply these products or, at the Thousand Oaks facility, we may not be able to continue our clinical trials.

We currently perform all of the formulation, fill and finish for Neulasta^®, NEUPOGEN^®, Aranesp^®, EPOGEN^®, Prolia^® and XGEVA^® and substantially all of the formulation, fill and finish operations for ENBREL at our manufacturing facility in Juncos, Puerto Rico. We also currently perform all of the bulk manufacturing for Neulasta^®, NEUPOGEN^® and Aranesp^®, all of the purification of bulk EPOGEN^® material and substantially all of the bulk manufacturing for Prolia^® and XGEVA^® at this facility. We perform substantially all of the bulk manufacturing and formulation, fill and finish, and packaging for product candidates to be used in clinical trials at our manufacturing facility in Thousand Oaks, California. The global supply of our products and product candidates is significantly dependent on the uninterrupted and efficient operation of these facilities. A number of factors could materially and adversely affect our operations, including:

•power failures and/or other utility failures;

•breakdown, failure or substandard performance of equipment;

•improper installation or operation of equipment;

•labor disputes or shortages, including the effects of a pandemic flu outbreak;

•inability or unwillingness of third-party suppliers to provide raw materials and components; and

•natural or other disasters, including hurricanes, earthquakes or fires.

These or other problems may result in our being unable to supply our products, which could materially and adversely affect our product sales, business and operating results. Our Puerto Rico facility is also subject to the same difficulties, disruptions or delays in manufacturing experienced in our other manufacturing facilities. For example, the limited number of lots of EPOGEN^® voluntarily recalled in 2010 were manufactured at our Puerto Rico facility. In future inspections, our failure to adequately address the FDA's expectations could lead to further inspections of the facility or regulatory actions. (See Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.)

Our efforts to acquire other companies or products and to integrate their operations may not be successful, and may result in costs, delays or failures to realize the benefits of the transactions.

We have an ongoing process of evaluating potential merger, acquisition, partnering and in-license opportunities that we expect will contribute to our future growth and expand our geographic footprint, product offerings and/or our R&D pipeline. Acquisitions may result in unanticipated costs, delays or other operational or financial problems related to integrating the acquired company and business with our company, which may result in the diversion of our management's attention from other business issues and opportunities. Failures or difficulties in integrating or retaining new personnel or in integrating the operations of the businesses that we acquire (including their technology, compliance programs, financial systems, distribution and general business operations and procedures), while preserving important R&D, distribution, marketing, promotion and other relationships, may affect our ability to grow and may result in us incurring asset impairment or restructuring charges. For example, on October 1, 2013, we acquired Onyx, a biopharmaceutical company with several currently marketed products as well as pipeline candidates progressing through the development process and failures or difficulties in the integration of Onyx could result in a material adverse impact on our business and results of operations.

Our intellectual property positions may be challenged, invalidated, circumvented or expire, or we may fail to prevail in present and future intellectual property litigation.

Our success depends in part on our ability to obtain and defend patent rights and other intellectual property rights that are important to the commercialization of our products and product candidates. The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and often involve complex legal, scientific and factual questions. Third parties may challenge, invalidate or circumvent our patents and patent applications relating to our products, product candidates and technologies. In addition, our patent positions might not protect us against competitors with similar products or technologies because competing products or technologies may not infringe our patents. For certain of our product candidates, there are third parties who have patents or pending patent applications that they may claim necessitate payment of a royalty or prevent us from commercializing these product candidates in certain territories. Patent disputes are frequent, costly and can preclude, delay or increase the cost of commercialization of products. We have been in the past, and may be in the future, involved in patent litigation. A determination made by a court, agency or tribunal concerning infringement, validity, enforceability, injunctive or economic remedy, or the right to patent protection, for example, are typically subject to appellate or administrative review. Upon review, such initial determinations may be afforded little or no deference by the reviewing tribunal and may be affirmed, reversed, or made the subject of reconsideration through further proceedings. A patent dispute or litigation may not discourage a potential violator from bringing the product that is alleged to infringe to market prior to a final resolution of the dispute or litigation. The period of time from inception until resolution of a patent dispute or litigation is subject to the availability and schedule of the court, agency or tribunal before which the dispute or litigation is pending. We may be subject to competition during this period and may not be able to fully recover for the losses, damages, and harms we incur from infringement by the competitor product even if we prevail. Moreover, if we lose or settle current or future litigations at certain stages or entirely, we could be subject to competition and/or significant liabilities, be required to enter into third-party licenses for the infringed product or technology or be required to cease using the technology or product in dispute. In addition, we cannot guarantee that such licenses will be available on terms acceptable to us, or at all.

Further, under the Hatch-Waxman Act, our products approved by the FDA under the FDCA may be the subject of patent litigation with generic competitors before expiry of the five year period of data exclusivity provided for under the Hatch-Waxman Act and prior to the expiration of the patents listed for the product. Likewise, our innovative biologic products may be the subject of patent litigation prior to the expiration of our patents and, with respect to competitors seeking approval as a biosimilar or interchangeable version of our products, prior to the twelve year exclusivity period provided under the ACA. In addition, we may face additional patent litigation involving claims that the biosimilar product candidates we are working to develop infringe the patents of other companies that manufacture, market or sell the applicable reference products.

Certain of the existing patents on our principal products have recently expired or will expire this year or over the next few years. (See Item 1. Business—Marketing, Distribution and Selected Marketed Products—Patents.) As our patents expire,

competitors may be able to legally produce and market similar products or technologies, including biosimilars, which may have a material adverse effect on our product sales, business and results of operations. We have received, and we continue to seek, additional patent protection relating to our products, including patents on our products, specific processes for making our products, formulations and particular uses of our products. However, competitors may be able to invalidate, design around or otherwise circumvent our patents and sell competing products.

Our sales and operations are subject to the risks of doing business in emerging markets.

We expect a significant portion of growth in our future business to come from expanding in emerging markets. As we continue our expansion efforts in emerging markets around the world, through acquisitions and licensing transactions as well as through the development and introduction of our current products into new markets, we face numerous risks to our business. There is no guarantee that the Company’s efforts and strategies to expand sales in emerging markets will succeed. Emerging market countries may be especially vulnerable to periods of global political, legal, regulatory and financial instability, including sovereign debt issues, fluctuations in currency exchange rates and/or the imposition of international sanctions in response to certain state actions. The Company may also be required to increase its reliance on third-party agents and unfamiliar operations and arrangements previously utilized by companies that we partner with or acquire in emerging markets (See We must conduct clinical trials in humans before we can commercialize and sell any of our product candidates or existing products for new indications.). Our international operations and business may also be subject to less protective intellectual property or other applicable laws, diverse data privacy and protection requirements, changing tax laws and tariffs, far-reaching anti-bribery and anti-corruption laws and regulations and an evolving legal and regulatory environment. These legal and operational challenges along with governmental controls, the challenges of attracting and retaining qualified personnel and obtaining and/or maintain necessary regulatory or pricing approvals of our products may result in a material adverse impact on the international sales of our products, our business and results of operations.

Concentration of sales at certain of our wholesaler distributors and consolidation of free-standing dialysis clinic businesses may negatively impact our business.

The substantial majority of our U.S. product sales is made to three pharmaceutical product wholesaler distributors: AmerisourceBergen Corporation, Cardinal Health, Inc. and McKesson Corporation. These distributors, in turn, sell our products to their customers, which include physicians or their clinics, dialysis centers, hospitals and pharmacies. One of our products, EPOGEN^®, is sold primarily to free-standing dialysis clinics, which have experienced significant consolidation. Two organizations, DaVita and Fresenius Medical Care North America, own or manage a large number of the outpatient dialysis facilities located in the United States and account for a substantial majority of all EPOGEN^®sales in the free-standing dialysis clinic setting. Due to this concentration, these entities have substantial purchasing leverage, which may put pressure on our pricing by their potential ability to extract price discounts on our products or fees for other services, correspondingly negatively impacting our bargaining position and profit margins.

Our business may be affected by litigation and government investigations.

We and certain of our subsidiaries are involved in legal proceedings. (See Part IV—Note 18, Contingencies and commitments, to the Consolidated Financial Statements.) Civil and criminal litigation is inherently unpredictable, and the outcome can result in costly verdicts, fines and penalties, exclusion from the federal healthcare programs and/or injunctive relief that affect how we operate our business. Defense of litigation claims can be expensive, time-consuming and distracting and it is possible that we could incur judgments or enter into settlements of claims for monetary damages or change the way we operate our business, which could have a material adverse effect on our business and results of operations. In addition, product liability is a major risk in testing and marketing biotechnology and pharmaceutical products. We may face substantial product liability exposure in human clinical trials and for products that we sell after regulatory approval. Product liability claims, regardless of their merits, could be costly and divert management's attention and adversely affect our reputation and the demand for our products. Amgen and Immunex have previously been named as defendants in product liability actions for certain of our products.

We are also involved in government investigations that arise in the ordinary course of our business. As we announced on December 19, 2012, we finalized a settlement agreement with the U.S. government and various other parties to settle certain allegations regarding our sales and marketing practices. However, we may also be subject to actions by governmental entities, including those not participating in the settlement, and may in the future become subject to claims by other parties, in each case with respect to the alleged conduct which is the subject of the settlement. We may see new governmental investigations of or actions against us citing novel theories of recovery. Any of these results could have a material adverse effect on our business and results of operations.

The adoption of new tax legislation or exposure to additional tax liabilities could affect our profitability.

We are subject to income and other taxes in the United States and other jurisdictions in which we do business. As a result, our provision for income taxes is derived from a combination of applicable tax rates in the various places we operate. Significant

judgment is required for determining our provision for income tax and our tax returns are periodically examined by various tax authorities. We believe our accrual for tax liabilities is adequate for all open years based on past experience, interpretations of tax law, and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes, the ultimate resolution of any tax matters may result in payments greater or less than amounts accrued. Our provision for income taxes and results of operations in the future could be adversely affected by changes to our operating structure, changes in the mix of income and expenses in countries with differing tax rates, changes in the valuation of deferred tax assets and liabilities, and changes in applicable tax laws, regulations or administrative interpretations thereof. For example, there are several proposals under consideration in the United States to reform tax law, including proposals that may reduce or eliminate the deferral of U.S. income tax on our unrepatriated foreign earnings. A significant change to the U.S. tax system, such as a change to the taxation of income earned outside the United States including credits allowed for foreign taxes, or a significant change to the Puerto Rico tax system, could have a material and adverse effect on our business and on the results of our operations.

We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.

The capital and credit markets may experience extreme volatility and disruption which may lead to uncertainty and liquidity issues for both borrowers and investors. We may access the capital markets to supplement our existing funds and cash generated from operations in satisfying our needs for working capital; capital expenditure and debt service requirements; our plans to pay dividends; and other business initiatives we plan to strategically pursue, including acquisitions and licensing activities. In the event of adverse capital and credit market conditions, we may be unable to obtain capital market financing on similar favorable terms, or at all, which could have a material adverse effect on our business and results of operations. Changes in credit ratings issued by nationally recognized credit rating agencies could adversely affect our cost of financing and have an adverse effect on the market price of our securities.

Our risk mitigation measures and corporate compliance program cannot guarantee that we effectively manage all operational risks and that we are in compliance with all potentially applicable U.S. federal and state regulations and all potentially applicable foreign regulations and/or other requirements.

The development, manufacturing, distribution, pricing, sales, marketing and reimbursement of our products, together with our general operations, are subject to extensive federal and state regulation in the United States and to extensive regulation in foreign countries. (See Our current products and products in development cannot be sold without regulatory approval and Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.) In addition, our business is complex, involves significant operational risks and includes the use of third parties to conduct business. While we have implemented numerous risk mitigation measures to comply with such regulations in this complex operating environment, we cannot guarantee that we will be able to effectively mitigate all operational risks. Further, we are operating under a corporate integrity agreement with the U.S. Department of Health and Human Services, OIG, which requires us to maintain our corporate compliance program and to undertake a set of defined obligations. The corporate integrity agreement requires us to make periodic attestations that we are implementing and following the provisions of the corporate integrity agreement, and provides for an independent third-party review organization to assess and report on our compliance to the OIG. While we have developed and instituted a corporate compliance program, we cannot guarantee that we, our employees, our partners, our consultants, our contractors or other third parties are or will be in compliance with all potentially applicable U.S. federal and state regulations and/or laws, all potentially applicable foreign regulations and/or laws and/or all requirements of the corporate integrity agreement. If we fail to adequately mitigate our operational risks or if we or our agents fail to comply with any of those regulations, laws and/or requirements of the corporate integrity agreement, a range of actions could result, including, but not limited to, the termination of clinical trials, the failure to approve a product candidate, restrictions on our products or manufacturing processes, withdrawal of our products from the market, significant fines, exclusion from government healthcare programs or other sanctions or litigation. Such occurrences could have a material and adverse effect on our product sales, business and results of operations.

We are increasingly dependent on information technology systems, infrastructure and data.

We are increasingly dependent upon information technology systems, infrastructure and data. The multitude and complexity of our computer systems make them inherently vulnerable to service interruption or destruction, malicious intrusion and random attack. Likewise, data privacy or security breaches by employees or others may pose a risk that sensitive data, including intellectual property, trade secrets or personal information belonging to the Company, its patients, customers or other business partners, may be exposed to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyber-attacks could include the deployment of harmful malware, denial-of-service, social engineering and other means to affect service reliability and threaten data confidentiality, integrity and availability. Our key business partners face similar risks and any security breach of their systems could adversely affect our security posture. While in the past we have experienced cyber-attacks and intrusions into our computer systems, we do not believe that such attacks have had a material adverse effect on our operations. While we continue to invest heavily in the protection of data and information technology, there can be no assurance that our efforts will prevent service interruptions, or identify breaches in our systems, that

could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us.

Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

Our operations and performance have been, and may continue to be, affected by economic conditions in the United States and throughout the world. As more fully explained below, financial pressures may cause government or other third-party payers to more aggressively seek cost containment through mandatory discounts on our products, policies requiring the automatic substitution of generics or biosimilars, higher hurdles for initial reimbursement approval for new products or other similar measures. (See We expect to face increasing competition from biosimilars.) For example, in recent years, Amgen has had to pay increased discounts under the 340B Drug Pricing Program in the United States through expansion to more settings of care and making more entities eligible to the mandatory discounts. Additionally, as a result of global economic conditions, third-party payers may delay or be unable to satisfy their reimbursement obligations. In addition, as a result of the economic conditions and/or employer decisions regarding the insurance coverage mandate that goes into effect in the United States in 2015 and 2016, some employers may seek to reduce costs by reducing or eliminating employer group healthcare plans or transferring a greater portion of healthcare costs to their employees. Job losses or other economic hardships may also result in reduced levels of coverage for some individuals, potentially resulting in lower levels of healthcare coverage for themselves or their families. These economic conditions may affect patients' ability to afford health care as a result of increased co-pay or deductible obligations, greater cost sensitivity to existing co-pay or deductible obligations, lost healthcare insurance coverage or for other reasons. We believe such conditions have led and could continue to lead to changes in patient behavior and spending patterns that negatively affect usage of certain of our products, including some patients delaying treatment, rationing prescription medications, leaving prescriptions unfilled, reducing the frequency of visits to healthcare facilities, utilizing alternative therapies and/or foregoing healthcare insurance coverage. In addition to its effects on consumers, any economic downturn may have also increased cost sensitivities among medical providers in the United States, such as oncology clinics, particularly in circumstances where providers may experience challenges in the collection of patient co-pays or be forced to absorb treatment costs as a result of coverage decisions or reimbursement terms. Collectively, we believe these changes have resulted and may continue to result in reduced demand for our products, which could materially and adversely affect the sales of our products, our business and results of operations. Any resulting decrease in demand for our products could also cause us to experience excess inventory write-offs and/or excess capacity or impairment charges at certain of our manufacturing facilities.

Economic conditions continue to affect our operations and performance outside the United States as well, particularly in countries where government-sponsored healthcare systems are the primary payers for healthcare expenditures. Credit and economic conditions have adversely impacted the timing of collections of our trade receivables. (See Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation—Financial Condition, Liquidity and Capital Resources.) Further economic challenges may impact our ability to collect some or all of our receivables, which could have a material adverse impact on our operating cash flows and a material adverse effect on our financial position, liquidity or results of operations. (See Our sales depend on coverage and reimbursement from third-party payers.)

We also rely upon third parties for certain parts of our business, including licensees and partners, wholesale distributors of our products, contract clinical trial providers, contract manufacturers and single third-party suppliers. There may be a disruption or delay in the performance or satisfaction of commitments to us by these third parties which could have a material adverse effect on the sales of our products, our business and results of operations. Current economic conditions may adversely affect the ability of our distributors, customers and suppliers to obtain the liquidity required to buy inventory or raw materials and to perform their obligations under agreements with us, which could disrupt our operations. Further, economic conditions appear to have affected, and may continue to affect, the business practices of our wholesale distributors in a manner that contributes to lower sales of our products. Although we monitor our distributors', customers' and suppliers' financial condition and their liquidity in order to mitigate our business risks, some of our distributors, customers and suppliers may become insolvent, which could have a material adverse effect on the sales of our products, our business and results of operations. These risks may be elevated with respect to our interactions with third parties with substantial operations in countries where current economic conditions are the most severe, particularly where such third parties are themselves exposed to sovereign risk from business interactions directly with fiscally-challenged government payers.

We maintain a significant portfolio of investments disclosed as cash equivalents and marketable securities on our Consolidated Balance Sheet. The value of our investments may be adversely affected by interest rate fluctuations, downgrades in credit ratings, illiquidity in the capital markets and other factors that may result in other than temporary declines in the value of our investments. Any of those events could cause us to record impairment charges with respect to our investment portfolio or to realize losses on the sale of investments.

Our stock price is volatile.

Our stock price, like that of our peers in the biotechnology and pharmaceutical industries, is volatile. Our revenues and operating results may fluctuate from period to period for a number of reasons. Events such as a delay in product development or even a relatively small revenue shortfall may cause financial results for a period to be below our expectations or projections. As a result, our revenues and operating results and, in turn, our stock price may be subject to significant fluctuations.

Guidelines and recommendations published by various organizations can reduce the use of our products.

Government agencies promulgate regulations and guidelines directly applicable to us and to our products. However, professional societies, practice management groups, insurance carriers, physicians, private health/science foundations and organizations involved in various diseases from time to time may also publish guidelines or recommendations to healthcare providers, administrators and payers, and patient communities. Recommendations by government agencies or those other groups/organizations may relate to such matters as usage, dosage, route of administration and use of related therapies as well as reimbursement of our products by government and private payers. In addition, HTA organizations, such as the National Institute for Health and Clinical Excellence in the UK and the Canadian Agency for Drugs and Technologies in Health, make reimbursement recommendations to payers in their jurisdictions based on the clinical effectiveness, cost-effectiveness and service impact of new, emerging and existing medicines and treatments. Any recommendations or guidelines that result in decreased use, dosage or reimbursement of our products could materially and adversely affect our product sales, business and operating results. In addition, the perception by the investment community or stockholders that such recommendations or guidelines will result in decreased use and dosage of our products could adversely affect the market price for our common stock.

The commercialization of certain of our product candidates and the marketing of certain of our products is dependent in part on our partners.

We have entered into agreements with third parties to assist in the commercialization of certain of our product candidates and the marketing of certain of our products in specified geographic areas. (See Item 1. Business—Business Relationships.) Many of these agreements involve the sharing of certain decisions and a division of responsibilities, costs and benefits. If our partners fail to effectively deliver on their marketing and commercialization commitments to us or if we and our partners fail to coordinate our efforts effectively, sales of our products may be materially and adversely affected.

There can be no assurance that we will continue to declare cash dividends or that we will repurchase stock.

Our Board of Directors has declared quarterly dividends on our common stock since it adopted a dividend policy in 2011. In addition, in October 2014, our Board of Directors authorized an increase in our stock repurchase program that resulted in a total of $4.0 billion available under the repurchase program. Whether we pay such dividends and repurchase our stock in the future, and the amount and timing of such dividends and/or stock repurchases are subject to capital availability and periodic determinations by our Board of Directors that cash dividends and/or stock repurchases are in the best interest of our stockholders and are in compliance with all respective laws and agreements of the Company applicable to the declaration and payment of cash dividends and the repurchase of stock. Future dividends and stock repurchases, including their timing and amount, may be affected by, among other factors: our views on potential future capital requirements for strategic transactions, including acquisitions; debt service requirements; our credit rating; changes to applicable tax laws or corporate laws; and changes to our business model. In addition, the amount we spend and the number of shares we are able to repurchase under our stock repurchase program may further be affected by a number of other factors, including the stock price and blackout periods in which we are restricted from repurchasing shares. Our dividend payments and/or stock repurchases may change from time to time, and we cannot provide assurance that we will continue to declare dividends and/or repurchase stock in any particular amounts or at all. The reduction in or elimination of our dividend payments and/or stock repurchases could have a negative effect on our stock price.

The illegal distribution and sale by third parties of counterfeit versions of our products or of stolen or diverted products could have a negative impact on our reputation and business.

Third parties may illegally distribute and sell counterfeit versions of our products, which do not meet the exacting standards of our Company's development, manufacturing and distribution processes. Counterfeit medicines pose a significant risk to patient health and safety because of the conditions under which they are manufactured and the lack of regulation of their contents. Counterfeit products are frequently unsafe or ineffective and can be potentially life-threatening. Our reputation and business could suffer harm as a result of counterfeit drugs sold under our brand name. In addition, products stolen from inventory, at warehouses, plants or while in transit or unlawfully diverted, which are not properly stored and which are sold through unauthorized channels, could adversely impact patient safety, our reputation and our business. Public loss of confidence in the integrity of biologics and/or pharmaceutical products as a result of counterfeiting or theft could have a material adverse effect on our product sales, business and results of operations.

We may experience difficulties, delays or unexpected costs and not achieve anticipated benefits and savings from our recently announced restructuring plan.

During the second half of 2014, we initiated a restructuring plan to invest in continuing innovation and the launch of our new pipeline molecules, while improving our cost structure. As part of the plan, we expect to reduce staff and close or dispose of certain facilities. We may not realize, in full or in part, the anticipated benefits and savings from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs, which may adversely affect our business and results of operations.

Following the completion of our restructuring, we must execute our core business initiatives, including advancing our pipeline and addressing competition from competitor products and biosimilars, with fewer human resources. We must also attract, retain and motivate key employees that are critical to our business. If we are unable to effectively execute with fewer staff members and/or attract, retain or motivate key employees, it may adversely affect our business.



Item 1B.	UNRESOLVED STAFF COMMENTS

None.



Item 2.	PROPERTIES

As of December 31, 2014, we owned or leased approximately 200 properties. The locations and primary functions of significant properties are summarized in the following table:

Excluded from the table above are undeveloped land and leased properties that have been abandoned and certain buildings that we still own but are no longer used in our business. There are no material encumbrances on our properties.

We believe that our facilities are suitable for their intended use and, in conjunction with our third-party contracting manufacturing agreements, provide adequate capacity and are sufficient to meet our expected needs. See Item 1A. Risk Factors for a discussion on the factors that could adversely impact our manufacturing operations and the global supply of our products.

See Item 1. Business—Manufacturing, Distribution and Raw Materials.



Item 3.	LEGAL PROCEEDINGS

Certain of the legal proceedings in which we are involved are discussed in Part IV—Note 18, Contingencies and commitments, to our Consolidated Financial Statements in this Annual Report on Form 10-K and are hereby incorporated by reference.



Item 4.	MINE SAFETY DISCLOSURES

Not applicable.

PART II



Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common stock

Our common stock trades on The NASDAQ Global Select Market under the symbol AMGN. As of February 12, 2015, there were approximately 7,383 holders of record of our common stock.

The following table sets forth, for the periods indicated, the range of high and low quarterly closing sales prices of the common stock as quoted on The NASDAQ Global Select Market:



Year ended December 31, 2014	High		Low
Fourth quarter	$	171.64	$	130.45
Third quarter	144.01		115.39
Second quarter	126.07		110.29
First quarter	127.47		113.48
Year ended December 31, 2013
Fourth quarter	$	118.69	$	106.28
Third quarter	117.52		95.81
Second quarter	113.42		94.60
First quarter	102.51		82.08

Performance graph

The following graph shows the value of an investment of $100 on December 31, 2009, in each of Amgen common stock, the Amex Biotech Index, the Amex Pharmaceutical Index and Standard & Poor’s 500 Index (S&P 500). All values assume reinvestment of the pretax value of dividends and are calculated as of December 31 of each year. The historical stock price performance of the Company’s common stock shown in the performance graph is not necessarily indicative of future stock price performance.

Amgen vs. Amex Biotech, Amex Pharmaceutical and S&P 500 Indices

Comparison of Five-Year Cumulative Total Return

Value of Investment of $100 on December 31, 2009



	12/31/2009	12/31/2010	12/31/2011	12/31/2012	12/31/2013	12/31/2014
Amgen (AMGN)	100.00	97.05	114.74	156.35	210.32	299.33
Amex Biotech (BTK)	100.00	137.73	115.91	164.13	247.47	366.04
Amex Pharmaceutical (DRG)	100.00	102.51	115.75	133.00	174.52	203.45
S&P 500 (SPX)	100.00	114.82	117.23	135.75	179.25	203.77

The material in this performance graph is not soliciting material, is not deemed filed with the SEC, and is not incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made on, before or after the date of this filing and irrespective of any general incorporation language in such filing.

Stock repurchase program

During the year ended December 31, 2014, we had one outstanding stock repurchase program, under which the repurchasing activity was as follows:



	Total number of shares purchased	Average price paid per share⁽¹⁾		Total number of shares purchased as part of publicly announced program	Maximum dollar value that may yet be purchased under the program⁽²⁾
January 1 - September 30	—	$	—	—	$	1,559,838,541
October 1 - October 31	—	—		—	4,000,000,000
November 1 - November 30	223,000	162.67		223,000	3,963,725,678
December 1 - December 31	714,209	163.77		714,209	3,846,756,797
January 1 - December 31	937,209	$	163.51	937,209


⁽¹⁾	Average price paid per share includes related expenses.


⁽²⁾	In October 2014, our Board of Directors authorized an increase that resulted in a total of $4.0 billion available under the stock repurchase program.

Dividends

For the years ended December 31, 2014 and 2013, we paid quarterly dividends. We expect to continue to pay quarterly dividends, although the amount and timing of any future dividends are subject to approval by our Board of Directors. Additional information required by this item is incorporated herein by reference to Part IV—Note 15, Stockholders’ equity, to the Consolidated Financial Statements.

Securities Authorized for Issuance Under Existing Equity Compensation Plans

Information about securities authorized for issuance under existing equity compensation plans is incorporated by reference from Item 12—Securities Authorized for Issuance Under Existing Equity Compensation Plans.



Item 6.	SELECTED FINANCIAL DATA



	Years ended December 31,
Consolidated Statement of Income Data:	2014		2013		2012		2011		2010
	(In millions, except per share data)
Revenues:
Product sales	$	19,327	$	18,192	$	16,639	$	15,295	$	14,660
Other revenues	736		484		626		287		393
Total revenues	20,063		18,676		17,265		15,582		15,053
Operating expenses:
Cost of sales	4,422		3,346		3,199		2,708		2,501
Research and development	4,297		4,083		3,380		3,167		2,894
Selling, general and administrative	4,699		5,184		4,814		4,499		3,996
Other⁽¹⁾	454		196		295		896		117
Net income	5,158		5,081		4,345		3,683		4,627
Diluted earnings per share	6.70		6.64		5.52		4.04		4.79
Dividends paid per share	2.44		1.88		1.44		0.56		—
	As of December 31,
Consolidated Balance Sheet Data:	2014		2013		2012		2011		2010
	(In millions)
Total assets	$	69,009	$	66,125	$	54,298	$	48,871	$	43,486
Total debt⁽²⁾	30,715		32,128		26,529		21,428		13,362
Total stockholders’ equity⁽³⁾	25,778		22,096		19,060		19,029		23,944

In addition to the following notes, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and accompanying notes and previously filed Annual Reports on Form 10-K for further information regarding our consolidated results of operations and financial position for periods reported therein and for known factors that will impact comparability of future results. Also, see Part IV—Note 15, Stockholders’ equity, to the Consolidated Financial Statements, for information regarding cash dividends declared per share of common stock.


⁽¹⁾	In 2011, we recorded a $780 million legal settlement charge ($705 million, net of tax) in connection with an agreement in principle to settle allegations related to our sales and marketing practices.


⁽²⁾	See Part IV—Note 14, Financing arrangements, to the Consolidated Financial Statements for discussion of our financing arrangements. In addition, in 2011 and 2010, we issued $10.5 billion and $2.5 billion, respectively, aggregate principal amount of notes. In 2011, we repaid our 0.125% Convertible Notes of $2.5 billion. No debt was due or repaid in 2010.


⁽³⁾	Throughout the five years ended December 31, 2014, we had a stock repurchase program authorized by the Board of Directors through which we repurchased $0.2 billion, $0.8 billion, $4.7 billion, $8.3 billion and $3.8 billion, respectively, of Amgen common stock.



Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis (MD&A) is intended to assist the reader in understanding Amgen’s business. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and accompanying notes. Our results of operations discussed in MD&A are presented in conformity with accounting principles generally accepted in the United States (GAAP). Amgen operates in one business segment: human therapeutics. Therefore, our results of operations are discussed on a consolidated basis.

Forward-looking statements

This report and other documents we file with the SEC contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs and our management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases or written statements, or in our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls. Such words as “expect,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “should,” “may,” “assume,” and “continue,” as well as variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and they involve certain risks, uncertainties and assumptions that are difficult to predict. We describe our respective risks, uncertainties and assumptions that could affect the outcome or results of operations in Item 1A. Risk Factors. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecast by our forward-looking statements. Reference is made in particular to forward-looking statements regarding product sales, regulatory activities, clinical trial results, reimbursement, expenses, earnings per share (EPS), liquidity and capital resources, trends and planned dividends, stock repurchases and restructuring plans. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Overview

Amgen is committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics. This approach begins by using tools like advanced human genetics to unravel the complexities of disease and understand the fundamentals of human biology.

Amgen focuses on areas of high unmet medical need and leverages its biologics manufacturing expertise to strive for solutions that improve health outcomes and dramatically improve people's lives. A biotechnology pioneer since 1980, Amgen has grown to be one of the world's leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.

Our principal products include Neulasta^®, NEUPOGEN^®, ENBREL, XGEVA^®, Prolia^®,EPOGEN^®, Aranesp^® and Sensipar^®/Mimpara^®. For additional information about our products, see Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products.

Our strategy for long-term growth continues to focus on discovery and development of innovative medicines to address serious illnesses, development of branded biosimilars, global expansion, next-generation manufacturing of high quality biologics, development of improved biologic drug delivery systems and return of capital to shareholders.

In 2014, we advanced our strategy. Revenues increased 7% driven by strong performance across the portfolio. Product sales grew 5% in the United States and 11% in the rest of the world (ROW). We continued returning capital to shareholders through the payment of dividends and through stock repurchases. We paid dividends of $0.61 per share of common stock in each of the four quarters of 2014, representing a 30% increase over the quarterly dividend paid in each of the four quarters of 2013. In December 2014, we declared a dividend of $0.79 per share of common stock, payable in March 2015, representing a 30% increase over the quarterly dividend paid in 2014. In October 2014, our Board of Directors approved an increase in our stock repurchase authorization that resulted in a total of $4.0 billion available under that program. We reinitiated repurchase activity in November 2014 and repurchased 0.9 million shares of our common stock at an aggregate cost of $153 million during the remainder of 2014.

In addition to delivering strong operating results, our innovative pipeline, which includes both internally-developed and externally-acquired opportunities, continued to advance in 2014, with the following milestones achieved:



Clinical Program	Lead Indication	Milestone
Repatha^™	Dyslipidemia	US submission
		EU submission
Corlanor^®	Chronic heart failure	US submission
Kyprolis^®*	Multiple myeloma	Phase 3 ASPIRE data
Talimogene laherparepvec	Metastatic melanoma	US submission
		EU submission
BLINCYTO^™	Relapsed/refractory ALL	US approval
		EU submission
Brodalumab^**	Moderate-to-severe plaque psoriasis	Phase 3 data
AMG 416	Secondary hyperparathyroidism	Phase 3 data
AMG 334	Migraine prophylaxis	Phase 2b data (episodic)

* Marketed by Onyx, an Amgen subsidiary

** Developed in collaboration with AstraZeneca

During 2014, six of our medicines generated positive registration-enabling data and four were submitted for regulatory approval. In December 2014, the FDA approved BLINCYTO^™ and the Neulasta^® Delivery Kit, including the On-body Injector for Neulasta^®. In 2014, we also advanced and expanded our biosimilar program, including announcing plans to add three more biosimilar molecules to our portfolio—for a total of nine. Finally, in January 2015, we and Onyx announced the submission of a sNDA to the FDA and an MAA to the EMA for Kyprolis^®to seek approval for the treatment of patients with relapsed multiple myeloma who have received at least one prior therapy.

We believe that we are uniquely positioned for the opportunities arising in biology and to deliver our strategy. We have near- and long-term growth opportunities ahead, including: (i) the approval and launch of new indications for Kyprolis^® in the United States and Europe as well as the approval and launch of several new innovative biologics, including Repatha^™ and brodalumab, (ii) continuing to move into new geographic growth markets and (iii) the development, approval and launch of our biosimilars. We are present in more than 75 countries and, in 2014 we continued to expand into new geographic growth markets, including additional markets in Latin America, the Middle East and Asia.

We announced a restructuring plan during the second half of 2014 that reduces our staff and our facilities footprint by the end of 2015. This restructuring plan allows us to invest in continuing innovation and the launch of our new pipeline molecules while improving our cost structure. We are also advancing a number of key initiatives to streamline processes, increase agility and efficiencies, and improve operating performance. These initiatives include improved contracting and sourcing, rationalizing discretionary spending, greater use of shared services and optimizing R&D efficiency. Also during 2014, we completed facilities construction and entered the licensure process for a Next-Generation Biomanufacturing facility in Singapore which we believe, when licensed, will enable us to increase our manufacturing productivity versus conventional alternatives at lower capital costs and operating expense. Our restructuring plan and our continued focus on increasing cost efficiencies in all areas of the company will enable us to reallocate resources to fund many of our growth opportunities to deliver value to patients and shareholders.

Our business will continue to face various challenges. Certain of our products will face increasing competitive pressure as a result of competitive product launches. Additionally, certain of the existing patents on our principal products recently expired or will expire this year or over the next few years, and we expect to face increasing competition, including biosimilars. For additional information, including information on the expiration of patents for various products, see Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Patents and see Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition.

Current global economic conditions also pose challenges to our business, including continued pressure to reduce healthcare expenditures. Efforts to reduce healthcare costs are being made by third-party payers including governments and private payers. In the United States, various actions have been taken aimed at reducing healthcare spending. The continuing prominence of U.S. budget deficits increases the risk that taxes, fees, rebates, or other federal measures that would further reduce our revenues or increase our expenses may be enacted. As a result of economic conditions, the industry continues to experience significant pricing pressures and other cost containment measures in certain non-U.S. countries also.

Our long-term success depends to a great extent on our ability to continue to discover, develop and commercialize innovative products and acquire or collaborate on therapies currently in development by other companies. The discovery and development of safe and effective new products, as well as the development of additional indications for existing products, are necessary for the continued strength of our business. We must develop new products over time in order to offset revenue losses when products lose their exclusivity or competing products are launched, as well as in order to provide for revenue and earnings growth. We devote considerable resources to R&D activities. However, successful product development in the biotechnology industry is highly uncertain. We are also confronted by increasing regulatory scrutiny of safety and efficacy both before and after products launch.

Finally, our product sales can be affected by wholesaler and end-user buying patterns. These effects can cause fluctuations in quarterly product sales. For example, sales of certain of our products in the United States for the three months ended March 31 are usually lower relative to the preceding fourth quarter. These effects have generally not been significant when comparing full-year product performance to the prior year.

See Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products and Part I, Item 1A. Risk Factors for further discussion of certain of the factors that could impact our future product sales.

Selected financial information

The following is an overview of our results of operations (in millions, except percentages and per share data):



	Year ended December 31,				Year ended December 31,
	2014		Change		2013
Product sales:
U.S.	$	14,732	5	%	$	14,045
ROW	4,595		11	%	4,147
Total product sales	19,327		6	%	18,192
Other revenues	736		52	%	484
Total revenues	$	20,063	7	%	$	18,676
Operating expenses	$	13,872	8	%	$	12,809
Operating income	$	6,191	6	%	$	5,867
Net income	$	5,158	2	%	$	5,081
Diluted EPS	$	6.70	1	%	$	6.64
Diluted shares	770		1	%	765

In the following discussion of changes in product sales, any reference to unit growth or decline refers to changes in the purchases of our products by healthcare providers, such as physicians or their clinics, dialysis centers, hospitals and pharmacies.

The increase in U.S. product sales for 2014 reflects growth across the portfolio except for NEUPOGEN^®, which declined 28%. This overall growth was driven primarily by increases in average net sales prices and, to a lesser extent, unit growth, offset partially by a decline in wholesaler and, based on prescription data for ENBREL and Sensipar^®, end-user inventory levels. Also, 2014 included a full year of Kyprolis^® product sales as a result of the Onyx acquisition on October 1, 2013. The increase in ROW product sales for 2014 reflects growth primarily in our marketed products except ENBREL and Aranesp^®, which declined 4% and 2%, respectively. The ROW increase was driven by unit growth, offset partially by declines in average net sales prices.

The increase in other revenues for 2014 was due primarily to a full year of Nexavar^® collaboration revenues as a result of the Onyx acquisition.

The increase in operating expenses for 2014 was driven primarily by cost of sales and restructuring charges, offset partially by the end of the ENBREL profit share on October 31, 2013.

The increase in net income for 2014 was due primarily to higher operating income, offset partially by a higher effective income tax rate.

The increase in diluted EPS for 2014 was driven primarily by an increase in net income offset partially by an increase in diluted shares.

Although changes in foreign currency exchange rates result in increases or decreases in our reported international product sales, the benefit or detriment that such movements have on our international product sales is offset partially by corresponding increases or decreases in our international operating expenses and our related foreign currency hedging activities. Our hedging

activities seek to offset the impacts, both positive and negative, that foreign currency exchange rate changes may have on our net income by hedging our net foreign currency exposure, primarily with respect to product sales denominated in euros. The net impact from changes in foreign currency exchange rates was not material in 2014, 2013 or 2012.

Results of Operations

Product sales

Worldwide product sales were as follows (dollar amounts in millions):



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2014		Change		2013		Change		2012
Neulasta^®/NEUPOGEN^®	$	5,755	(1	)%	$	5,790	8	%	$	5,352
ENBREL	4,688		3	%	4,551		7	%	4,236
XGEVA^®	1,221		20	%	1,019		36	%	748
Prolia^®	1,030		38	%	744		58	%	472
EPOGEN^®	2,031		4	%	1,953		1	%	1,941
Aranesp^®	1,930		1	%	1,911		(6	)%	2,040
Sensipar^®/Mimpara^®	1,158		6	%	1,089		15	%	950
Other products	1,514		33	%	1,135		26	%	900
Total product sales	$	19,327	6	%	$	18,192	9	%	$	16,639
Total U.S.	$	14,732	5	%	$	14,045	10	%	$	12,815
Total ROW	4,595		11	%	4,147		8	%	3,824
Total product sales	$	19,327	6	%	$	18,192	9	%	$	16,639

Future sales of our products will depend, in part, on the factors discussed in the Overview, Part 1—Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition, Part 1—Item 1A. Risk Factors and any additional factors discussed in the individual product sections below. In addition, for a list of our products' significant competitors, see Part 1—Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition.

Neulasta^®/NEUPOGEN^®

Total Neulasta^® and total NEUPOGEN^® sales by geographic region were as follows (dollar amounts in millions):



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2014		Change		2013		Change		2012
Neulasta^® — U.S.	$	3,649	4	%	$	3,499	9	%	$	3,207
Neulasta^® — ROW	947		6	%	893		1	%	885
Total Neulasta^®	4,596		5	%	4,392		7	%	4,092
NEUPOGEN^® — U.S.	839		(28	)%	1,169		16	%	1,007
NEUPOGEN^® — ROW	320		40	%	229		(9	)%	253
Total NEUPOGEN^®	1,159		(17	)%	1,398		11	%	1,260
Total Neulasta^®/NEUPOGEN^®	$	5,755	(1	)%	$	5,790	8	%	$	5,352

The increase in global Neulasta^® sales for 2014 was driven primarily by an increase in the average net sales price in the United States. The decrease in global NEUPOGEN^® sales for 2014 was driven by the $155-million order from the U.S. government in 2013. Excluding the special order, U.S. and global sales declined 17% and 7%, respectively, which reflected decreases in unit demand in the United States, offset partially by the increased sales as a result of acquiring rights to filgrastim in certain regions effective January 1, 2014. In December 2014, the FDA granted approval of the Neulasta^®Delivery Kit, including the On-body Injector for Neulasta^®, which enables the healthcare provider to initiate administration of Neulasta^® on the same day as cytotoxic chemotherapy with delivery of the patient’s full dose of Neulasta^® the day following chemotherapy administration, consistent with the Neulasta^® prescribing information.

The increase in global Neulasta^® sales for 2013 was driven by an increase in the average net sales price in the United States, offset partially by a decline in units. The increase in global NEUPOGEN^® sales for 2013 was driven by the $155-million order

from the U.S. government. Excluding the special order, U.S. sales grew only 1% and global sales declined 1%. Units declined in 2013 in both the United States and ROW.

Our material U.S. patents for filgrastim (NEUPOGEN^®) expired in December 2013. We face competition in the United States, which could have an impact over time on future sales of NEUPOGEN^® and, to a lesser extent, Neulasta^®. Our outstanding material U.S. patent for pegfilgrastim (Neulasta^®) expires in 2015. Apotex, Inc. announced that the FDA accepted for filing their applications, under the abbreviated pathway, for pegfilgrastim, a biosimilar version of Neulasta^®, on December 17, 2014, and for filgrastim, a biosimilar version of NEUPOGEN^®, on February 17, 2015. On January 7, 2015, Sandoz, a Novartis company, announced that the FDA ODAC recommended approval of its investigational biosimilar filgrastim. The Sandoz biosimilar filgrastim is the subject of ongoing litigation between us and Sandoz.

See Part 1, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition and Part IV—Note 18, Contingencies and commitments, to the Consolidated Financial Statements.

Future Neulasta^®/NEUPOGEN^® sales will also depend, in part, on the development of new protocols, tests and/or treatments for cancer and/or new chemotherapy treatments or alternatives to chemotherapy that may have reduced and may continue to reduce the use of chemotherapy in some patients.

ENBREL

Total ENBREL sales by geographic region were as follows (dollar amounts in millions):



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2014		Change		2013		Change		2012
ENBREL — U.S.	$	4,404	3	%	$	4,256	7	%	$	3,967
ENBREL — Canada	284		(4	)%	295		10	%	269
Total ENBREL	$	4,688	3	%	$	4,551	7	%	$	4,236

The increase in ENBREL sales for 2014 was driven primarily by an increase in the average net sales price offset partially by unfavorable changes in wholesaler and, based on prescription data, end-user inventories.

The increase in ENBREL sales for 2013 was driven primarily by an increase in the average net sales price offset partially by slight unit declines.

XGEVA^®and Prolia^®

Total XGEVA^® and total Prolia^® sales by geographic region were as follows (dollar amounts in millions):



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2014		Change		2013		Change		2012
XGEVA^® — U.S.	$	857	12	%	$	764	19	%	$	644
XGEVA^® — ROW	364		43	%	255		*		104
Total XGEVA^®	1,221		20	%	1,019		36	%	748
Prolia^® — U.S.	625		35	%	462		58	%	292
Prolia^® — ROW	405		44	%	282		57	%	180
Total Prolia^®	1,030		38	%	744		58	%	472
Total XGEVA^®/Prolia^®	$	2,251	28	%	$	1,763	45	%	$	1,220

* Change in excess of 100%

The increases in global XGEVA^®and Prolia^® sales for 2014 and 2013 were driven primarily by unit growth.

EPOGEN^®

Total EPOGEN^® sales were as follows (dollar amounts in millions):



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2014		Change		2013		Change		2012
EPOGEN^® — U.S.	$	2,031	4	%	$	1,953	1	%	$	1,941

The increase in EPOGEN^® sales for 2014 was driven by an increase in the average net sales price offset partially by unit declines.

EPOGEN^® sales for 2013 increased by 1% due to unit growth.

Our remaining material U.S. patent for EPOGEN^® expires in May 2015. As a result, we may face competition in the United States, which may have a material adverse impact over time on EPOGEN^® sales. In addition, EPOGEN^® and Aranesp^® will face competition from the launch of MIRCERA^® in the United States. Roche began selling MIRCERA^® in October 2014 in the United States under terms of a limited patent license obtained from Amgen in connection with the settlement of patent litigation. MIRCERA^® competes with Aranesp^® in the nephrology segment only. On December 16, 2014, Hospira, Inc. submitted a BLA to the FDA for Retacrit^™, a proposed biosimilar to EPOGEN^®, under the abbreviated pathway.

In addition, future EPOGEN^® sales will also depend, in part, on such factors as response to changes in reimbursement, including the reduction to the ESRD payment bundle effective January 1, 2014, and changes in dose utilization as healthcare providers continue to refine their treatment practices in accordance with approved labeling. See Part 1, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition.

Aranesp^®

Total Aranesp^® sales by geographic region were as follows (dollar amounts in millions):



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2014		Change		2013		Change		2012
Aranesp^® — U.S.	$	794	6	%	$	747	(4	)%	$	782
Aranesp^® — ROW	1,136		(2	)%	1,164		(7	)%	1,258
Total Aranesp^®	$	1,930	1	%	$	1,911	(6	)%	$	2,040

The increase in U.S. Aranesp^® sales for 2014 was driven by an increase in the average net sales price and, to a lesser extent, unit demand. The decrease in ROW Aranesp^® sales for 2014 reflects price declines offset partially by unit demand in international markets.

The decrease in U.S. Aranesp^® sales for 2013 was driven by declines in unit demand. The unit declines reflect changes in practice patterns resulting from changes to the label and to the reimbursement environment that occurred during 2011.

The decrease in ROW Aranesp^® sales for 2013 reflects unit declines and price pressure in Europe.

Sensipar^®/Mimpara^®

Total Sensipar^®/Mimpara^® sales by geographic region were as follows (dollar amounts in millions):



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2014		Change		2013		Change		2012
Sensipar^®— U.S.	$	796	5	%	$	757	18	%	$	639
Sensipar^®/Mimpara^®— ROW	362		9	%	332		7	%	311
Total Sensipar^®/Mimpara^®	$	1,158	6	%	$	1,089	15	%	$	950

The increases in global Sensipar^®/Mimpara^® sales for 2014 and 2013 were driven primarily by unit growth and increases in the average net sales price in the United States; however, the increases in 2014 were offset partially by unfavorable changes in U.S. wholesaler and, based on prescription data, end-user inventories.

Other products

Other product sales by geographic region were as follows (dollar amounts in millions):



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2014		Change		2013		Change		2012
Vectibix^®— U.S.	$	168	33	%	$	126	3	%	$	122
Vectibix^®— ROW	337		28	%	263		11	%	237
Nplate^®— U.S.	260		8	%	241		13	%	214
Nplate^®— ROW	209		12	%	186		21	%	154
Kyprolis^®— U.S.	306		*		71		N/A		—
Kyprolis^®— ROW	25		*		2		N/A		—
BLINCYTO^™— U.S.	3		N/A		—		N/A		—
Other — ROW	206		(16	)%	246		42	%	173
Total other product sales	$	1,514	33	%	$	1,135	26	%	$	900
Total U.S. — other products	$	737	68	%	$	438	30	%	$	336
Total ROW — other products	777		11	%	697		24	%	564
Total other product sales	$	1,514	33	%	$	1,135	26	%	$	900

* Change in excess of 100%

Operating expenses

Operating expenses were as follows (dollar amounts in millions):



	Year ended December 31,					Year ended December 31,					Year ended December 31,
	2014			Change		2013			Change		2012
Operating expenses:
Cost of sales	$	4,422		32	%	$	3,346		5	%	$	3,199
% of product sales	22.9		%			18.4		%			19.2		%
% of total revenues	22.0		%			17.9		%			18.5		%
Research and development	$	4,297		5	%	$	4,083		21	%	$	3,380
% of product sales	22.2		%			22.4		%			20.3		%
% of total revenues	21.4		%			21.9		%			19.6		%
Selling, general and administrative	$	4,699		(9	)%	$	5,184		8	%	$	4,814
% of product sales	24.3		%			28.5		%			28.9		%
% of total revenues	23.4		%			27.8		%			27.9		%
Other	$	454		*		$	196		(34	)%	$	295

* Change in excess of 100%

Restructuring

We announced a restructuring plan during the second half of 2014 to invest in continuing innovation and the launch of our new pipeline molecules while improving our cost structure. As part of the plan, we stated that we would reduce our staff by 3,500 to 4,000 by the end of 2015 and close our facilities in Washington state and Colorado and reduce the number of buildings at our headquarters in Thousand Oaks, California. Company-wide, these actions will result in an approximate 23% reduction in our facilities footprint.

We estimate that these actions will result in pre-tax accounting charges in the range of $935 million to $1,035 million. During the year ended December 31, 2014, we initiated the above-noted actions and incurred $558 million of restructuring costs. We expect that substantially all remaining restructuring actions and related estimated costs will be incurred in 2015.

Net savings were not significant in 2014 due to investments in later stage clinical programs, new product launch preparation and external business development.

Additional information required for our restructuring plan is incorporated herein by reference to Part IV—Note 2, Restructuring and other cost savings initiatives, to the Consolidated Financial Statements.

Cost of sales

Cost of sales increased to 22.0% of total revenues for 2014, driven by acquisition-related expenses that included an increase of $642 million of non-cash amortization of intangible assets acquired in the Onyx acquisition. The year ended December 31, 2014, also included impairment and accelerated depreciation charges pursuant to our restructuring initiative of $104 million and a $99-million charge related to the termination of the supply contract with Roche as a result of acquiring the licenses to filgrastim and pegfilgrastim effective January 1, 2014.

Cost of sales decreased to 17.9% of total revenues for 2013, driven primarily by lower royalties and higher average net sales prices, offset partially by changes in product mix. The excise tax imposed by Puerto Rico on the gross intercompany purchase price of goods and services from our manufacturer in Puerto Rico (Puerto Rico excise tax) also slightly contributed to the decrease. The rate was 3.75% in 2012, 2.75% in the first half of 2013 and 4.0% effective July 1, 2013 through December 31, 2017. See Part IV—Note 5, Income taxes, to the Consolidated Financial Statements for further discussion of the Puerto Rico excise tax.

Excluding the impact of the excise tax, cost of sales would have been 20.1%, 16.0% and 16.5% of total revenues for 2014, 2013 and 2012, respectively.

Research and development

R&D costs are expensed as incurred and include primarily salaries, benefits and other staff-related costs; facilities and overhead costs; clinical trial and related clinical manufacturing costs; contract services and other outside costs; information systems’ costs and amortization of acquired technology used in R&D with alternative future uses. R&D expenses also include costs and cost recoveries associated with K-A and third-party R&D arrangements, including upfront fees and milestones paid to third parties in connection with technologies which had not reached technological feasibility and did not have an alternative future use. Net payment or reimbursement of R&D costs is recognized when the obligations are incurred or as we become entitled to the cost recovery.

The Company groups all of its R&D activities and related expenditures into three categories: (1) Discovery Research and Translational Sciences (DRTS), (2) later stage clinical programs and (3) marketed products. These categories include the Company’s R&D activities as set forth in the following table:



Category		Description
DRTS		R&D expenses incurred in activities substantially in support of early research through the completion of phase 1 clinical trials. These activities encompass our DRTS functions, including drug discovery, toxicology, pharmacokinetics and drug metabolism, and process development.
Later stage clinical programs		R&D expenses incurred in or related to phase 2 and phase 3 clinical programs intended to result in registration of a new product or a new indication for an existing product in the United States or the EU.
Marketed products		R&D expenses incurred in support of the Company’s marketed products that are authorized to be sold in the United States or the EU. Includes clinical trials designed to gather information on product safety (certain of which may be required by regulatory authorities) and their product characteristics after regulatory approval has been obtained, as well as the costs of obtaining regulatory approval of a product in a new market after approval in either the United States or the EU has been obtained.

R&D expense by category was as follows (in millions):



	Years ended December 31,
	2014