Amgen 2012 Annual Report Download - page 52

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products may also experience greater competition from lower-cost generic or biosimilars that come to market as branded products
that compete with our products lose patent protection.
In the EU, the EC has granted marketing authorizations for several biosimilars pursuant to a set of general and product class-
specific guidelines for biosimilar approvals issued over the past few years. In 2006, the EMA developed and issued regulatory
guidelines related to the development and approval of biosimilars. The guidelines included clinical trial guidance for certain
biosimilars, including erythropoietins and G-CSFs, recommending that applicants seeking approval of such biosimilars conduct
pharmacodynamic, toxicological and clinical safety studies as well as a pharmacovigilance program. Some companies have received
and other companies are seeking approval to market erythropoietin and G-CSF biosimilars in the EU, presenting additional
competition for our products. (See Our marketed products face substantial competition.) For example, following the expiration
of the principal European patent relating to recombinant G-CSF in August 2006, the EC issued marketing authorizations for the
first G-CSF biosimilars and the products were launched in certain EU countries in 2008 and 2009. There are now several G-CSF
biosimilars available in the EU marketed by different companies and these G-CSF biosimilars compete with NEUPOGEN® and
Neulasta®. In December 2012, EMA guidelines on the approval process for monoclonal antibody biosimilars became effective.
In an effort to spur biosimilar utilization and/or increase potential health care savings, countries in the EU may adopt biosimilar
uptake measures such as requiring physician prescribing quotas or automatic substitution by pharmacists of biosimilars for the
corresponding reference products. We cannot predict to what extent the entry of biosimilars or other competing products will
impact future sales of our products in the EU. Our inability to compete effectively could reduce sales, which could have a material
adverse effect on our business and results of operations.
In the United States, with the adoption of the healthcare reform law the FDA was authorized to approve biosimilars under
a separate, abbreviated pathway. (See Our sales depend on coverage and reimbursement from third-party payers.) The law
established a period of 12 years of data exclusivity for reference products in order to preserve incentives for future innovation and
outlined statutory criteria for science-based biosimilar approval standards that take into account patient safety considerations.
Under this framework, data exclusivity protects the data in the innovator's regulatory application by prohibiting, for a period of
12 years, others from gaining FDA approval based in part on reliance or reference to the innovator's data in their application to
the FDA. The law does not change the duration of patents granted on biologic products. On February 9, 2012, the FDA released
three draft guidance documents that provide insight into the FDA's current thinking on the development of biosimilars and broad
parameters for the scientific assessment of biosimilar applications. The documents provide guidance in the development of
biosimilar versions of currently approved biological products and indicate that the clinical trials and other steps required for
approval of each biosimilar will depend on a variety of factors, including the complexity of the protein, the degree of analytical
similarity with the reference product and the potential risks of the product. A growing number of companies have announced their
intentions to develop biosimilar versions of existing biotechnology products, including a number of our products. Further, biosimilar
manufacturers with approved products in Europe may seek to obtain U.S. approval now that the regulatory pathway for biosimilars
has been enacted. In addition, critics of the 12-year exclusivity period in the biosimilar pathway law will likely seek to shorten
the data exclusivity period. President Obama's proposed 2013 budget included a proposal to lower the data exclusivity period to
seven years, but this would require new legislation be passed by Congress. Critics may also encourage the FDA to interpret narrowly
the law's provisions regarding which new products receive data exclusivity. While we are unable to predict the precise impact of
the pending introduction of biosimilars on our products, or the degree to which the FDA's 2012 biosimilar guidelines will contribute
to that impact, we expect in the future to face greater competition in the United States as a result of biosimilars and downward
pressure on our product prices and sales, subject to our ability to enforce our patents. (See Item 7A. Management's Discussion
and Analysis of Financial Condition and Results of Operations — Financial Condition, Liquidity and Capital Resources.) This
additional competition could have a material adverse effect on our business and results of operations.
With respect to the biosimilars we are working to develop (see Item 1. Research and Development and Selected Product
Candidates — Amgen Development of Biosimilars), a number of other companies have announced their intention to develop
biosimilar versions of the same reference products that we are pursuing. Some of these companies may be ahead of us in their
biosimilar development timelines, have certain technical or other advantages over us or have more experience producing or
marketing generic or biosimilar products. Even if we are able to successfully get our biosimilar product candidates approved by
regulatory authorities, this additional competition could limit the ability of our biosimilars to gain market acceptance with
prescribers or payors or otherwise affect the sales of our biosimilars.
We may not be able to develop commercial products.
Successful product development in the biotechnology industry is highly uncertain, and very few R&D projects produce a
commercial product. We intend to continue to make significant R&D investments. Product candidates or new indications for
existing products (collectively, “product candidates”) that appear promising in the early phases of development may fail to reach
the market for a number of reasons, such as: