Amgen 2012 Annual Report Download - page 56

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patients, we may lose patients and physicians may elect to prescribe competing therapeutics instead of our products, which could
materially and adversely affect our product sales, business and results of operations.
Our manufacturing processes and those of our third-party contract manufacturers must undergo a potentially lengthy FDA
or other regulatory approval process and are subject to continued review by the FDA and other regulatory authorities. It can take
longer than five years to build, validate and license a new manufacturing plant and it can take longer than three years to qualify
and license a new contract manufacturer. For example, in order to mitigate the risk associated with the majority of our formulation
and fill operations being performed in a single facility, we are completing the construction and qualification of a new formulation
and filling facility at our Puerto Rico site, and we are modifying and expanding our recently acquired formulation, fill and finish
manufacturing site in Ireland. Upon completion, these facilities will require licensure by the various regulatory authorities.
If regulatory authorities determine that we or our third-party contract manufacturers or certain of our third-party service
providers have violated regulations or if they restrict, suspend or revoke our prior approvals, they could prohibit us from
manufacturing our products or conducting clinical trials or selling our marketed products until we or the affected third-party
contract manufacturers or third-party service providers comply, or indefinitely. Because our third-party contract manufacturers
and certain of our third-party service providers are subject to the FDA and foreign regulatory authorities, alternative qualified
third-party contract manufacturers and third-party service providers may not be available on a timely basis or at all. If we or our
third-party contract manufacturers or third-party service providers cease or interrupt production or if our third-party contract
manufacturers and third-party service providers fail to supply materials, products or services to us, we may experience delayed
shipments, supply constraints, stock-outs and/or recalls of our products. Additionally, we distribute a substantial volume of our
commercial products through our primary distribution centers in Louisville, Kentucky for the United States and in Breda, the
Netherlands for Europe and much of the rest of the world. We also conduct all the labeling and packaging of our products distributed
in Europe and much of the rest of the world in Breda, the Netherlands. Our ability to timely supply products is dependent on the
uninterrupted and efficient operations of our distribution and logistics centers, our third-party logistics providers and our labeling
and packaging facility in Breda. Further, we rely on commercial transportation for the distribution of our products to our customers
which may be negatively impacted by natural disasters or security threats.
We perform a substantial amount of our commercial manufacturing activities at our Puerto Rico manufacturing facility and
a substantial amount of our clinical manufacturing activities at our Thousand Oaks, California manufacturing facility; if
significant natural disasters or production failures occur at the Puerto Rico facility, we may not be able to supply these
products or, at the Thousand Oaks facility, we may not be able to continue our clinical trials.
We currently perform all of the formulation, fill and finish for Neulasta®, NEUPOGEN®, Aranesp®, EPOGEN®, Prolia® and
XGEVA® and substantially all of the formulation, fill and finish operations for ENBREL at our manufacturing facility in Juncos,
Puerto Rico. We also currently perform all of the bulk manufacturing for Neulasta®, NEUPOGEN® and Aranesp®, all of the
purification of bulk EPOGEN® material and substantially all of the bulk manufacturing for Prolia® and XGEVA® at this facility.
We perform substantially all of the bulk manufacturing and formulation, fill and finish, and packaging for product candidates to
be used in clinical trials at our manufacturing facility in Thousand Oaks, California. The global supply of our products and product
candidates is significantly dependent on the uninterrupted and efficient operation of these facilities. A number of factors could
materially and adversely affect our operations, including:
• power failures and/or other utility failures;
• breakdown, failure or substandard performance of equipment;
• improper installation or operation of equipment;
• labor disputes or shortages, including the effects of a pandemic flu outbreak;
• inability or unwillingness of third-party suppliers to provide raw materials and components;
• natural or other disasters, including hurricanes, earthquakes or fires; and
• failures to comply with regulatory requirements, including those of the FDA.
In the past, the Puerto Rico facility has experienced manufacturing component shortages and there was evidence of adverse
trends in the microbial bioburden of the production environment that reduced the production output. The same or other problems
may result in our being unable to supply these products, which could materially and adversely affect our product sales, business
and operating results. Although we have obtained limited insurance to protect against certain business interruption losses, there