Amgen 2009 Annual Report Download - page 62

In addition, as a result of the economic downturn, some employers may seek to reduce costs by reducing or
eliminating employer group healthcare plans or transferring a greater portion of healthcare costs to their employ-
ees. Job losses or other economic hardships may also result in reduced levels of coverage for some individuals,
potentially resulting in lower levels of healthcare coverage for themselves or their families. These economic
conditions may affect patients’ ability to afford healthcare as a result of increased co-pay or deductible obliga-
tions, greater cost sensitivity to existing co-pay or deductible obligations, lost healthcare insurance coverage or
for other reasons. We believe such conditions have led and could continue to lead to changes in patient behavior
and spending patterns that negatively affect usage of certain of our products, including delaying treatment,
rationing prescription medications, leaving prescriptions unfilled, reducing the frequency of visits to healthcare
facilities, utilizing alternative therapies and/or foregoing healthcare insurance coverage. In addition to its effects
on consumers, the economic downturn may have also increased cost sensitivities among medical providers in the
United States, such as oncology clinics, particularly in circumstances where providers may experience challenges
in the collection of patient co-pays or be forced to absorb treatment costs as a result of coverage decisions or re-
imbursement terms. Collectively, we believe that these changes have resulted and may continue to result in
reduced demand for our products, which could continue to adversely affect our business and results of oper-
ations. Any resulting decrease in demand for our products could also cause us to experience excess inventory
write-offs and/or excess capacity or impairment charges at certain of our manufacturing facilities.
Additionally, we rely upon third-parties for certain parts of our business, including licensees and partners,
wholesale distributors of our products, contract clinical trial providers, contract manufacturers and single third-
party suppliers. Because of the recent volatility in the financial markets, there may be a disruption or delay in the
performance or satisfaction of commitments to us by these third-parties which could have a material adverse af-
fect on our business and results of operations. Current economic conditions may adversely affect the ability of
our distributors, customers and suppliers to obtain liquidity required to buy inventory or raw materials and to
perform their obligations under agreements with us, which could disrupt our operations. Further, economic con-
ditions appear to have affected, and may continue to affect, the business practices of our wholesale distributors in
a manner that has and may continue to contribute to lower sales of our products. For example, in the first quarter
of 2009, certain of our wholesale distributors lowered their levels of inventory on hand, which we believe was
done to reduce their carrying costs and improve their results of operations Although we monitor our distributors’,
customers’ and suppliers’ financial condition and their liquidity, in order to mitigate our business risks, some of
our distributors, customers and suppliers may become insolvent, which could negatively impact our business and
results of operations.
We maintain a significant portfolio of investments disclosed as cash equivalents and marketable securities
on our Consolidated Balance Sheet. The value of our investments may be adversely affected by interest rate fluc-
tuations, downgrades in credit ratings, illiquidity in the capital markets and other factors which may result in
other than temporary declines in the value of our investments. Any of these events could cause us to record im-
pairment charges with respect to our investment portfolio or to realize losses on the sale of investments.
We rely on single-source third-party suppliers for certain of our raw materials, medical devices and compo-
nents.
We rely on single-source unaffiliated third-party suppliers for certain raw materials, medical devices and
components necessary for the formulation, fill and finish of our products. Certain of these raw materials, medical
devices and components are the proprietary products of these unaffiliated third-party suppliers and are specifi-
cally cited in our drug application with regulatory agencies so that they must be obtained from that specific sole
source and could not be obtained from another supplier unless and until the regulatory agency approved such
supplier.
Among the reasons we may be unable to obtain these raw materials, medical devices and components in-
clude:
• regulatory requirements or action by regulatory agencies or others
• adverse financial or other strategic developments at or affecting the supplier
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