Amgen 2015 Annual Report Download - page 2

omecamtiv mecarbil, a promising opportunity for
us in treating heart failure.
We are encouraged by the wellspring of
innovation occurring in biotechnology globally,
and we maintain an active licensing and
acquisition effort to access these external
opportunities. At Amgen, we systematically
allocate resources across the best of the internal
and external programs available to us within our
six core therapeutic areas. This generates a
productive balance of internal development and
external programs and collaborations, the
outcome of which is reflected in our current
product portfolio. We anticipate that we will
continue to pursue a comparable mix of internal
and external innovations into the future.
Developing Biosimilars to Address an
Emerging Opportunity
Biotechnology-based medicines serve an
increasingly critical role in fighting serious
diseases around the world. With advances in the
science of biotechnology, these therapies are
being utilized for an increasing number of
ailments. As newer biologic medicines come to
market, the first wave of biologics are now
beginning to face competition as patents expire.
Global regulatory authorities are adopting
pathways for approval of competitors to these
off-patent biologics, known as biosimilars, and
there is a clear pathway for approval of
biosimilars in the United States. At Amgen, we
believe that our deep experience in biologics
development and unparalleled capabilities in
biotechnology manufacturing make entry into the
biosimilars market attractive and position us for
leadership. Our program for developing
biosimilars is making good progress, and we
expect to be among the early market entrants.
Amgen has a portfolio of nine biosimilars in
development, with the first of these programs
already undergoing global regulatory reviews in
the US, EU and Canada. We believe this portfolio
represents a substantial opportunity, and global
originator sales for these products exceeded
$50 billion in 2015.
Expanding Internationally to Serve
Global Needs for Medicines That Address
Serious Illness
Demand for innovative medicines that address
serious illness continues to grow across the
globe, especially with aging demographics in
many countries. Amgen is working to tap the
global potential for our medicines. Having
established a target earlier this decade of
operating in 75 countries by 2015, we have
exceeded that goal. Recently, we expanded our
marketing of Prolia® (denosumab), XGEVA®
(denosumab) and Vectibix® (panitumumab)
to 48 countries in Asia, South America, Europe,
Australia and other regions. In addition, we
gained footholds in key expansion markets for
Amgen, including Brazil, China, Colombia, Hong
Kong, Israel, Singapore, South Korea, Taiwan and
Thailand. Early in 2016, we also achieved
approval of Repatha® in Japan, representing the
first product approved through our Japanese
partnership with Astellas.
Building on Amgen’s Competitive Advantage
in Biomanufacturing
We have long held that Amgen’s
biomanufacturing capabilities are a source of
competitive advantage, delivering reliable
supplies of high-quality medicines with
continuously improving efficiency. Through
investment in next-generation biomanufacturing,
we believe we are significantly extending our
advantage. Our initial next-generation
biomanufacturing facility in Singapore has been
constructed in less than half the time and at less
than a quarter of the cost of a traditional facility.
Once licensed, we expect this facility to operate
at a fraction of the cost and at greater reliability
than traditional manufacturing facilities.
Improving Drug Delivery Systems to
Dierentiate Our Biologic Medicines
Biologic medicines are, for the most part,
injected subcutaneously or administered
intravenously. Innovations which make the
delivery of our medicines easier and less costly
offer important opportunities for differentiation.
Recognizing this, we have invested in new ways
to formulate and deliver our medicines and are
beginning to see solid results.
Following our success with the Neulasta®
Onpro™ kit, we expect to achieve additional
differentiation for Repatha® with a single-
injection dosing option for monthly
administration. This was filed with the FDA in
2015. In the future, we plan to continue to
develop proprietary patient- and provider-friendly
delivery systems for our biologic medicines.
Transforming Amgen for the Future
As we bring more medicines to more people in
more places than ever before and continue to
invest in innovation, we must maintain tight
control of our business. That is essential in order
to deliver important, innovative medicines while
generating satisfactory investor returns. Over the
past three years, we have focused our business
and operating model through significant
transformation and process improvement efforts.
This enabled us, in 2015, to drive our adjusted
operating margin* to 48 percent, a four
percentage point improvement over 2014 and
10 percentage point improvement over 2013.
Through our transformation work, we expect to
make continued progress in 2016.
Investing in Long-Term Growth and Returning
Capital to Shareholders
We are committed to investing in innovation to
drive long-term growth while returning capital to
shareholders through dividends and share
buybacks. In 2015, we supported research and
development spending of nearly $4 billion on an
adjusted basis*, or nearly 19% of sales, and
invested approximately $600 million in capital
expenditures to support innovative programs like
next-generation manufacturing. At the same
time, we increased our quarterly 2015 dividend
per share by 30 percent versus 2014, with
payments totaling $2.4 billion. We also
announced a 27 percent dividend increase
effective in the first quarter of 2016. Since we
introduced our dividend in 2011, we have
increased it by a total of 257%. In addition, since
2014, we have repurchased more than $2 billion
of shares. These actions are all consistent with
our commitment to return, on average,
approximately 60% of our adjusted net income*
to shareholders from 2014 through 2018. We
are meeting this commitment while working to
maintain a balance sheet with an investment-
grade rating and sustaining our investment in
long-term growth.
Entering 2016, We Are Excited About
Amgen’s Future
We are at an exhilarating moment in the history
of biotechnology, with a growing number of
opportunities to address serious illness in
important new ways. Excitement and momentum
are palpable at Amgen as we focus on genetic
validation of high-potential biological targets,
next-generation biomanufacturing and
transformational activities that increase our
agility and help us deliver new and meaningful
medicines to patients.
On behalf of the Board of Directors and all of my
Amgen colleagues, I would like to thank our
shareholders for their support of both our
company and our strategy for long-term growth.
Importantly, I would also like to thank my Amgen
colleagues for all that they accomplished in
2015—and all that they do every day. Their deep
devotion to Amgen’s mission and values, coupled
with the alignment of their work to our strategy,
are the driving forces behind our ability to deliver
for shareholders and patients.
Robert A. Bradway
Chairman and Chief Executive Officer
*This is a non-GAAP financial measure. See reconciliation to US generally accepted accounting principles (GAAP) accompanying this letter.