Amgen 2007 Annual Report Download - page 80

Most patients receiving our principal products for approved indications are covered by either government
and/or private payer health care programs. The reimbursement environment is evolving with greater emphasis on
cost containment. For example, failure to demonstrate a clear economic value associated with the use of a new
therapeutic product as compared to existing therapeutic products or practices may result in reduced reimburse-
ment. Therefore, sales of our products are and will continue to be affected by the availability and extent of
reimbursement from third-party payers, including government and private insurance plans and administration of
those programs. Governments may regulate access to, prices or reimbursement levels of our products to control
costs or to affect levels of use of our products. Worldwide use of our products may be affected by these cost con-
tainment pressures and cost shifting from governments and private insurers to healthcare providers or patients in
response to ongoing initiatives to reduce or reallocate healthcare expenditures. Further, safety signals or adverse
events or results from clinical trials or studies performed by us or by others (including our licensees or in-
dependent investigators) or from the marketed use of our drugs may expand safety labeling or restrict the use for
our approved products and may negatively impact worldwide reimbursement for our products. For additional in-
formation on reimbursement and its impact on our business, see “Item 1. Business — Reimbursement.”
For the year ended December 31, 2007, total revenues were $14.8 billion and net income was $3.2 billion,
or $2.82 per share on a diluted basis. In addition to the factors noted in “Item 1. Business — Key Developments,”
our results of operations for the year ended December 31, 2007 were negatively impacted by the write-off of
$590 million of acquired IPR&D related to the acquisitions of Alantos and Ilypsa and charges of $739 million in
connection with our previously announced restructuring plan.
As of December 31, 2007, cash, cash equivalents and marketable securities were $7.2 billion, of which ap-
proximately $6.2 billion was generated from operations in foreign tax jurisdictions and is intended for use in our
foreign operations. If these funds are repatriated for use in our U.S. operations, we would be required to pay
additional U.S. and state income taxes at the applicable marginal tax rates. Our total debt outstanding was $11.2
billion as of December 31, 2007.
Our product sales for the year ended December 31, 2007 were $14.3 billion representing an increase of $453
million, or 3%, over product sales for the year ended December 31, 2006. This increase reflects growth primarily
in ENBREL and Neulasta®/NEUPOGEN®significantly offset by a decline in Aranesp®. The decline in sales of
Aranesp®, in particular Aranesp®sales in the U.S. supportive cancer care segment, reflects a decrease in demand
resulting from various regulatory and reimbursement developments in 2007, as discussed below.
International product sales in 2007 represented 20% of total product sales and consisted principally of Euro-
pean sales of Aranesp®, Neulasta®and NEUPOGEN®. International product sales grew 17% in 2007 to $2.9
billion, principally driven by sales of Neulasta®/NEUPOGEN®and favorable changes in foreign currency ex-
change rates. International product sales growth during 2007 was favorably impacted by $193 million from
foreign currency exchange rate changes. Both the positive and negative impacts that movements in foreign cur-
rency exchange rates have on our international product sales are mitigated, in part, by the natural, opposite
impact these exchange rate movements have on our international operating expenses and as a result of our for-
eign currency hedging activities. Our hedging activities seek to offset the impact, both positive and negative, that
foreign currency exchange rate changes may have on our net income. As such, the impact to our net results of
operations from changes in foreign currency exchange rates has been largely mitigated.
As discussed in more detail in “Item 1. Business — Key Developments,” certain of our products, principally
our marketed ESA products, face various challenges primarily arising from regulatory and reimbursement devel-
opments that began in 2007. The developments impacting our marketed ESA products include revisions to
product labels to reflect adverse safety results in various clinical studies involving ESA products performed by us
and others and the loss of or significant restrictions on reimbursements. Furthermore, our ESA products continue
to face future challenges, including the potential for further revisions to product labels and changes to
reimbursement. These developments have had and will continue to have a material adverse impact on sales of our
ESA marketed products, in particular Aranesp®sales in the U.S. supportive cancer care segment. In addition, in-
creased competition, including additional approved indications for existing products, has and will continue to
present challenges to certain of our products.
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