Amgen 2013 Annual Report Download - page 34

third-party contract manufacturers or third-party service providers cease or interrupt production or if our third-party contract manufacturers and third-party
service providers fail to supply materials, products or services to us, we may experience delayed shipments, supply constraints, stock-outs and/or recalls of
our products. Additionally, we distribute a substantial volume of our commercial products through our primary distribution centers in Louisville, Kentucky
for the United States and in Breda, the Netherlands for Europe and much of the rest of the world. We also conduct all the labeling and packaging of our
products distributed in Europe and much of the rest of the world in Breda, the Netherlands. Our ability to timely supply products is dependent on the
uninterrupted and efficient operations of our distribution and logistics centers, our third-party logistics providers and our labeling and packaging facility in
Breda. Further, we rely on commercial transportation for the distribution of our products to our customers which may be negatively impacted by natural
disasters or security threats.
We perform a substantial amount of our commercial manufacturing activities at our Puerto Rico manufacturing facility and a substantial amount
of our clinical manufacturing activities at our Thousand Oaks, California manufacturing facility; if significant natural disasters or production
failures occur at the Puerto Rico facility, we may not be able to supply these products or, at the Thousand Oaks facility, we may not be able to
continue our clinical trials.
We currently perform all of the formulation, fill and finish for Neulasta ®, NEUPOGEN®, Aranesp®, EPOGEN®, Prolia® and XGEVA® and
substantially all of the formulation, fill and finish operations for ENBREL at our manufacturing facility in Juncos, Puerto Rico. We also currently perform all
of the bulk manufacturing for Neulasta®, NEUPOGEN® and Aranesp®, all of the purification of bulk EPOGEN ® material and substantially all of the bulk
manufacturing for Prolia® and XGEVA® at this facility. We perform substantially all of the bulk manufacturing and formulation, fill and finish, and
packaging for product candidates to be used in clinical trials at our manufacturing facility in Thousand Oaks, California. The global supply of our products
and product candidates is significantly dependent on the uninterrupted and efficient operation of these facilities. A number of factors could materially and
adversely affect our operations, including:
•power failures and/or other utility failures;
•breakdown, failure or substandard performance of equipment;
•improper installation or operation of equipment;
•labor disputes or shortages, including the effects of a pandemic flu outbreak;
•inability or unwillingness of third-party suppliers to provide raw materials and components; and
•natural or other disasters, including hurricanes, earthquakes or fires.
In the past, the Puerto Rico facility has experienced manufacturing component shortages and there was evidence of adverse trends in the microbial
bioburden of the production environment that reduced the production output. The same or other problems may result in our being unable to supply our
products, which could materially and adversely affect our product sales, business and operating results. Our Puerto Rico facility is also subject to the same
difficulties, disruptions or delays in manufacturing experienced in our other manufacturing facilities. For example, the limited number of lots EPOGEN ®
voluntarily recalled in 2010 were manufactured at our Puerto Rico facility. In future inspections, our failure to adequately address the FDA's expectations could
lead to further inspections of the facility or regulatory actions. (See Manufacturing difficulties, disruptions or delays could limit supply of our products and
limit our product sales.)
Our efforts to acquire other companies or products and to integrate their operations may not be successful, and may result in costs, delays or
failures to realize the benefits of the transactions.
We have an ongoing process of evaluating potential merger, acquisition, partnering and in-license opportunities that we expect will contribute to our
future growth and expand our geographic footprint, product offerings and/or our R&D pipeline. Acquisitions may result in unanticipated costs, delays or
other operational or financial problems related to integrating the acquired company and business with our company, which may result in the diversion of our
management's attention from other business issues and opportunities. Failures or difficulties in integrating or retaining new personnel or in integrating the
operations of the businesses that we acquire (including their technology, compliance programs, financial systems, distribution and general business operations
and procedures), while preserving important R&D, distribution, marketing, promotion and other relationships, may affect our ability to grow and may result
in us incurring asset impairment or restructuring charges. For example, on October 1, 2013, we acquired Onyx, a biopharmaceutical company with several
currently marketed products as well as pipeline candidates progressing through the development process and failures or difficulties in the integration of Onyx
could result in a material adverse impact on our business and results of operations.
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