Amgen 2013 Annual Report Download - page 38

materially and adversely affect the sales of our products, our business and results of operations. Any resulting decrease in demand for our products could also
cause us to experience excess inventory write-offs and/or excess capacity or impairment charges at certain of our manufacturing facilities.
Economic conditions continue to affect our operations and performance outside the United States as well, particularly in countries where government-
sponsored healthcare systems are the primary payers for healthcare expenditures. Credit and economic conditions have adversely impacted the timing of
collections of our trade receivables. (See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation — Financial
Condition, Liquidity and Capital Resources.) Further economic challenges may impact our ability to collect some or all of our receivables, which could have a
material adverse impact on our operating cash flows and a material adverse effect on our financial position, liquidity or results of operations. (See Our sales
depend on coverage and reimbursement from third-party payers.)
We also rely upon third parties for certain parts of our business, including licensees and partners, wholesale distributors of our products, contract
clinical trial providers, contract manufacturers and single third-party suppliers. There may be a disruption or delay in the performance or satisfaction of
commitments to us by these third parties which could have a material adverse effect on the sales of our products, our business and results of operations.
Current economic conditions may adversely affect the ability of our distributors, customers and suppliers to obtain liquidity required to buy inventory or raw
materials and to perform their obligations under agreements with us, which could disrupt our operations. Further, economic conditions appear to have
affected, and may continue to affect, the business practices of our wholesale distributors in a manner that contributes to lower sales of our products. Although
we monitor our distributors', customers' and suppliers' financial condition and their liquidity in order to mitigate our business risks, some of our distributors,
customers and suppliers may become insolvent, which could have a material adverse effect on the sales of our products, our business and results of
operations. These risks may be elevated with respect to our interactions with third parties with substantial operations in countries where current economic
conditions are the most severe, particularly where such third parties are themselves exposed to sovereign risk from business interactions directly with fiscally-
challenged government payers.
We maintain a significant portfolio of investments disclosed as cash equivalents and marketable securities on our Consolidated Balance Sheet. The
value of our investments may be adversely affected by interest rate fluctuations, downgrades in credit ratings, illiquidity in the capital markets and other
factors that may result in other than temporary declines in the value of our investments. Any of those events could cause us to record impairment charges with
respect to our investment portfolio or to realize losses on the sale of investments.
Our stock price is volatile.
Our stock price, like that of our peers in the biotechnology and pharmaceutical industries, is volatile. Our revenues and operating results may fluctuate
from period to period for a number of reasons. Events such as a delay in product development or even a relatively small revenue shortfall may cause financial
results for a period to be below our expectations or projections. As a result, our revenues and operating results and, in turn, our stock price may be subject to
significant fluctuations.
Guidelines and recommendations published by various organizations can reduce the use of our products.
Government agencies promulgate regulations and guidelines directly applicable to us and to our products. However, professional societies, practice
management groups, insurance carriers, physicians, private health/science foundations and organizations involved in various diseases from time to time may
also publish guidelines or recommendations to healthcare providers, administrators and payers, and patient communities. Recommendations by government
agencies or those other groups/organizations may relate to such matters as usage, dosage, route of administration and use of related therapies as well as
reimbursement of our products by government and private payers. In addition, HTA organizations, such as the National Institute for Health and Clinical
Excellence in the UK and the Canadian Agency for Drugs and Technologies in Health, make reimbursement recommendations to payers in their jurisdictions
based on the clinical effectiveness, cost-effectiveness and service impact of new, emerging and existing medicines and treatments. Any recommendations or
guidelines that result in decreased use, dosage or reimbursement of our products could materially and adversely affect our product sales, business and
operating results. In addition, the perception by the investment community or stockholders that such recommendations or guidelines will result in decreased
use and dosage of our products could adversely affect the market price for our common stock.
The commercialization of certain of our product candidates and the marketing of certain of our products is dependent in part on our partners.
We have entered into agreements with third parties to assist in the commercialization of certain of our product candidates and the marketing of certain of
our products in specified geographic areas. (See Item 1. Business — Business Relationships.) Many of these agreements involve the sharing of certain
decisions and a division of responsibilities, costs and benefits. If our partners fail to effectively deliver on their marketing and commercialization
commitments to us or if we and our partners fail to coordinate our efforts effectively, sales of our products may be materially and adversely affected.
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