Amgen 2013 Annual Report Download - page 33

the use of certain biologically derived substances because such raw materials may be subject to contamination and/or recall. However, any disruptions or
delays by us or by third-party suppliers or partners in converting to alternatives to certain biologically derived substances and alternative manufacturing
processes or our ability to gain regulatory approval for the alternative materials and manufacturing processes could increase our associated costs or result in
the recognition of an impairment in the carrying value of certain related assets, which could have a material and adverse effect on our business and results of
operations.
Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.
Manufacturing biologic human therapeutic products is difficult, complex and highly regulated. We currently are involved in the manufacture of all of
our principal products and plan to manufacture many of our product candidates. In addition, we currently use third-party contract manufacturers to produce
or assist in the production of ENBREL, Prolia ®, Sensipar®/Mimpara®, Nplate®, XGEVA®, Vectibix® and Kyprolis® and plan to use contract manufacturers
to produce or assist in the production of a number of our late-stage product candidates. Our ability to adequately and timely manufacture and supply our
products and product candidates is dependent on the uninterrupted and efficient operation of our facilities and those of our third-party contract manufacturers,
which may be impacted by:
•capacity of our facilities and those of our contract manufacturers;
•contamination by microorganisms or viruses;
•natural or other disasters, including hurricanes, earthquakes, volcanoes or fires;
•labor disputes or shortages, including the effects of a pandemic flu outbreak, natural disaster, or otherwise;
•degree of compliance with regulatory requirements;
•changes in forecasts of future demand;
•timing and actual number of production runs;
•updating of manufacturing specifications;
•production success rates and yields;
•contractual disputes with our suppliers and contract manufacturers; and
•timing and outcome of product quality testing.
If the efficient manufacture and supply of our products or product candidates is interrupted, we may experience delayed shipments, delays in our
clinical trials, supply constraints, stock-outs and/or recalls of our products. Over the past several years we have initiated a number of voluntary recalls of
certain lots of our products. For example, beginning in September 2010, we initiated a voluntary recall of certain lots of EPOGEN ® and J&J voluntarily
recalled certain lots of PROCRIT®, manufactured by us, because a small number of vials in each lot were found to contain glass lamellae (extremely thin,
barely visible glass flakes) which we believed was a result of the interaction of the product formulation with glass vials during the shelf life of the product.
The recalls were executed in close cooperation with the FDA. We may experience the same or other problems in the future, resulting in broader product recalls,
adverse event trends, delayed shipments, supply constraints, contract disputes and/or stock-outs of our products. If we are at any time unable to provide an
uninterrupted supply of our products to 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
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