Amgen 2007 Annual Report Download - page 87

In addition to the factors mentioned in the “Product sales” section above, future worldwide ENBREL sales
growth will be dependent, in part, on such factors as:
• the effects of competing products or therapies, which may include new indications for existing products
such as a treatment for adult patients with moderate to severe chronic plaque psoriasis for HUMIRA®,
and new competitive products coming to market, such as J&J’s CNTO 1275 (ustekinumab) and CNTO
148 (golimumab) and, in part, our ability to differentiate ENBREL based on its safety profile and effi-
cacy;
• pending change to the patient safety information in the form of a boxed warning that will apply to the
ENBREL label as has been the case with other TNF inhibitor agents;
• growth in the rheumatology and dermatology segments;
• impact of converting from primarily drop-shipping orders directly to pharmacies to a wholesaler dis-
tribution model primarily occurring in the three months ending March 31, 2008;
• the availability, extent and access to reimbursement by government and third-party payers;
• adverse events or results from clinical trials or studies performed by us or by others (including our li-
censees or independent investigators), which could expand safety labeling and may negatively impact
healthcare provider prescribing behavior, use of our product, regulatory or private healthcare organization
medical guidelines and reimbursement practices;
• governmental or private organization regulations or guidelines relating to the use of our products;
• cost containment pressures from governments and private insurers on healthcare providers;
• pricing strategies; and
• penetration of existing and new segments, including potential new indications.
See “Item 1A. Risk Factors” for further discussion of certain of the above factors that could impact our fu-
ture product sales.
Selected operating expenses
The following table summarizes our product sales and operating expenses for the years ended December 31,
2007, 2006 and 2005 (dollar amounts in millions):
2007 Change 2006 Change 2005
Product sales ..................................... $14,311 3% $13,858 15% $12,022
Operating expenses:
Cost of sales (excludes amortization of acquired
intangible assets) ............................ $ 2,548 22% $ 2,095 1% $ 2,082
% of product sales ......................... 18% 15% 17%
Research and development ...................... $ 3,266 (3)% $ 3,366 45% $ 2,314
% of product sales ......................... 23% 24% 19%
Selling, general and administrative ................ $ 3,361 0% $ 3,366 21% $ 2,790
% of product sales ......................... 23% 24% 23%
Amortization of acquired intangible assets .......... $ 298 $ 370 $ 347
Write-off of acquired in-process research and
development ............................... $ 590 $ 1,231 $ —
Other items (primarily certain restructuring costs in
2007) ..................................... $ 728 $ — $ 49
Cost of sales
Cost of sales, which excludes the amortization of acquired intangible assets (see “Consolidated Statements
of Income”), increased 22% for the year ended December 31, 2007. The increase was primarily driven by re-
structuring and related charges, discussed below, product mix due to higher sales of ENBREL, excess capacity
75