Amgn-12.31.2019-10K Q4 2019
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2019 Letter to Shareholders | Amgen LETTER TO SHAREHOLDERS Robert A. Bradway, Chairman and Chief Executive Officer, Amgen Inc. To My Fellow Shareholders: As I write this letter, Amgen is us confidence that we can play an in our industry, which reflected our approaching a significant milestone: increasingly important role in the global ability to manage our efficiency and our 40th anniversary. The date was healthcare ecosystem. By doing so, we ongoing productivity gains. We invested April 8, 1980, when our founders are also confident that we can continue more than $4.0 billion1 in research established Applied Molecular Genetics to deliver on the commitments that we and development, up 10% from the (later shortened to Amgen) in Thousand make to you, our shareholders. prior year, as we advanced numerous Oaks, California, to explore new potential new medicines across all business opportunities made possible DELIVERING RESULTS stages of our pipeline. by the biotechnology revolution getting We also delivered an attractive underway at that time. As anticipated, total revenues decreased slightly in 2019 as double- return to our shareholders in 2019. Since then, we’ve seen hundreds of digit, volume-driven growth of many of Specifically, Amgen delivered a total biotech companies come and go as our newer medicines did not fully offset shareholder return of 28% last year, Amgen flourished. While Thousand the decline in sales of our off-patent exceeding the 19% average return Oaks still serves as our global legacy products, which faced increased of our peer group. Our five-year headquarters—and our original competition around the world. Total total shareholder return of 73% also building still stands—Amgen ranks revenues of $23.4 billion were down outpaced the average return of our today among the largest companies 2% from the prior year, with non- peer group, which delivered a 46% on the Fortune 500, with more than GAAP earnings per share rising 3% return over the same time period. 23,000 employees in 100 countries to a record $14.82.1 For the full year, Looking at an even longer investment around the world. Amgen achieved a non-GAAP operating horizon, a purchase of $10,000 of margin of 50.2%,1 among the highest Amgen stock the day the company We are proud of what we have accomplished—and eager to do more. We know that an aging global population will require innovative new Total Shareholder Return treatments for illnesses like cancer 2015–2019 and heart disease that claim millions Amgen of lives and cost society hundreds 73% of billions of dollars each year. The pioneering spirit of Amgen —a Amgen Peers 46% hallmark for four decades—gives 2 1This is a non-GAAP financial measure. See reconciliation to U.S. generally accepted accounting principles (GAAP) accompanying this letter. 2019 Letter to Shareholders | Amgen $23.4B $14.82 > $4B 50.2% 2019 Total Revenues Non-GAAP Non-GAAP Research and Non-GAAP Earnings Per Share1 Development Investment1 Operating Margin1 went public in 1983 would have been Strengthening Our Product Portfolio crisis affecting millions of people worth more than $8.6 million as of worldwide, especially women. The We have launched a number of new December 31, 2019, including the statistics are staggering. According medicines in recent years that treat reinvestment of dividends. Additionally, to the World Health Organization, some of the world’s most serious, in 2019, we returned more than one in three women worldwide over prevalent, and costly diseases. We $11 billion to shareholders in the form the age of 50 will suffer a fracture have been able to generate growth of dividends and share repurchases. due to osteoporosis. Each year in from these new products largely the U.S. alone, osteoporosis-related through volume gains, rather than RETURNING TO GROWTH fractures account for 432,000 hospital price increases. This is critical in admissions and 180,000 nursing 2019 was a challenging year and one an environment in which healthcare home admissions—and after the first for which we were prepared. Managing systems around the world are wrestling fracture, a woman is five times more the impact of patent expirations on with how to pay for the quality care likely to suffer another fracture within highly successful products is one that aging populations desire. a year. Amgen has been engaged in of the fundamental challenges that In 2019, for example, we launched the fight against osteoporosis for many all large companies in our industry ® EVENITY®, the first and only years with Prolia , our innovative, eventually face. I was pleased to osteoporosis treatment that both market-leading anti-resorptive therapy. report on an earnings call in January increases bone formation and reduces 2020 that we expect to return to bone loss, thereby rapidly reducing top-line growth this year. There are “The quality of our the risk of fracture. Osteoporosis a few factors driving our expected is a major public health people along with the resurgence, including our recently support of the medical launched products, our community have made Otezla® ongoing global expansion, the blockbuster brand it is today. It’s our robust pipeline clear that our Amgen colleagues possess of potential new the willingness to go beyond the scope of medicines, and our acquisition of their daily task and the competitive drive Otezla®. to deliver above expectations. Together, we will ultimately improve Otezla®’s impact on patients.” – Colley B., who joined Amgen through the Otezla® acquisition 1This is a non-GAAP financial measure. See reconciliation to U.S. generally accepted accounting principles (GAAP) accompanying this letter. 3 2019 Letter to Shareholders | Amgen in more than 50 countries, including 2019 HIGHLIGHT Amgen’s 10 largest markets. Through 2019 HIGHLIGHT the acquisition, we also welcomed ® Acquired Otezla , the only oral, more than 800 new employees to Launched first two biosimilars in non-biologic treatment for Amgen and haven’t missed a beat the U.S. to the cancer treatments psoriasis and psoriatic arthritis ® ® for the more than 400,000 patients Avastin and Herceptin worldwide who have been treated with EVENITY® gives us another weapon in Otezla®. We expect this product to be its original list price. This decision led this fight, and we are encouraged by a key growth driver for us in 2020 and to 20% sales growth in 2019 as more its early performance and long-term beyond. patients, especially senior citizens in potential. the Medicare program, were able to ® ® EVENITY and Otezla join a portfolio access this important medicine at a We further strengthened our product that includes six medicines that in more affordable co-pay. portfolio in 2019 through the $13.4 2019 each generated annual sales in billion acquisition of Otezla®, the excess of $500 million and grew at In addition to new innovative only oral, non-biologic treatment for high-single-digit or double-digit rates. medicines, we are strengthening psoriasis and psoriatic arthritis. Otezla® Repatha®, for example, is Amgen’s our product portfolio by leveraging bolsters our existing inflammation medicine for people with high LDL our decades of biomanufacturing franchise, which includes Enbrel®, our cholesterol who are at risk for heart experience to bring to patients largest product. Otezla® sales in 2019 attacks and strokes—devastating a reliable supply of high-quality totaled nearly $2 billion, with Amgen health events that occur every 40 biosimilars, which are typically priced booking $178 million of these sales seconds in the U.S. In 2018, to address below the originator medicines following the close of the acquisition in access challenges, we made Repatha® with which they compete. In 2019, late November. We acquired the global available in the U.S. at 60% less than AMGEVITA™, our biosimilar to the rights to Otezla®, which is approved autoimmune disease treatment “OneOncology’s trust in Amgen’s biosimilars is rooted in the company’s experience and manufacturing processes. Our decision to be an early MVASI™ and KANJINTI™ adopter is increasingly important to our strategy to deliver high-quality cancer care at lower costs, which benefits patients and payers alike.” – Dr. Jeffrey Patton, Acting Chief Executive Officer and President of Physician Services at OneOncology, a network of leading community cancer centers 4 2019 Letter to Shareholders | Amgen healthcare budgets that can be Expanding Our Geographic Presence 2019 HIGHLIGHT redirected toward our innovative medicines. As the number of For much of our 40-year history, Announced strategic biosimilars in our portfolio grows, we Amgen offered its medicines to collaboration to expand oncology are increasingly able to have more patients primarily in one market: the business in China and advance holistic conversations with healthcare U.S. Although the U.S. remains the our oncology pipeline globally systems about how best to care for world’s largest pharmaceutical market the patients they serve—and how —and therefore continues to be a top to pay for that care. For example, priority for Amgen—the rest of the Humira®, the world’s best-selling AMGEVITA™ is highly complementary world offers increasingly compelling medicine, generated more than to Otezla®, as both medicines treat opportunities to serve more patients $200 million in global sales. We also patients with chronic inflammatory and drive growth. We are especially launched our first two biosimilars in diseases. Similarly, MVASI™ and excited by our prospects in China the U.S., MVASI™ and KANJINTI™, KANJINTI™ complement the many and Japan, the world’s second- and which are biosimilars to the cancer innovative cancer medicines in our third-largest pharmaceutical markets, treatments Avastin® and Herceptin®, portfolio. In 2020, we plan to launch respectively. respectively. In total, Amgen biosimilars AVSOLA™, our biosimilar to the generated $568 million in 2019 In 2019, we announced a strategic inflammation treatment Remicade®, in sales and we believe these medicines collaboration with BeiGene—a the U.S., and we continue to advance represent a significant growth biotechnology company with a large several additional biosimilars through opportunity for us over time.