Amgen 2002 Annual Report Download - page 39

Page 37
AMGEN 2002 ANNUAL REPORT
make it difficult for us to compete with them to success-
fully discover, develop, and market new products.
Certain of our raw materials, medical devices and
components are single-sourced from third parties;
third-party supply failures could adversely affect our
ability to supply our products.
Certain raw materials necessary for commercial manufac-
turing and formulation of our products are provided by
single-source unaffiliated third-party suppliers. Also, cer-
tain medical devices and components necessary for fill,
finish, and packaging of our products are provided by
single-source unaffiliated third-party suppliers. Certain of
these raw materials, medical devices, and components are
the proprietary products of these unaffiliated third-party sup-
pliers and, in some cases, such proprietary products are
specifically cited in our drug application with the FDA so
that they must be obtained from that specific sole source
and could not be obtained from another supplier unless
and until the FDA approved that other supplier. We would
be unable to obtain these raw materials, medical devices,
or components for an indeterminate period of time if these
third-party single suppliers were to cease or interrupt pro-
duction or otherwise fail to supply these materials or prod-
ucts to us for any reason, including due to regulatory
requirements or action, due to adverse financial developments
at or affecting the supplier, or due to labor shortages or
disputes. This, in turn, could materially and adversely affect
our ability to satisfy demand for our products, which could
materially and adversely affect our operating results.
Also, certain of the raw materials required in the com-
mercial manufacturing and the formulation of our products
are derived from biological sources, including bovine serum
and human serum albumin, or HSA. We are investigating
screening procedures with respect to certain biological
sources and alternatives to them. Such raw materials may
be subject to contamination and/or recall. A material short-
age, contamination, and/or recall could adversely impact or
disrupt our commercial manufacturing of our products or
could result in a mandated withdrawal of our products from
the market. This too, in turn, could adversely affect our
ability to satisfy demand for our products, which could
materially and adversely affect our operating results.
Our product development efforts may not result in
commercial products.
We intend to continue an aggressive research and devel-
opment program. Successful product development in the
biotechnology industry is highly uncertain, and very few
research and development projects produce a commercial
product. Product candidates that appear promising in the
early phases of development, such as in early human clin-
ical trials, may fail to reach the market for a number of rea-
sons, such as:
•the product candidate did not demonstrate acceptable
clinical trial results even though it demonstrated positive
preclinical trial results
•the product candidate was not effective in treating a spec-
ified condition or illness
•the product candidate had harmful side effects on humans
•the necessary regulatory bodies, such as the FDA, did not
approve our product candidate for an intended use
•the product candidate was not economical for us to man-
ufacture and commercialize
•other companies or people have or may have proprietary
rights to our product candidate, such as patent rights, and
will not let us sell it on reasonable terms, or at all
•the product candidate is not cost effective in light of exist-
ing therapeutics
Several of our product candidates have failed at vari-
ous stages in the product development process, includ-
ing Brain Derived Neurotrophic Factor (“BDNF”) and
Megakaryocyte Growth and Development Factor (“MGDF”).
For example, in 1997, we announced the failure of BDNF
for the treatment of amyotrophic lateral sclerosis, or Lou
Gehrig’s Disease, because the product candidate, when
administered by injection, did not produce acceptable clin-
ical results for a specific use after a phase 3 trial, even though
BDNF had progressed successfully through preclinical and
earlier clinical trials. In addition, in 1998, we discontinued
development of MGDF, a novel platelet growth factor, at
the phase 3 trial stage after several people in platelet dona-
tion trials developed low platelet counts and neutralizing
antibodies. Of course, there may be other factors that pre-
vent us from marketing a product. We cannot guarantee we
will be able to produce commercially successful products.
Further, clinical trial results are frequently susceptible to