Amgen 2009 Annual Report Download - page 78

providers or patients in response to ongoing initiatives to reduce or reallocate healthcare expenditures. Therefore,
sales of our principal products have and will continue to be affected by the availability and extent of reimburse-
ment from third-party payers, including government and private insurance plans, and administration of those
programs. Additionally, ongoing healthcare reform efforts may also have a significant impact on our business.
For example healthcare reform, focused on expanding healthcare coverage to millions of uninsured Americans
and reducing the rate of increase in the costs of healthcare, remains a priority for President Obama, U.S. Con-
gress and a number of states. Developments in this area have been highly dynamic and difficult to predict. As
recently as February 23, 2010, President Obama released a new proposal for healthcare reform which includes a
combination of provisions from both the Senate and House of Representatives bills passed in late 2009. Certain
healthcare reform proposals being considered, which may or may not be adopted into law, could:
• restrict the coverage and reimbursement of our products by Medicare, Medicaid and other government
programs
• reduce the number of years of data exclusivity for innovative biological products potentially leading to
earlier biosimilar competition and/or
• require additional healthcare reform costs be borne by pharmaceutical and biotechnology companies
At this time, we cannot predict which or whether any reform measures will be adopted into law.
We primarily earn revenues and income and generate cash from sales of human therapeutic products in the
areas of supportive cancer care, nephrology and inflammation. Our principal products include Aranesp®,EP-
OGEN®, Neulasta®, NEUPOGEN®and ENBREL all of which are sold in the United States. ENBREL is
marketed under a co-promotion agreement with Pfizer in the United States and Canada. Our international product
sales consist principally of European sales of Aranesp®, Neulasta®and NEUPOGEN®. For additional in-
formation about our products, their approved indications and where they are marketed, see “Item 1. Business —
Marketed Products and Selected Product Candidates.” Our product sales are subject to certain influences
throughout the year, including wholesaler and customer buying patterns, both of which fluctuate around holidays,
and contract-driven customer buying. These factors can periodically result in higher U.S. wholesaler distributor
inventory levels in the United States, and therefore higher product sales. We did not experience as large of an in-
crease in wholesaler inventory levels in the fourth quarter of 2009 as in the prior year.
Worldwide product sales for the year ended December 31, 2009 were $14.4 billion, representing a decrease
of 2% compared to 2008. U.S. product sales for the year ended December 31, 2009 were $11.1 billion compared
to $11.5 billion in 2008, representing a decrease of 3%. The decrease in U.S. product sales was largely attribut-
able to a 24% decline in Aranesp®sales primarily reflecting the negative impact of a product safety-related label
change that occurred in August 2008. Combined sales of our other products in the United States in 2009 in-
creased 1% compared to 2008 as increased EPOGEN®sales in 2009 largely offset the decline in ENBREL sales.
This decrease in ENBREL sales primarily reflects the unfavorable change in wholesaler inventories resulting
from an approximate $100 million wholesaler inventory build in 2008 related to the shift of ENBREL to a
wholesaler distribution model.
International product sales were relatively unchanged at $3.2 billion for the year ended December 31, 2009.
International product sales for 2009 were unfavorably impacted by foreign currency exchange rate changes of
$213 million. Excluding the impact of foreign currency exchange rate changes, international product sales for the
year ended December 31, 2009 increased 6%. This increase in international product sales is primarily due to the
launches of Vectibix®, Mimpara®and Nplate®into our existing international markets and the expansion of Neu-
lasta®and NEUPOGEN®into new international territories.
Although changes in foreign currency rates result in increases or decreases in our reported international prod-
uct sales, the benefit or detriment that such movements have on our international product sales are partially offset
by corresponding increases or decreases in our international operating expenses and our related foreign currency
hedging activities. Our hedging activities seek to offset the impact, both positive and negative, that foreign cur-
rency exchange rate changes may have on our net income by hedging our net foreign currency exposure,
primarily with respect to the Euro.
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