Amgen 2011 Annual Report Download - page 34

through direct-to-consumer print and television advertising, and also through the Internet. In addition, for certain
of our products, we promote programs to increase public awareness of the health risks associated with the
diseases these products treat, as well as provide support to various patient education and support programs in the
related therapeutic areas. (See Government Regulation — FDA Regulation of Product Marketing and Promotion
for a discussion of the government regulation over product marketing and promotion.)
In the United States, we sell primarily to pharmaceutical wholesale distributors. We utilize those wholesale
distributors as the principal means of distributing our products to healthcare providers. In Europe, we sell
principally to healthcare providers and/or pharmaceutical wholesale distributors depending on the distribution
practice in each country. We monitor the financial condition of our larger customers, and we limit our credit
exposure by setting credit limits and, for certain customers, by requiring letters of credit.
We had product sales to three customers each accounting for more than 10% of total revenues for the years
ended December 31, 2011, 2010 and 2009. For 2011, on a combined basis, these customers accounted for 72%
and 90% of worldwide gross revenues and U.S. gross product sales, respectively, as noted in the following table.
Certain information with respect to these customers for the years ended December 31, 2011, 2010 and 2009, was
as follows (dollar amounts in millions):
2011 2010 2009
AmerisourceBergen Corporation:
Gross product sales ................................................... $7,574 $7,678 $7,179
% of total gross revenues .............................................. 36% 38% 37%
% of U.S. gross product sales ........................................... 45% 47% 46%
McKesson Corporation:
Gross product sales ................................................... $4,591 $3,913 $3,694
% of total gross revenues. ............................................. 22% 19% 19%
% of U.S. gross product sales ........................................... 27% 24% 24%
Cardinal Health, Inc:
Gross product sales ................................................... $3,021 $2,813 $2,841
% of total gross revenues. ............................................. 14% 14% 15%
% of U.S. gross product sales ........................................... 18% 17% 18%
Reimbursement
Sales of all of our principal products are dependent in large part on the availability and extent of coverage
and reimbursement from third-party payers, including government and private insurance plans. Most patients
receiving our products are covered by government healthcare programs or private insurers. Governments may
regulate coverage, reimbursement and/or pricing of our products to control costs or to affect levels of use of our
products, and private insurers may adopt or be influenced by government coverage and reimbursement
methodologies. Worldwide use of our products may be affected by cost containment pressures and cost shifting
from governments and private insurers to healthcare providers or patients in response to ongoing initiatives to
reduce or reallocate healthcare expenditures. An increasing worldwide focus on patient access controls and cost
containment by public and private insurers has resulted, and may continue to result, in reduced reimbursement
rates for our products. In addition, recent healthcare reform efforts enacted in the United States have made
substantial long-term changes to the reimbursement of our products, and those changes have had, and are
expected to continue to have, a significant impact on our business.
U.S. Reimbursement System
Our principal products are sold primarily in the United States and healthcare providers, including doctors,
hospitals and other healthcare professionals and providers, are reimbursed for covered services and products they
use by the government through Medicare, Medicaid and other government healthcare programs as well as
through private payers. Government healthcare programs are funded primarily through the payment of taxes by
individuals and businesses. The public and private components of this multi-payer system are described below.
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