Amgen 2013 Annual Report Download - page 31

We expect to face increasing competition from biosimilars.
We currently face competition in Europe from biosimilars, and we expect to face increasing competition from biosimilars in the future. To the extent that
governments adopt more permissive approval frameworks and competitors are able to obtain broader marketing approval for biosimilars, our products will
become subject to increased competition. Expiration or successful challenge of applicable patent rights could trigger such competition, and we could face more
litigation regarding the validity and/or scope of our patents. Our products may also experience greater competition from lower-cost 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 2013, the EMA drafted new overarching guidelines revisions and proposals that seek to facilitate
biosimilar development by clarifying and streamlining the standards required for the approval of biosimilars. In addition, in an effort to spur biosimilar
utilization and/or increase potential healthcare savings, countries in the EU, such as France, may adopt biosimilar uptake measures such as requiring
physician prescribing quotas or automatic substitution by pharmacists of biosimilars for the corresponding reference products. Some EU countries may
impose automatic price reductions upon market entry of the second or third biosimilar competitor. 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 Item 1. Business — Government Regulation — Regulation in the United States — Approval of Biosimilars.) A growing number of companies
have announced their intentions to develop biosimilar versions of existing biotechnology products, including a number of our products as well as the
biosimilars we are working to develop. 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 and/or to 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, 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 7. 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.
Our products face substantial competition.
We operate in a highly competitive environment. (See Item 1. Business — Competition.) Our products compete with other products or treatments for
diseases for which our products may be indicated. Our competitors market products or are actively engaged in R&D in areas where we have products, where
we are developing product candidates or new indications for existing products. In the future, we expect that our products will compete with new drugs currently
in development, drugs currently approved for other indications that may later be approved for the same indications as those of our products and drugs
approved for other indications that are used off-label. Large pharmaceutical companies and generics manufacturers of pharmaceutical products are expanding
into the biotechnology field with increasing frequency, and some pharmaceutical companies and generics manufacturers have formed partnerships to pursue
biosimilars. In addition, some of our competitors may have technical, competitive or other advantages over us for the development of technologies and
processes. These advantages may make it difficult for us to compete with them to successfully discover, develop and market new products and for our
current products to compete with new products or new product indications that these competitors may bring to market. As a result, our products may compete
against products that have lower prices, equivalent or superior performance, better safety profile, are easier to administer, achieve earlier entry into the market
or that are otherwise competitive with our products. Our products may also experience greater competition from lower-cost biosimilars or generics that come to
market as branded products that compete with our products lose their own patent protection. For example, upon the expiry of patent protection for Novartis’s
Zometa® (zolendronic acid) in 2013, a number of companies have launched generic forms of zolendronic acid, which now compete against XGEVA ®. Further,
in November, Teva launched short-acting Granix® in the U.S. to compete with NEUPOGEN® and long-acting lipegfilgrastim in Europe to compete with
Neulasta®. Further, EPOGEN® and Aranesp® may begin to face competition during the second half of 2014 from the launch of MIRCERA ® in the United
States.
Our sales depend on coverage and reimbursement from third-party payers.
Sales of our principal products are dependent on the availability and extent of coverage and reimbursement from third-party payers, including
government healthcare programs and private insurance plans. Governments and private insurers have pursued, and continue to pursue, aggressive cost
containment initiatives, including increased focus on comparing the effectiveness, benefits and costs of similar treatments, which could result in lower
reimbursement rates for our products or narrower populations for whom our products will be reimbursed by payers.
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