Amgen 2004 Annual Report Download - page 26

It is hard to measure performance in one-year
increments. Everything we accomplished in 2004
builds on what we have done in the past. In the
preceding pages, you learned about our company’s
history of scientifi c innovation. You also met a
few of the patients whose lives have been improved
as a result of our efforts. These stories were years
in the making.
Although we can feel proud of how far we have
come in our work to help patients, it is humbling
to consider how many needs are still unmet. The
biggest challenges we face in 2005, or any year, are
discovering, developing and successfully bringing to
market innovative therapies that treat serious illness
effectively and safely. Increasingly, Amgen must also
answer ever more rigorous questions regarding our
medicines and whether they are suffi ciently value-
creating in terms of clear disease-modifying effects
and quality of life improvements to justify the
investments that governments, private payers and
patients make in buying them.
Much has been written about innovation in our
industry, and the debate about who has the best
system, which technologies are right, and what we
can expect shows no sign of easing. We struggle with
those questions, too. While we claim no superior
insights, we know that innovation in a science- and
medicine-based environment is especially challenging.
Our knowledge of biology, while growing, is still
very incomplete, and the human body is complex and
elegant beyond description; and, unlike engineering-
based environments, there are few steps we can take
to rework the product if the initial experimental
results do not demonstrate success. In the biotech-
nology world, creating and sustaining an environment
where innovation can consistently and successfully
happen is a diffi cult task. While this challenge is
daunting, Amgen must meet it in order to continue
to fulfi ll our mission of serving patients suffering
from serious illness.
We at Amgen believe there are 10 key ingredients
vital to innovation success. These 10 are fairly easy to
describe and will not likely strike you as surprising.
The challenge lies in doing them all very well,
simultaneously and over a sustained period of time.
We work on all of these every day, and our work will
never be done. We must be excellent in each area
and, occasionally, a bit lucky to succeed. Here are
Amgen’s top 10 innovation requirements:
1. The best possible R&D leadership. Should we
miss the mark here, all else is compromised. The
tone, standards and role model behavior are set at
the top. I am very confi dent we have it right here.
2. An environment that is open, risk-hungry
and collaborative, and that tolerates healthy dissent
and rewards the right results and behaviors. No
enterprise ever gets this just right. But we try hard,
and our every-two-year all staff survey just taken
in the fall of 2004 says we are healthy and improv-
ing in these areas. Our values, mission, aspiration,
leadership attributes and annual goals defi ne the
social architecture we follow in the uncompromising
pursuit of innovation.
3. The best people. While innovation starts with an
insight by one or a few, successfully bringing that
insight to patients is a vast, multi-functional activity
that requires excellence across the board.
4. Large, sustained and smart investment. We try
to invest on the order of 20 percent of our product
sales in research and development. A clinical trial
can cost in excess of $100 million. An individual
research facility or factory can cost over $500
million. Acquiring a capable and promising yet
small company, such as Tularik, can cost over
$1 billion. Money alone does not assure success,
but meaningful, sustained, smart investment
is a prerequisite to success.
5. Willingness to look outside our company for
new ideas and products and to place big bets.
Fighting the not-invented-here mindset is a challenge
for all good, proud and successful fi rms. However,
we know that only a tiny fraction of the scientists in
the world work at Amgen. Good things are happening
all around us. We must be a reliable, responsive and
capable partner.
Amgen 2004 Annual Report page 24