Amgen 2009 Annual Report Download - page 66

products compete with NEUPOGEN®and Neulasta®. We cannot predict to what extent the entry of biosimilar
products or other competing products will impact future NEUPOGEN®or Neulasta®sales in the EU. Our inabil-
ity to compete effectively could reduce sales, which could have a material adverse effect on our results of
operations.
In the United States, there is no regulatory pathway for the abbreviated approval of BLAs for biosimilars,
but legislation on biosimilars has been proposed and may be enacted in the in the near future. Such biosimilars
would reference biotechnology products already approved under the U.S. Public Health Service Act. Under cur-
rent law, potential competitors may introduce biotechnology products in the United States only by filing a
complete BLA. Before biosimilar products could enter the U.S. market through an abbreviated approval process,
the U.S. Congress would need to pass legislation to create a new approval pathway and the FDA may also then
promulgate associated regulations or guidance. The Obama Administration has expressed support for the creation
of such an approval pathway for biosimilars, including as a part of its broader healthcare reform effort, which the
Administration has identified as one of its top priorities. In late 2009, both the full House of Representatives and
the Senate passed bills that would provide twelve years of data exclusivity for innovative biological products.
Data exclusivity protects the data in the innovator’s regulatory application by, for a limited period of time,
prohibiting others from gaining FDA approval based, in part, on reliance or reference to the innovator’s data in
their application to the FDA. The debate on biosimilars continues, however, with a number of members of the
U.S. Congress and the Obama administration supporting a shorter period of data exclusivity. We cannot predict
what the specific provisions of any final legislation might be or the timing of implementation of the pathway by
the FDA. To the extent that an abbreviated biosimilar pathway is created through legislation in the United States,
we would likely face greater competition and downward pressure on our product prices, sales and revenues, sub-
ject to our ability to enforce our patents. Further, biosimilar manufacturers with approved products in Europe
may seek to quickly obtain U.S. approval if an abbreviated regulatory pathway for biosimilars is adopted. How-
ever, the absence of an abbreviated approval pathway for biosimilar products may not be a complete barrier to
the introduction of biosimilar-type products in the United States.
Concentration of sales at certain of our wholesaler distributors and consolidation of free-standing dialysis
clinic businesses may negatively impact our bargaining power and profit margins.
The substantial majority of our U.S. product sales are made to three pharmaceutical product wholesaler dis-
tributors, AmerisourceBergen Corporation, Cardinal Health, Inc. and McKesson Corporation. These distributors,
in turn, sell our products to their customers, which include physicians or their clinics, dialysis centers, hospitals
and pharmacies. These entities’ purchasing leverage has increased due to this concentration and consolidation
which may put pressure on our pricing by their potential ability to extract price discounts on our products or fees
for other services, correspondingly negatively impacting our bargaining position and profit margins. One of our
products, EPOGEN®, is primarily sold to free-standing dialysis clinics, which have experienced significant con-
solidation. Two organizations, DaVita Inc. and Fresenius North America own or manage a large number of the
outpatient dialysis facilities located in the United States and account for a substantial majority of all EPOGEN®
sales in the free-standing dialysis clinic setting. In October 2006, we entered into a five-year sole sourcing and
supply agreement with an affiliate of Fresenius North America, on its behalf and on behalf of certain of its affili-
ates, whereby they have agreed to purchase, and we have agreed to supply, all of Fresenius North America’s
commercial requirements for ESAs for use in managing the anemia of its hemodialysis patients in the United
States and Puerto Rico, based on forecasts provided by Fresenius North America and subject to the terms and
conditions of the agreement.
Our marketing of ENBREL is dependent in part upon Pfizer (formerly Wyeth).
On October 15, 2009, Pfizer and Wyeth completed their merger and our relationship with Pfizer may be dif-
ferent than our prior relationship with Wyeth. Under a co-promotion agreement, we and Pfizer market and sell
ENBREL in the United States and Canada. A management committee comprised of an equal number of repre-
sentatives from us and Pfizer is responsible for overseeing the marketing and sales of ENBREL including
strategic planning, the approval of an annual marketing plan and the establishment of a brand team. The brand
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