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 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. We have a presence in approximately 100 countries worldwide. Amgen operates in one business segment: human therapeutics.

Significant Developments

Following is a summary of significant developments affecting our business that have occurred and that we have reported since the filing of our Annual Report on Form 10-K for the year ended December 31, 2017, and in early 2018.

Products/Pipeline

Oncology/Hematology

BLINCYTO® (blinatumomab)

•	In March 2018, we announced that the U.S. Food and Drug Administration (FDA) approved under accelerated approval the supplemental Biologics License Application (sBLA) for BLINCYTO® for the treatment of adults and children with B-cell precursor acute lymphoblastic leukemia (ALL) in first or second complete remission with minimal residual disease greater than or equal to 0.1 percent.

•	In June 2018, we announced that the European Commission (EC) granted a full marketing authorization for BLINCYTO® based on the overall survival data from the phase 3 TOWER study in adult patients with Philadelphia chromosome-negative relapsed or refractory B-cell precursor ALL.

•

In August 2018, we announced that the EC approved an expanded indication for BLINCYTO® as monotherapy for the treatment of pediatric patients aged one year or older with Philadelphia chromosome-negative CD19 positive B-cell precursor ALL, which is refractory or in relapse after receiving at least two prior therapies or in relapse after receiving prior allogeneic hematopoietic stem cell transplantation.

•	In January 2019, we announced that the EC approved an expanded indication for BLINCYTO® as monotherapy to include adult patients with Philadelphia chromosome-negative CD19 positive B-cell precursor ALL in first or second complete remission with minimal residual disease greater than or equal to 0.1 percent.

KYPROLIS® (carfilzomib)

•

In January 2018, we announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion resulting in a label variation for KYPROLIS® to include updated overall survival data from the phase 3 head-to-head ENDEAVOR (RandomizEd, OpeN Label, Phase 3 Study of Carfilzomib Plus DExamethAsone Vs Bortezomib Plus DexamethasOne in Patients With Relapsed Multiple Myeloma) study in patients with relapsed or refractory multiple myeloma.

•

In April 2018, we announced that the CHMP of the EMA adopted a positive opinion resulting in a label variation for KYPROLIS® to include the final overall survival data from the phase 3 ASPIRE (CArfilzomib, Lenalidomide, and DexamethaSone versus Lenalidomide and Dexamethasone for the treatment of PatIents with Relapsed Multiple MyEloma) study. In June 2018, we announced that the FDA approved the supplemental New Drug Application (sNDA) to add the positive overall survival data from the ASPIRE study to the U.S. Prescribing Information for patients with relapsed or refractory myeloma.

•	In October 2018, we announced that the FDA approved the sNDA to expand the Prescribing Information for KYPROLIS® to include a once-weekly dosing option in combination with dexamethasone for patients with relapsed or refractory multiple myeloma.

Neulasta® (pegfilgrastim)

•	In February 2018, we announced that the CHMP of the EMA issued a positive opinion recommending a label variation for Neulasta® to include the Neulasta® Onpro® kit.

Cardiovascular

Repatha® (evolocumab)

•	In May 2018, we announced that the EC approved a new indication in the Repatha® label for adults with established atherosclerotic cardiovascular disease (myocardial infarction, stroke or peripheral arterial disease) to reduce cardiovascular risk by lowering low-density lipoprotein (LDL) cholesterol levels.

•	In October 2018, we announced a set of new National Drug Codes (NDCs) to make Repatha® available at a 60% lower list price of $5,850 per year to address affordability for patients, particularly those on Medicare.

•	In January 2019, we announced that the National Medical Products Administration approved a new indication for Repatha® as the first PCSK9 inhibitor in China for adults with established atherosclerotic cardiovascular disease to reduce the risk of myocardial infarction, stroke and coronary revascularization.

Neuroscience

Aimovig® (erenumab-aooe)

•	In May 2018, we announced that the FDA approved Aimovig® for the preventive treatment of migraine in adults. Aimovig® is part of a joint development and commercialization collaboration with Novartis AG (Novartis).

Inflammation

Tezepelumab

•	In September 2018, we announced that the FDA granted Breakthrough Therapy Designation for tezepelumab in patients with severe asthma without an eosinophilic phenotype. Tezepelumab is being developed jointly in collaboration with AstraZeneca plc (AstraZeneca).

Bone health

EVENITYTM* (romosozumab)

•

In January 2019, we and UCB, our global collaboration partner in the development of EVENITYTM, announced that the FDA Bone, Reproductive and Urologic Drugs Advisory Committee (BRUDAC) voted to recommend approval of EVENITYTM for the treatment of osteoporosis in postmenopausal women at high risk for fracture. Also in January 2019, the Japanese Ministry of Health, Labor and Welfare granted a marketing authorization for the treatment of osteoporosis in men and postmenopausal women at high risk of fracture.

Prolia® (denosumab)

•	In May 2018 and June 2018, the FDA and the EC, respectively, approved a new indication for Prolia® for the treatment of glucocorticoid-induced osteoporosis in adult patients at high risk of fracture.

XGEVA® (denosumab)

•	In April 2018, we announced that the EC approved an expanded indication for XGEVA® for the prevention of skeletal-related events (SREs) in patients with multiple myeloma.

Biosimilars

AMGEVITATM (biosimilar adalimumab)

•	In October 2018, we began launching AMGEVITATM in markets across Europe.

KANJINTITM* (biosimilar trastuzumab / formerly ABP 980)

•	In May 2018, the EC granted marketing authorization for KANJINTITM, a biosimilar candidate to Herceptin®, for the treatment of HER2-positive metastatic breast cancer, HER2-positive early breast cancer and HER2-positive metastatic adenocarcinoma of the stomach or gastroesophageal junction. KANJINTITM is being developed in collaboration with Allergan plc (Allergan).

•	In May 2018, we announced that we received a Complete Response Letter from the FDA for the Biologics License Application (BLA) for KANJINTITM. In December 2018, we refiled our BLA with the FDA for KANJINTITM.

ABP 710 (biosimilar infliximab)

•	In June 2018, we announced results from a phase 3 study evaluating the efficacy and safety of biosimilar candidate ABP 710 compared with REMICADE® (infliximab) in patients with moderate-to-severe rheumatoid arthritis. The results confirmed noninferiority compared to infliximab but could not rule out superiority based on its primary efficacy endpoint.

•	In December 2018 and January 2019, we submitted a BLA to the FDA and a Marketing Authorization Application (MAA) to the EMA, respectively, for ABP 710.

ABP 798 (biosimilar rituximab)

•

In January 2019, we and Allergan announced positive top-line results from a phase 1/phase 3 study evaluating the pharmacokinetics, efficacy and safety of ABP 798, a biosimilar candidate to RITUXAN® (rituximab), compared to rituximab in patients with moderate-to-severe rheumatoid arthritis. The results demonstrate that the study met its primary endpoint of pharmacokinetic similarity. Additionally, equivalent efficacy was established and a similar safety profile was demonstrated.

Next-generation biomanufacturing

•	In April 2018, we announced plans to build a new next-generation biomanufacturing plant on our campus in West Greenwich, Rhode Island. The new plant will employ our next-generation biomanufacturing capabilities and manufacture products for the U.S. and global markets.

• FDA provisionally approved trade name.

Marketing, Distribution and Selected Marketed Products

The largest concentration of our sales and marketing forces is based in the United States and Europe. Additionally, we continue to expand the commercialization and marketing of our products into other geographic territories, including parts of Latin America, the Middle East and Asia. This expansion is occurring by establishing our own affiliates, by acquiring existing third-party businesses or product rights or by partnering with third parties. Whether we use our own sales and marketing forces or a third party’s varies across these markets. Such use typically depends on several factors, including the nature of entry into the new market, the size of an opportunity and operational capabilities. 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, which are the principal means of distributing our products to healthcare providers. We also market certain products through direct-to-consumer channels including, print, television and online media. For further discussion, see Government Regulation—Regulation in the United States—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 individually accounted for more than 10% of total revenues for each of the years ended December 31, 2018, 2017 and 2016. On a combined basis, these wholesalers accounted for 98%, 96% and 96% of our U.S. gross product sales for each of the years ended December 31, 2018, 2017 and 2016, respectively, and 84%, 81% and 81% of worldwide gross revenues for each of these years. We monitor the financial condition of our larger customers and limit our credit exposure by setting credit limits and, in certain circumstances, by requiring letters of credit or obtaining credit insurance.

Our products are marketed around the world, with the United States being our largest market. The following chart shows our product sales by principal product and by geography for the years ended 2018, 2017 and 2016.

Enbrel® (etanercept)

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

•	moderately to severely active rheumatoid arthritis;

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

•	active psoriatic arthritis.

Neulasta® (pegfilgrastim)

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 used primarily in the indication to help reduce the chance of infection due to a low white blood cell count, in patients with certain types of cancer (nonmyeloid) who receive anticancer medicines (chemotherapy) that can cause fever and a low blood cell count. In 2015, the Neulasta® Onpro® kit became available in the United States. The Neulasta® Onpro® kit provides physicians the opportunity to initiate the administration of Neulasta® on the same day as chemotherapy, with drug delivery of the recommended dose of Neulasta® at home the day after chemotherapy, thereby saving patients a trip back to the doctor.

Prolia® (denosumab)

We market Prolia® primarily in the United States and Europe. Prolia® contains the same active ingredient as XGEVA® (denosumab) but is approved for different indications, patient populations, doses and frequencies of administration. 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 of 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 fracture.

Aranesp® (darbepoetin alfa)

We market Aranesp® primarily in the United States and Europe. It was launched in 2001 and is indicated to treat a lower-than-normal number of red blood cells (anemia) caused by chronic kidney disease (CKD) (in both patients on dialysis and patients not on dialysis). Aranesp® is also indicated for the treatment of anemia due to concomitant myelosuppressive chemotherapy in certain patients with nonmyeloid malignancies and when chemotherapy will be used for at least two months after starting Aranesp®.

Aranesp® and EPOGEN® (epoetin alfa) compete with each other in the United States, primarily in the dialysis setting.

XGEVA®

We market XGEVA® primarily in the United States and Europe. XGEVA® was launched in the United States in 2010 and is now used primarily in the indication for the prevention of SREs (pathological fracture, radiation to bone, spinal cord compression or surgery to bone) in patients with bone metastases from solid tumors and multiple myeloma. XGEVA® was launched in Europe in 2011 and is used primarily in the indication for the prevention of SREs in patients with bone metastases from solid tumors. It was approved in January 2018 in the United States and April 2018 in Europe for the prevention of SREs in patients with multiple myeloma.

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 adult patients with CKD who are on dialysis.

Sensipar® and our recently launched Parsabiv® (etelcalcetide) compete with each other.

EPOGEN®

We market EPOGEN® in the United States for dialysis patients. EPOGEN® was launched in 1989, and we market it for the indication to treat anemia caused by CKD in patients on dialysis in order to lessen the need for red blood cell transfusions. The majority of our sales are to a large dialysis provider.

Other Marketed Products

We also market a number of other products in various markets worldwide, including KYPROLIS® (carfilzomib), Nplate® (romiplostim), Vectibix® (panitumumab), Repatha® (evolocumab), NEUPOGEN® (filgrastim), Parsabiv®, BLINCYTO® (blinatumomab), Aimovig® (erenumab-aooe), IMLYGIC® (talimogene laherparepvec), Corlanor® (ivabradine), KANJINTITM (biosimilar trastuzumab) and AMGEVITATM (biosimilar adalimumab).

Patents

The following table lists our outstanding material patents for the indicated product by territory, general subject matter and latest expiry date. Certain of the European patents are the subjects of supplemental protection certificates that provide additional protection for the products in certain European countries beyond the dates listed in the table (see footnotes).

One or more patents with the same or earlier expiry date may fall under the same general subject matter and are not listed separately.

Product		Territory		General subject matter		Expiration
Enbrel® (etanercept)		U.S.		Methods of treating psoriasis		8/13/2019
	U.S.		Aqueous formulation and methods of treatment using the formulation		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		9/17/2021
	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 including epitope binding		2/23/2021
	Europe		RANKL antibodies including sequences(1)		6/25/2022
Aranesp® (darbepoetin alfa)		U.S.		Glycosylation analogs of erythropoietin proteins		5/15/2024
Sensipar®/ Mimpara® (cinacalcet)		U.S.		Formulation		9/22/2026
	Europe		Calcium receptor-active molecules(1)		10/23/2015
	Europe		Formulation		9/10/2024
KYPROLIS® (carfilzomib)		U.S.		Compositions and compounds		12/7/2027
	U.S.		Methods of treatment		4/14/2025
	U.S.		Methods of making		5/8/2033
	Europe		Compositions, compounds and methods of treatment(1)		8/8/2025
Nplate® (romiplostim)		U.S.		Thrombopoietic compounds		1/19/2022
	U.S.		Formulation		2/12/2028
	Europe		Thrombopoietic compounds(1)		10/22/2019
	Europe		Formulation		4/20/2027
Vectibix® (panitumumab)		U.S.		Human monoclonal antibodies to epidermal growth factor receptor		4/8/2020
	Europe		Human monoclonal antibodies to epidermal growth factor receptor(1)		5/5/2018
Repatha® (evolocumab)		U.S.		Antibodies(2)		10/25/2029
	U.S.		Methods of treatment		10/8/2030
	Europe		Compositions and method of treatment		8/22/2028
Parsabiv® (etelcalcetide)		U.S.		Compound and pharmaceutical composition(2)		7/29/2030
	U.S.		Formulation		6/27/2034
	Europe		Compound and pharmaceutical composition		7/29/2030
	Europe		Formulation		6/27/2034
BLINCYTO® (blinatumomab)		U.S.		Bifunctional polypeptides(2)		4/21/2019
	U.S.		Method of administration		9/28/2027
	Europe		Bifunctional polypeptides(1)		11/26/2024
	Europe		Method of administration		11/29/2026
Aimovig® (erenumab-aooe)		U.S.		CGRP receptor antibodies(2)		11/9/2031
	U.S.		Methods of treatment		12/18/2029
	Europe		CGRP receptor antibodies and methods of treatment		12/18/2029
IMLYGIC® (talimogene laherparepvec)		U.S.		Compositions		11/23/2025
	U.S.		Method of treatment		3/27/2022
	Europe		Composition and uses(1)		3/27/2022
Corlanor® (ivabradine)		U.S.		Crystalline forms		2/22/2026

(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:

• denosumab — France, Italy, Spain and the United Kingdom, expiring in 2025

• cinacalcet — Germany expiring in 2019; France, Italy, Spain and the United Kingdom, expiring in 2020

• carfilzomib — France, Germany, Italy and Spain, expiring in 2030

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

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

• evolocumab — France and Spain, expiring in 2030

• blinatumomab — France, Italy and Spain, expiring in 2029

• erenumab — Italy expiring in 2033

• talimogene laherparepvec — Spain, expiring in 2026; France, Germany, Italy and the United Kingdom, expiring in 2027

(2)	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. A number of our marketed products are indicated in disease areas in which other products or treatments are currently available or are being pursued by our competitors through research and development (R&D) activities. Additionally, some competitor-marketed products target the same genetic pathways as our recently launched marketed products or are being pursued currently. This competition could impact the pricing and market share of our products. We continue to pursue ways to increase the value of our medicines through innovations during their life cycles, which can include expanding the disease areas for which our products are indicated and finding new methods to make the delivery of our medicines easier and less costly. Such activities can offer important opportunities for differentiation. For example, in 2015, we launched the Neulasta® Onpro® kit, which provides physicians the opportunity to initiate the administration of the recommended dose of Neulasta® on the same day as chemotherapy, with drug delivery at home the day after chemotherapy, thereby saving patients a trip back to the doctor. We also launched in 2017 the AutoTouch® reusable auto-injector to be used with Enbrel Mini® single-dose prefilled cartridges (50 mg/mL). The Enbrel Mini® utilizes a new drug formulation of ENBREL that was associated with statistically significant lower mean injection site pain than the current formulation. We plan to continue pursuing innovation efforts to strengthen our competitive position. Such position may be based on, among other things, safety, efficacy, reliability, availability, patient convenience/delivery devices, price, reimbursement, access to and timing of market entry and patent position and expiration.

Certain of the existing patents on our principal products have expired, and we face new and increasing competition, including from biosimilars and generics. We may also compete against biosimilar or generic versions of our competitors’ products. 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 “highly similar” to the original reference product. We expect that the adverse impact on our product sales from biosimilar competition will be more like branded biologic competition than that seen when branded small molecules face generics, but we believe that when multiple biosimilar versions of one of our products get approved and launched, competition could intensify more rapidly, resulting in a greater impact on our product’s sales. Although we expect biosimilars to compete on price, we believe many patients, providers and payers will continue to place high value on the reputation, reliability and safety of our products. In the United States, companies now have approved biosimilar versions of EPOGEN®, NEUPOGEN®, Neulasta® and ENBREL. See also Government Regulation—Regulation in the United States—Approval of Biosimilars. As biosimilar competitors come to market, we will leverage both the experience we have had in the United States versus branded competition and our experience in competing against epoetin alfa and filgrastim biosimilars in Europe. In addition, although most of our products are biologics, some of our products are small-molecule products. Because the FDA approval process allows generic manufacturers to rely on the safety and efficacy data of the innovator product rather than having to conduct their own costly and time-consuming clinical trials, generic manufacturers can often market their competing versions of our small-molecule products at much lower prices. As a result, upon the expiration or loss of patent protection for a small-molecule product, we can lose the majority of revenues for that product in a very short period of time.

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 reductions in the prices 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. (As used in this document, the term clinical trials may include prospective clinical trials, observational studies, registries and other studies.) See Item 1A. Risk Factors—Our products face substantial competition and Item 1A. Risk Factors—We currently face competition from biosimilars and expect to face increasing competition from biosimilars and generics in the future.

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

Product		Territory		Competitor-marketed product		Competitors
ENBREL		U.S. & Canada		REMICADE®*		Janssen Biotech, Inc. (Janssen)(1)
	U.S. & Canada		HUMIRA®		AbbVie Inc.
	U.S. & Canada		STELARA®(2)		Janssen(1)
	U.S. & Canada		Otezla®(2)		Celgene Corporation (Celgene)
Neulasta®(3)		U.S.		UDENYCATM		Coherus BioSciences, Inc.
	U.S.		Fulphila®		Mylan Institutional Inc.
	U.S. & Europe		Filgrastim biosimilars		Various
Prolia®		U.S. & Europe		Alendronate, raloxifene and zoledronate generics		Various
Aranesp®		U.S.		PROCRIT®(4)		Janssen(1)
	U.S.		MIRCERA®(5)		Galenica Group (Galenica)/F. Hoffmann-La Roche Ltd. (Roche)
	U.S. & Europe		Epoetin alfa biosimilars		Various
XGEVA®		U.S. & Europe		Zoledronate generics		Various
Sensipar®(6)/ Mimpara®		U.S. & Europe		Active vitamin D analogs		Various
EPOGEN®(3)		U.S.		MIRCERA®(5)		Galenica/Roche
	U.S.		RETACRITTM		Hospira(7)
KYPROLIS®(9)		U.S.		VELCADE®		Millennium Pharmaceuticals, Inc.(8)
	U.S.		REVLIMID®		Celgene
	U.S.		POMALYST®		Celgene
	U.S.		DARZALEX®		Janssen(1)
Repatha®		U.S. & Europe		PRALUENT®		Regeneron Sanofi
Parsabiv®		U.S. & Europe		Active vitamin D analogs		Various
Aimovig®		U.S.		AJOVYTM		Teva Pharmaceuticals USA, Inc.
	U.S.		EmgalityTM		Eli Lilly and Company

• Approved biosimilars available.

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

(2)	Dermatology only.

(3)	Other biosimilars under regulatory review in the United States and Europe.

(4)	PROCRIT® competes with Aranesp® in the supportive cancer care and predialysis settings.

(5)	MIRCERA® competes with Aranesp® only in the nephrology segment.

(6)

Our U.S. composition of matter patent for Sensipar® expired in March 2018. We are engaged in litigation with a number of companies seeking to market generic versions of Sensipar® surrounding our U.S. formulation patent that expires in September 2026. See Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements, for further information. Several of these generic versions of Sensipar® have been approved by the FDA.

(7)	A subsidiary of Pfizer Inc. (Pfizer)

(8)	A subsidiary of Takeda Pharmaceutical Company Limited.

(9)	KYPROLIS® is facing increased competition from several recently approved products.

Reimbursement

Sales of our principal products are dependent on the availability and extent of coverage and reimbursement from third-party payers. In many markets around the world, these payers, including government health systems, private health insurers and other organizations, remain focused on reducing the cost of healthcare, and their efforts have intensified as a result of rising healthcare costs and economic challenges. Drugs, and in particular specialty drugs such as our products, remain heavily scrutinized for cost containment. As a result, payers are becoming more restrictive regarding the use of biopharmaceutical products and scrutinizing the prices of these products, while requiring a higher level of clinical evidence to support the benefit such products bring to patients and the broader healthcare system. These pressures are intensified where our products are subject to increasing competition.

In the United States, healthcare providers and other entities such as pharmacies and Pharmacy Benefit Managers (PBMs) are reimbursed for covered services and products they deliver through Medicare, Medicaid and other government healthcare programs, as well as through private payers. We are required to provide rebates or discounts on our products that are reimbursed through certain government programs, including Medicare and Medicaid, and also provide discounts to qualifying healthcare providers under the Federal 340B Drug Pricing Program. In addition, we provide rebates to PBMs, as well as other entities (such as hospitals and pharmacies), which are payments by a biopharmaceutical manufacturer of a portion of the product’s purchase price back to the PBMs or other entities.

Biopharmaceutical-product pricing remains central to discussions on controlling healthcare costs in the United States. Policy makers from both of the major U.S. political parties are pursuing policies to lower drug costs for patients. In May 2018, U.S. president Donald Trump and his administration released a drug-pricing “blueprint” and requested public comment on an array of policy ideas intended to increase competition, improve the federal government’s negotiating power, reduce drug prices and lower patients’ out-of-pocket costs. The blueprint included a number of policy ideas with the potential to significantly affect, whether individually or collectively, the biopharmaceutical industry; and the U.S. presidential administration has already begun to implement certain elements described in the administration’s drug-pricing blueprint, such as (i) seeking initial feedback on a potential program that would set the Medicare payment amount for Part B single-source drugs and biologics to be more closely aligned with international drug prices and rely on third-party vendors, (ii) issuing guidance to allow certain Medicare plans offered by private insurance companies to begin requiring that patients receiving Medicare Part B drugs first try a drug preferred by the plan before such plan will cover another therapy, (iii) lowering initial reimbursement rates for new Part B drugs launched beginning in 2019 and (iv) proposing new rules to require drug price information in direct-to-consumer drug television advertising. The blueprint also discussed (i) the potential removal of the safe-harbor protection under the federal anti-kickback statute for drug rebates paid to payers and (ii) changes to the Part D program. At the same time, value assessments of new technologies previously used predominantly outside the United States are having an impact in the U.S. healthcare environment. Healthcare provider organizations and independent organizations are creating their own value assessments of biopharmaceutical drugs for comparison with manufacturer pricing. Although these organizations do not set drug prices, they seek to influence pricing as well as payer and provider decision making by publicly disclosing their assessments, often making assertions around what they believe to be the appropriate price to charge for a product. In addition, continued consolidation of payers and integration of providers and payers (integrated delivery systems) increase the level of market power held by our customers. Such developments, particularly when taken in combination with increasing product competition, put greater pressure on access to, pricing of and sales of our products.

In addition, rebates and/or discount levels as well as the number of entities that are entitled to receive them since they are reimbursed through government programs have increased over time. For example, the Bipartisan Budget Act, enacted in 2018, requires biopharmaceutical manufacturers to pay greater discounts for patients in the Medicare Part D coverage gap beginning in 2019; and the Patient Protection and Affordable Care Act (ACA), enacted in 2010, increased many of the mandatory discounts and rebates required of us. The ACA also imposed a new Branded Prescription Pharmaceutical Manufacturers and Importers fee payable each year by us and other manufacturers. In the Tax Cuts and Jobs Act (2017 Tax Act) signed by President Trump in December 2017, Congress removed a key ACA provision by repealing the individual mandate penalty, which required every person to have health insurance or pay a penalty. Future changes to government programs such as the ACA, whether legislative or regulatory, could impact the number of patient lives covered, could raise or lower the cost or quality of insurance, could affect Medicaid eligibility and could change levels of patient protections provided unless alternatives are put in place.

Other government legislative and regulatory actions that would have a significant impact on Amgen include changes to how the Medicare program covers and reimburses current and future drugs, including for patients with end-stage renal disease (ESRD); changes in the federal payment rate or new rebate requirements for covered drugs and policies for drug payment in Medicare or Medicaid; and changes to coverage and payment for biosimilars, such as policies that would facilitate easier substitution for, or provide reimbursement advantages over, the corresponding innovative products. In ESRD, the Centers for Medicare & Medicaid Services (CMS) uses a bundled-payment system and recently finalized changes allowing more new dialysis drugs to be eligible for temporary add-on payment adjustments starting in 2020. Sensipar® and Parsabiv® were already eligible for add-on payment adjustments beginning in 2018 and will continue to receive them in 2019. CMS has indicated interest in testing new models for drug payment in Medicare Part B and Part D. CMS also continues to test alternative payment models with providers, such as the

Oncology Care Model. These models provide financial incentives for providers who participate; under the models, providers take on greater risk for the overall cost and quality of care. In addition, in 2018 CMS implemented changes to Medicare payment to hospitals for Part B drugs acquired through the Federal 340B Drug Pricing Program but provided a financial incentive for hospitals to use biosimilar products over the corresponding innovative products. As described above, CMS is permitting Medicare Advantage plans to implement access controls for Part B drugs while also (i) considering a proposal that would set the Medicare payment amount for Part B single-source drugs and biologics to more closely align with international drug prices and rely on third-party vendors and (ii) considering changes to Medicare Part D and Medicare Advantage. These and/or other changes have the potential to impact prescribing and patient access to Amgen’s therapies.

Additional efforts by state legislatures and government agencies in the United States could also affect us and our industry. For example, a California law requires manufacturers to provide payers advance notice of a price increase over a specified threshold, and laws in Oregon and Vermont require manufacturers to submit price increase justifications to a state attorney agency if certain price increase and state-spending thresholds are met. Examples of other proposals that have been discussed and debated but not yet enacted include state ballot initiatives that would place a maximum price ceiling, or cap, on pharmaceutical products purchased by state agencies and state legislative efforts to cap pharmaceutical prices for commercial payers.

In the U.S. private sector, payers continue to institute cost reduction and containment measures that lower drug utilization and/or spending altogether and/or shift a greater portion of the costs to patients. Such measures include more limited benefit plan designs, higher patient co-pays or coinsurance obligations, limitations on patients’ use of commercial manufacturer co-pay payment assistance programs (including through co-pay accumulator adjustment or maximization programs), stricter utilization management criteria before a patient may get access to a drug, and/or higher-tier formulary placement that increases the level of patient out-of-pocket costs. The use of such measures by PBMs and insurers that handle the majority of sales for ENBREL and Repatha® has continued to intensify and thereby limited Amgen product usage and sales. Consolidation has resulted in a smaller number of PBMs and insurers overseeing a large portion of total covered lives in the United States. As a result, PBMs and insurers have greater market power and negotiating leverage to mandate stricter utilization criteria and/or exclude drugs from their formularies in favor of competitor drugs or alternative treatments. Our past experience with Repatha® underscores that utilization management requirements, including the burdensome administrative processes required of physicians to demonstrate and document that patients meet such requirements, continue to be a significant challenge for patients and physicians, limiting access for appropriate usage. Formulary exclusion effectively encourages patients and providers to seek alternative treatments or pay 100% of the cost of a drug. A drug’s inclusion and favorable positioning on formulary is essential to ensure patients have access. Even when access is available, some patients abandon their prescriptions due to economic reasons. In highly competitive treatment markets such as with ENBREL, Repatha® and Aimovig®, PBMs are also able to exert negotiating leverage by requiring incremental rebates from manufacturers in order to maintain their formulary position.

In many countries outside the United States, government-sponsored healthcare systems are the primary payers for drugs and biologics. With increasing budgetary constraints, and/or difficulty in understanding the value of medicines, governments and payers in many countries are applying a variety of measures to exert downward price pressure. These measures can include mandatory price controls; price referencing; therapeutic-reference pricing; increases in mandates; incentives for generic substitution and biosimilar usage; and government-mandated price cuts. In this regard, many countries have health technology assessment organizations that use formal economic metrics such as cost-effectiveness to determine prices, coverage and reimbursement of new therapies, and these organizations are expanding in established and emerging markets. We expect that countries will continue to take aggressive actions to seek to reduce expenditures on drugs and biologics. Similarly, fiscal constraints may also affect the extent to which countries are willing to approve new and innovative therapies and/or allow access to new technologies.

The dynamics and developments discussed above serve to create pressure on the pricing and potential usage of our products and the industry. We remain focused on delivering breakthrough treatments for unmet medical needs. Amgen is committed to working with the entire healthcare community to ensure continued innovation and to facilitate patient access to needed medicines. We do this by:

•	investing billions of dollars annually in R&D;

•	developing more affordable therapeutic choices in the form of high-quality and reliably-supplied biosimilars;

•	pricing our medicines to reflect the value they provide;

•	partnering with payers to share risk and accountability for health outcomes;

•	providing patient support and education programs and helping patients in financial need access our medicines; and

•	working with policy makers, patients and other stakeholders to establish a sustainable healthcare system with access to affordable care and where patients and their healthcare professionals are the primary decision makers.

See Item 1A. Risk Factors—Our sales depend on coverage and reimbursement from third-party payers, and pricing and reimbursement pressures may affect our profitability and Item 1A. Risk Factors—Guidelines and recommendations published by various organizations can reduce the use of our products.

Manufacturing, Distribution and Raw Materials

Manufacturing

We believe we are a leader in the manufacturing of biologics and that our manufacturing capabilities represent a competitive advantage. The products we manufacture consist of both biologics and small-molecule drugs. The majority of our products are biologics that are produced in living cells and that 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. Further, our expertise in manufacturing of biologics positions us well for leadership in the global biosimilars market. For additional information regarding manufacturing facilities, see Item 2. Properties.

Our internal manufacturing network has the commercial production capabilities of bulk manufacturing, formulation, fill, finish and device assembly. These activities are performed within the United States and its territories in our Puerto Rico, Rhode Island and California facilities as well as internationally in our Ireland, Netherlands and Singapore facilities. In addition, we utilize third-party contract manufacturers to supplement the capacity or capability of our commercial manufacturing network.

To support our clinical trials, we manufacture product candidates primarily at our California and, to a lesser extent, our Rhode Island facilities. 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 Puerto Rico, Kentucky, 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, each of our manufacturing locations also includes 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 in the United States—Regulation of Manufacturing Standards.

Manufacturing Initiatives

We have multiple ongoing initiatives that are designed to extend our manufacturing advantage by optimizing our manufacturing network and/or mitigating risks while continuing to ensure adequate supply of our products.

In 2017, our next-generation biomanufacturing plant in Singapore was licensed by the FDA and the EMA for certain commercial-scale production. In 2018, we successfully completed additional bulk process qualification campaigns, which if approved, would permit the commercial production of an additional product at that site. A next-generation biomanufacturing plant incorporates multiple innovative technologies into a single facility and therefore can be built in half the construction time with approximately one-half of the operating cost of a traditional plant. Next-generation biomanufacturing plants require a smaller manufacturing footprint and offer greater environmental benefits, including reduced consumption of water and energy and lower levels of carbon emissions. Within the plant, the equipment is portable and smaller, and some components are disposable, which provides greater flexibility and speed when manufacturing different medicines simultaneously. This eliminates costly and complex retrofitting inherent in standard plants and allows Amgen to respond to changing demands for its medicines with increased agility, ultimately impacting the speed at which a medicine is available for patients. The Singapore site also has a plant with the capability to produce small-molecule drugs. When approved by relevant regulatory authorities this plant can be used for commercial manufacturing.

In July 2018, we announced the groundbreaking of our new next-generation biomanufacturing plant that will be constructed at our West Greenwich, Rhode Island, campus. The new plant is expected to be the first of its kind in the United States and will use our next-generation biomanufacturing capabilities. After construction has been completed and upon approval by the FDA and other global regulatory authorities, this plant will expand our capacity to manufacture certain products for U.S. and global markets.

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 (including companion diagnostics) 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 help authenticate the source of raw materials, including intermediary materials used in the manufacture of our products, which include verification of the country of origin. The 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 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. Compliance with these standards is complex, and failure to comply with any of these standards can result in significant implications. See Item 1A. Risk Factors for a discussion of factors, including global regulatory implications, that can adversely impact our development and marketing of commercial products.

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, promotion and distribution of our products, as well as the reporting of certain payments and other transfers of value to healthcare professionals and teaching hospitals.

Clinical Development and Product Approval. Drug development in our industry is complex, challenging and risky; and failure rates are high. Product development cycles are typically 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 risk-benefit 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 large 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, reevaluate, 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 either a BLA for biologic products or a New Drug Application for small-molecule products. We are not permitted to market or promote a new product until the FDA has approved our marketing application.

Approval of Biosimilars. The ACA authorized the FDA to approve biosimilars via a separate, abbreviated pathway. The pathway allows sponsors of a biosimilar to seek and obtain regulatory approval based in part on the nonclinical and clinical trial data of an originator product to which the biosimilar has been demonstrated to be “highly similar” and to have no clinically meaningful differences in terms of safety, purity and potency. The relevance of demonstrating “similarity” is that in many cases, biosimilars can be brought to market without conducting the full suite of clinical trials typically required of originators, as risk-benefit has previously been established. In order to preserve incentives for future innovation, the law establishes a period of exclusivity for originators’ products, which in general prohibits biosimilars from gaining FDA approval based in part on reliance on or reference to the originator’s data in their application to the FDA for 12 years after initial FDA approval of the originator product. The law does not change the duration of patents granted on biologic products. The FDA has released a number of guidance documents as part of the implementation of the abbreviated approval pathway for biosimilars, some of which remain in draft form.

As of the end of 2018, 16 biosimilar applications have been approved by the FDA, including our products AMJEVITATM, a biosimilar candidate to HUMIRA® (adalimumab), and MVASITM, a biosimilar candidate to Avastin® (bevacizumab), as well as competitors to our products ENBREL, Aranesp®, EPOGEN®, NEUPOGEN® and Neulasta®. A number of manufacturers have announced the filing of marketing applications to the FDA under the biosimilar pathway, some of which are for biosimilars of our products.

Regulation of Product Marketing and Promotion. The FDA regulates the marketing and promotion of drug products. Our product promotion for approved product indications must comply with the statutory standards of the FDCA and the FDA’s implementing regulations and guidance. 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 electronic media. 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 reinspect our equipment, facilities, laboratories and processes following an initial approval.

Regulation of Combination Products. Combination products are defined by the FDA to include products composed 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 European Union (EU) countries as well as Switzerland, Canada, Australia and Japan, regulatory requirements and approval processes are similar in principle to those in the United States.

In the EU, there are currently two potential tracks for seeking marketing approval for a product not authorized in any EU member state: a decentralized procedure and a centralized procedure. In the decentralized procedure, identical applications for marketing authorization are submitted simultaneously to the national regulatory agencies. Regulatory review is led by one member state (the reference-member state), and its assessment—based on safety, quality and efficacy—is reviewed and approved (assuming there are no concerns that the product poses a serious risk to public health) by the other member states from which the applicant is seeking approval (the concerned-member states). The decentralized procedure leads to a series of single national approvals 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 an evaluation of the dossier, drawing upon its scientific resources across Europe. If the drug product is proven to fulfill the requirements for quality, safety and efficacy, the EMA’s CHMP adopts a positive opinion, which is transmitted to the EC for final decision on grant of the marketing authorization. While the EC generally follows the CHMP’s opinion, it is not bound to do so. Subsequent commercialization is enabled by country-by-country reimbursement approval.

In the EU, biosimilars are approved under a specialized pathway of the centralized procedure. As with the U.S. pathway, applicants seek and obtain regulatory approval for a biosimilar once the data exclusivity period for the original reference product has expired relying in part on the data submitted for the originator product together with data evidencing that the biosimilar is “highly similar” in terms of quality, safety and efficacy to the original reference product authorized in the European Economic Area.

As a result of the United Kingdom’s vote to leave the EU in March 2019, the EMA announced that it will relocate its headquarters from London to Amsterdam by March 30, 2019. While negotiations continue regarding the terms of the United Kingdom’s withdrawal from the EU, the specific impact to the supervision, regulation and supply of medicines in the United Kingdom and Europe remain unclear.

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 can rely on prior marketing approval from U.S. or EU regulatory authorities. The regulatory process in these countries may include manufacturing/testing facility inspections, testing of drug product upon importation and other domestic requirements.

In Asia Pacific, a number of countries such as China, Japan, South Korea and Taiwan may require local clinical trial data for bridging purposes as part of the drug registration process in addition to global clinical trials, which can add to overall drug development and registration timelines. In most of the Asian markets, registration timelines depend on marketing approval in the United States or the EU. In some markets in Asia, such as China, Thailand and Indonesia, the regulatory timelines can be less predictable. The regulatory process may also include manufacturing/testing facility inspections, testing of drug product upon importation and other domestic requirements. Countries such as Australia and Japan have more mature systems that would allow for submissions in more competitive time frames. Regarding biosimilars, several of these countries have pathways to register biosimilars (e.g., South Korea, India, Australia, Singapore and Taiwan), and biosimilar products are already present on the markets (e.g., Australia and South Korea).

In some countries, such as Japan and those in the EU, medical devices may be subject to regulatory regimes whereby the manufacturer must establish that its medical device conforms to essential requirements set out in the law for the particular device category. For example, in the EU, with limited exceptions, medical devices placed on the market must bear the Conformité Européenne marking to indicate their conformity with legal requirements.

Post-approval Phase

After approval, we continue to monitor adverse events and product complaints reported following the use of our products through routine post-marketing 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 implementation of signal detection, assessment and the communication of adverse events that may be associated with the use of our products. We also proactively monitor product complaints through our quality systems, which includes assessing our drug delivery devices for device complaints, adverse events and malfunctions. 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. 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 (REMS) and we currently have REMS for Prolia®, Nplate® and BLINCYTO®.

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 prescribing 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 by 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 (e.g., violations regarding improper promotional activity or unlawful payments) contributes to the submission of a false claim.

In 2012, Amgen entered into a corporate integrity agreement with the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services, which was formally closed out in August 2018. 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.

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 arguably 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 serious illness. We capitalize on our strength in human genetics, novel biology and protein engineering. We leverage our biologic expertise and take a modality-independent approach to R&D. We use cutting-edge science and technology to study subtle biological mechanisms in search of therapies that will improve the lives of those who suffer from diseases. Our discovery research programs may therefore yield targets that lead to the development of human therapeutics delivered as large molecules, small molecules, other combination modalities or new modalities. Leveraging two decades of research at deCODE, a global leader in analyzing the human genome, we are reshaping our portfolio and increasingly focusing efforts on validated targets. Human genetic validation is used whenever possible in order to enhance the likelihood of success. For the years ended December 31, 2018, 2017 and 2016, our R&D expenses were $3.7 billion, $3.6 billion and $3.8 billion, respectively.

We have major R&D centers in Thousand Oaks and San Francisco, California; Cambridge, Massachusetts; Iceland; and the United Kingdom, as well as smaller research centers and development facilities globally. See Item 2. Properties.

Our clinical trial activities are conducted by 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 opening clinical sites and enrolling patients in a number of geographic locations. See Government Regulation—Regulation in the United States—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 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 in which we have products or in which 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 greatly dependent on the timing of entry into the market. Early entry may have important advantages in gaining product acceptance, thereby contributing to a 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 a 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 shows a selection of certain of our product candidates by phase of development in our therapeutic areas of focus as of February 12, 2019, 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, nonregistrational 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 nonregistrational clinical trials for various reasons, including to evaluate real-world outcomes or to collect additional safety information with regard to the use of our products. In addition, the table does not include biosimilar products we are developing, which are discussed later in this section.

Molecule		Disease/condition
Phase 3 Programs
ENBREL		Rheumatoid arthritis remission
EVENITYTM		Postmenopausal osteoporosis; Male osteoporosis
IMLYGIC®		Metastatic melanoma
KYPROLIS®		Multiple myeloma
Omecamtiv mecarbil		Chronic heart failure
Tezepelumab		Severe asthma
AMG 520 / CNP520		Alzheimer’s disease
Phase 2 Programs
BLINCYTO®		Diffuse large B-cell lymphoma
Tezepelumab		Atopic dermatitis
AMG 714 / PRV-015		Celiac disease
Phase 1 Programs
IMLYGIC®		Various cancer types
AMG 119		Small-cell lung cancer
AMG 160		Prostate cancer
AMG 176		Hematologic malignancies
AMG 212		Prostate cancer
AMG 330		Acute myeloid leukemia
AMG 397		Hematologic malignancies
AMG 420		Multiple myeloma
AMG 424		Multiple myeloma
AMG 427		Acute myeloid leukemia
AMG 510		Solid tumors
AMG 562		Non-Hodgkin’s lymphoma
AMG 570		Systemic lupus erythematosus
AMG 592		Inflammatory diseases
AMG 596		Glioblastoma
AMG 598		Obesity
AMG 673		Acute myeloid leukemia
AMG 701		Multiple myeloma
AMG 757		Small-cell lung cancer
AMG 890		Cardiovascular disease
AMG 966		Inflammatory bowel diseases (Crohn’s and ulcerative colitis)
AMG 986		Heart failure

Phase 3	Clinical trials investigate the safety and efficacy of product candidates in a large number of patients who have the disease or condition under study; typically performed with registrational intent.
Phase 2	Clinical trials investigate side effect profiles and efficacy of product candidates in a large number of patients who have the disease or condition under study.
Phase 1	Clinical trials investigate the safety and proper dose ranges of product candidates in a small number of human subjects.

Phase 3 Product Candidate Program Changes

As of February 12, 2018, we had 13 phase 3 programs. As of February 12, 2019, we had eight phase 3 programs, as regulatory approvals were received for three programs, and two programs concluded. These changes are set forth in the following table.

Molecule		Disease/condition		Program change
Aimovig®		Migraine prevention		BLA approved by FDA
Aranesp®		Myelodysplastic syndromes		Concluded; no longer pursuing our marketing application with the EC
BLINCYTO®		ALL		sBLA approved by FDA
ENBREL		Psoriatic arthritis		Concluded; study achieved its primary endpoint
Prolia®		Glucocorticoid-induced osteoporosis		sBLA approved by FDA and EC

Phase 3 Product Candidate Patent Information

The following table describes our outstanding composition of matter patents that have been issued thus far for our product candidates in phase 3 development that have yet to be approved for any indication in the United States or the EU. Patents for products already approved for one or more indications in the United States or the EU but that are 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*
EVENITYTM		U.S.		Polypeptides		2026
		Europe		Polypeptides		2026
Omecamtiv mecarbil		U.S.		Compound		2027
		Europe		Compound		2025
Tezepelumab		U.S.		Polypeptides		2029
		Europe		Polypeptides		2028
AMG 520 / CNP520		U.S.		Compound		2032
		Europe		Compound		2032

• 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 provides additional information about selected product candidates that have advanced into human clinical trials.

BLINCYTO®

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

A phase 2/3 study in patients with relapsed or refractory diffuse large B-cell lymphoma is ongoing.

ENBREL

ENBREL is a fusion protein that inhibits tumor necrosis factor.

A phase 3 study to evaluate ENBREL as a monotherapy in maintaining remission in rheumatoid arthritis is ongoing.

EVENITYTM

EVENITYTM is a humanized monoclonal antibody that inhibits the action of sclerostin. It is being evaluated as a treatment for osteoporosis. EVENITYTM is being developed in collaboration with UCB.

In January 2019, we and UCB announced support from the FDA BRUDAC for the approval of EVENITYTM for the treatment of postmenopausal women with osteoporosis at high risk for fracture. Also in January 2019, the Japanese Ministry of Health, Labor and Welfare granted a marketing authorization for EVENITYTM for the treatment of osteoporosis in men and postmenopausal women at high risk of fracture.

IMLYGIC®

IMLYGIC® is an oncolytic immunotherapy derived from herpes simplex virus type 1.

A phase 1b/3 study to evaluate IMLYGIC® in combination with Merck & Company, Inc.’s anti-PD-1 therapy, KEYTRUDA® (pembrolizumab), in patients with mid- to late-stage metastatic melanoma is ongoing.

KYPROLIS®

KYPROLIS® is a proteasome inhibitor.

In April 2018, we announced that the CHMP of the EMA adopted a positive opinion recommending a label variation for KYPROLIS® to include the final overall survival data from the phase 3 ASPIRE study.

In June 2018, we announced that the FDA approved the sNDA to add the positive overall survival data from the phase 3 ASPIRE study to the U.S. Prescribing Information for KYPROLIS® in patients with relapsed or refractory multiple myeloma.

In October 2018, we announced that the FDA approved the sNDA to expand the Prescribing Information for KYPROLIS® to include a once-weekly dosing option in combination with dexamethasone for patients with relapsed or refractory multiple myeloma.

A phase 3 study comparing carfilzomib, dexamethasone, and daratumumab to carfilzomib and dexamethasone for the treatment of patients with relapsed or refractory multiple myeloma is ongoing.

Omecamtiv mecarbil

Omecamtiv mecarbil is a small-molecule activator of cardiac myosin. It is being evaluated for the treatment of chronic heart failure. Omecamtiv mecarbil is being developed by Amgen in collaboration with Cytokinetics, Inc., and in collaboration with Servier for certain territories.

A phase 3 cardiovascular outcomes study for the treatment of chronic heart failure is ongoing.

Tezepelumab

Tezepelumab is a human monoclonal antibody that inhibits the action of thymic stromal lymphopoietin. It is being evaluated as a treatment for severe asthma in an ongoing phase 3 study, as well as atopic dermatitis. Tezepelumab is being developed jointly in collaboration with AstraZeneca.

AMG 520 / CNP520

AMG 520 / CNP520 is a small-molecule inhibitor of beta-site amyloid precursor protein-cleaving enzyme-1 (BACE). It is being evaluated for the prevention of Alzheimer’s disease, with phase 3 studies ongoing. AMG 520 / CNP520 is being developed jointly in collaboration with Novartis.

AMG 714 / PRV-015

AMG 714 / PRV-015 is a human monoclonal antibody that binds to Interleukin-15. It is being investigated for the treatment of celiac disease. In November 2017, Amgen reacquired the AMG 714 program from Celimmune LLC. AMG 714 / PRV-015 is being developed jointly in collaboration with Provention Bio.

Amgen Development of Biosimilars

We also develop and commercialize biosimilar medicines. Our biosimilar product candidates in late-stage clinical development are described in the following table:

Program		Reference product		Status
ABP 710		Infliximab (REMICADE®)		Filed BLA with the FDA and MAA with the EMA
ABP 798		Rituximab (Rituxan® / Mabthera®)		Phase 3 rheumatoid arthritis study completed Phase 3 non-Hodgkin’s lymphoma study ongoing
ABP 959		Eculizumab (Soliris®)		Phase 3 initiated

In addition to the above programs, AMJEVITATM / AMGEVITATM and MVASITM have been approved by the FDA and the EC. KANJINTITM has been approved by the EC and we have refiled our BLA with the FDA. We are also pursuing other biosimilar product candidates in earlier-stage development.

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 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 nonrefundable, 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 commencement of a 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.

During the first quarter of 2018, we acquired the remaining 50% ownership interest of Kirin-Amgen, Inc. (K-A), from Kirin Holdings Company, Limited (Kirin), making K-A a wholly owned subsidiary of Amgen. Prior to the closing of the share acquisition, K-A was a 50-50 joint venture with Kirin. K-A develops and then licenses all product rights that have been transferred from Amgen and Kirin. See Part IV—Note 3, Business combinations and Note 10, Related party transactions, to the Consolidated Financial Statements.

Prior to the closing of the share acquisition, K-A had given us exclusive licenses to manufacture and market (i) filgrastim and pegfilgrastim in the United States; Europe; Canada; Australia; New Zealand; all Central American, South American, Middle Eastern and African countries; and certain countries in Asia; (ii) darbepoetin alfa and romiplostim 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, filgrastim, darbepoetin alfa, recombinant human erythropoietin and romiplostim under the brand names Neulasta®, NEUPOGEN®/GRANULOKINE®, Aranesp®, EPOGEN® and Nplate®, respectively. Under these agreements, Amgen paid K-A royalties based on product sales. In addition, Amgen received payments from K-A for milestones earned and for conducting certain R&D activities on K-A’s behalf.

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

Novartis

In April 2017, we expanded our existing migraine collaboration with Novartis. In the United States, Amgen and Novartis jointly develop and collaborate on the commercialization of Aimovig®. Amgen, as the principal, recognizes product sales of Aimovig® in the United States, shares U.S. commercialization costs with Novartis and pays Novartis a significant royalty on net sales in the United States. Novartis holds global co-development rights and exclusive commercial rights outside the United States and Japan for Aimovig® and other specified migraine programs. Novartis pays Amgen double-digit royalties on net sales of the products in the Novartis exclusive territories and funds a portion of global R&D expenses. In addition, Novartis will make a payment to Amgen of up to $100 million if certain commercial and expenditure thresholds are achieved with respect to Aimovig® in the United States. Amgen manufactures and supplies Aimovig® worldwide.

UCB

We are in a collaboration with UCB for the development and commercialization of EVENITYTM. Under our collaboration, UCB has the rights to lead commercialization for EVENITYTM for all indications in Europe, China (excluding Hong Kong) and Brazil. All other territories have been allocated to Amgen. Generally, development costs and future worldwide commercialization profits and losses related to the collaboration after accounting for expenses are shared equally.

Bayer HealthCare Pharmaceuticals Inc.

We are in a collaboration with Bayer HealthCare Pharmaceuticals Inc. (Bayer) to jointly develop and commercialize Nexavar® (sorafenib). In 2015, we amended the terms of our collaboration agreement with Bayer, which terminated the co-promotion agreement in the United States and transferred all U.S. operational responsibilities to Bayer, including commercial and medical affairs activities. Prior to the termination of the co-promotion agreement, we co-promoted Nexavar® with Bayer and shared equally in the profits in the United States. In lieu of this profit share, Bayer now pays us a royalty on U.S. sales of Nexavar® at a percentage rate in the high 30s. Outside the United States and Japan, Bayer manages all commercialization activities and incurs all sales and marketing expenditures and mutually agreed R&D expenses, and we reimburse Bayer for half of those expenditures. In all countries outside the United States and Japan, we receive 50% of net profits on sales of Nexavar® after deducting certain Bayer-related costs. The rights to develop and market Nexavar® in Japan are reserved to Bayer.

DaVita Inc.

In January 2017, we entered into a six-year supply agreement with DaVita Inc. (DaVita), which superseded the previously existing seven-year supply agreement that commenced in 2012. Pursuant to the 2017 agreement, we supply EPOGEN® and Aranesp® in amounts necessary to meet specified annual percentages of DaVita’s and its affiliates’ requirements for erythropoiesis-stimulating agents (ESAs) used in providing dialysis services in the United States and Puerto Rico. Such percentage varies during the term of the agreement, but in each year is at least 90%. The agreement expires in 2022. 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, 2018, Amgen had approximately 21,500 staff members. We consider our staff relations to be good.

Executive Officers of the Registrant

Mr. Robert A. Bradway, age 56, has served as a director of the Company since 2011 and Chairman of the Board of Directors since 2013. Mr. Bradway has been the Company’s President since 2010 and Chief Executive Officer since 2012. From 2010 to 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 2007 to 2010. Prior to joining the Company, he was a Managing Director at Morgan Stanley in London, where, beginning in 2001, he had responsibility for the firm’s banking department and corporate finance activities in Europe. Mr. Bradway has been a director of The Boeing Company, an aerospace company and manufacturer of commercial airplanes, defense, space and securities systems, since 2016. He has served on the board of trustees of the University of Southern California since 2014 and on the advisory board of the Leonard D. Schaeffer Center for Health Policy and Economics at that university since 2012. From 2011 to 2017, Mr. Bradway was a director of Norfolk Southern Corporation, a transportation company.

Mr. Murdo Gordon, age 52, became Executive Vice President, Global Commercial Operations in 2018. Prior to joining the Company, Mr. Gordon was the Chief Commercial Officer at Bristol-Myers Squibb Company (BMS) from 2016 to July 2018. Mr. Gordon served as Head of Worldwide Markets at BMS from 2015 to 2016. Prior to this, Mr. Gordon served in a variety of leadership roles at BMS for over 25 years.

Mr. Jonathan P. Graham, age 58, became Senior Vice President, General Counsel and Secretary in 2015. From 2006 to 2015, Mr. Graham was Senior Vice President and General Counsel at Danaher Corporation. From 2004 to 2006, Mr. Graham was Vice President, Litigation and Legal Policy, at General Electric Company (GE). Prior to GE, Mr. Graham was a partner at Williams & Connolly LLP.

Ms. Lori A. Johnston, age 54, became Senior Vice President, Human Resources in 2016. From 2012 to 2016, Ms. Johnston was Executive Vice President and Chief Administrative Officer of Celanese Corporation. From 2006 to 2012, Ms. Johnston served in a series of progressive leadership roles at the Company, with her last position being Vice President, Human Resources. Prior to joining the Company, Ms. Johnston held human resources and other positions at Dell Inc.

Mr. David W. Meline, age 61, became Executive Vice President and Chief Financial Officer in 2014. From 2011 to 2014, Mr. Meline served as Senior Vice President and Chief Financial Officer at 3M Company (3M). From 2008 to 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 at 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 ABB Ltd., a global industrial technology company based in Switzerland, since 2016, currently serving as the chairman of the Finance, Audit and Compliance Committee. Mr. Meline was a director of TRW Automotive Holdings, Corp., a supplier of automotive systems, modules and components, from 2014 until its acquisition by ZF Friedrichshafen AG in 2015.

Ms. Cynthia M. Patton, age 57, became Senior Vice President and Chief Compliance Officer in 2012. Ms. Patton joined the Company in 2005. From 2005 to 2010, Ms. Patton was Associate General Counsel. From 2010 to 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 62, became Senior Vice President, Business Development, in 2014. Mr. Piacquad joined the Company in 2010 and served as Vice President, Strategy and Corporate Development, until 2014. Mr. Piacquad served as Vice President, Business Development in 2014. Prior to joining the Company, from 2009 to 2010 Mr. Piacquad was Principal of David A. Piacquad Consulting LLC. From 2006 to 2009, Mr. Piacquad served as Senior Vice President, Business Development and Licensing at Schering-Plough Corporation (Schering-Plough). 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.

Dr. David M. Reese, age 56, became Executive Vice President, Research and Development in 2018. Dr. Reese joined the Company in 2005 and has held leadership roles in development, medical sciences and discovery research. Dr. Reese was Senior Vice President, Translational Sciences and Oncology, from 2017 to 2018 and Senior Vice President, Translational Sciences, from 2015 to 2017. Prior to joining Amgen, Dr. Reese was director of Clinical Research for the Breast Cancer International Research Group from 2001 to 2003 and a co-founder, president and chief medical officer of Translational Oncology Research International, a not-for-profit academic clinical research organization from 2003 to 2005. Dr. Reese previously served on the faculty at University of California, Los Angeles and the University of California, San Francisco.

Mr. Esteban Santos, age 51, became Executive Vice President, Operations, in 2016. Mr. Santos joined the Company in 2007 as Executive Director, Manufacturing Technologies. From 2008 to 2013, Mr. Santos held a number of Vice President roles at the Company in engineering, manufacturing, site operations and drug product. From 2013 to 2016, Mr. Santos was Senior Vice President, Manufacturing. Prior to joining the Company, Mr. Santos served as Site General Manager of J&J’s Cordis operation in Puerto Rico. Prior to J&J, Mr. Santos held several management positions in GE’s industrial and transportation businesses.

Geographic Area Financial Information

For financial information concerning the geographic areas in which we operate, see Part IV—Note 4, Revenues and Note 13, Property, plant and equipment, 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 website 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.)