Amgen 2010 Annual Report Download - page 85

XGEVA
TM
versus placebo in men with castrate-resistant prostate cancer met its primary endpoint. This study will
form the basis of planned marketing applications, which we expect to submit to regulatory authorities beginning in
the first half of 2011, for the prevention of bone metastases in prostate cancer. Longer-term growth may also be
achieved by the successful development of our late-stage pipeline and strategic business development opportunities,
such as our recently announced agreement to acquire BioVex. In addition, longer-term growth may also be achieved
by expansion into emerging markets and Japan.
Looking forward, we believe our products will continue to face various regulatory, reimbursement and
competitive challenges. Our ESA products, in particular, have several near-term challenges that could result in
further reductions in sales. For example, EPOGEN»sales will be impacted by the Final Rule on Bundling in
Dialysis that became effective in 2011. Further, the NCA opened by CMS in June 2010 and the results of the
MEDCAC meetings held in March 2010 and January 2011 could lead to an NCD for the use of ESAs in patients with
kidney disease, which could impact the use of or reimbursement for ESAs to manage anemia in patients with CKD
and/or dialysis-related anemia. In addition, the FDA-approved REMS for ESAs may continue to impact Aranesp»
sales in the supportive cancer care setting. Future product label changes (including those we proposed prior to the
2010 CRDAC meeting, any others required in connection with TREAT or the CRDAC meeting and any from the
PLR conversion process), may also impact the use of ESAs in CKD. Since we rely in large part on the
reimbursement of our products through government programs such as Medicare and Medicaid, the recently
enacted healthcare reform law has had and will continue to have a material adverse impact on sales of our products
in the United States and on our results of operations. The provisions of the new legislation impacted our
U.S. product sales by approximately $200 million in 2010, and we anticipate that our U.S. product sales in
2011 will be impacted by $250 million to $300 million. Furthermore, we estimate that our results of operations for
2011 will be impacted by an additional $150 million to $200 million related to a new fee on manufacturers and
importers of “branded prescription drugs” established by that legislation, which is not deductible for U.S. federal
income tax purposes. Certain of our products will also continue to face increasing competitive pressure, in
particular ENBREL in the United States, as well as Aranesp», Neulasta»and NEUPOGEN»in Europe as a result of
biosimilars. In addition, over the next several years, the existing patents on our principal products will begin to
expire, and we expect to face increasing competition thereafter. (See Item 1. Business — Marketed Products.)
Certain of these developments are expected to have a material adverse impact on our sales and results of
operations. However, these effects may be mitigated by certain of the opportunities we have to grow our business,
discussed above, by other strategic initiatives or by increased efforts to manage our expenses.
Selected Financial Data
The following table presents selected financial data for the years ended December 31, 2010 and 2009 (amounts
in millions, except percentages and per share data):
2010 Change 2009
Product sales:
U.S. ...................................................... $11,254 1% $11,135
International ................................................ 3,406 6% 3,216
Total product sales ......................................... 14,660 2% 14,351
Other revenues ................................................ 393 35% 291
Total revenues ............................................. $15,053 3% $14,642
Operating expenses............................................. $ 9,508 4% $ 9,136
Operating income .............................................. $ 5,545 1% $ 5,506
Net income .................................................. $ 4,627 — $ 4,605
Diluted EPS .................................................. $ 4.79 6% $ 4.51
Diluted shares ................................................ 965 (5)% 1,021
The following discusses certain key changes in our results of operations for the year ended December 31, 2010
as well as our financial condition as of December 31, 2010.
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