What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-09 compared with 2022-02-16 · 217 added, 183 removed, 459 unchanged (47% of the section changed)

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A biotechnology pioneer since 1980, Amgen has grown to be one of the world’s leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.

Our principal products are ENBREL, Prolia, Otezla, XGEVA, Neulasta, Aranesp, Repatha, KYPROLIS and Nplate.

We also market a number of other products, including MVASI, Vectibix, KANJINTI, EVENITY, EPOGEN, BLINCYTO, AMGEVITA, Aimovig, Parsabiv, NEUPOGEN, LUMAKRAS/LUMYKRAS, Sensipar/Mimpara and TEZSPIRE.

Our principal products are ENBREL, Prolia, Otezla, XGEVA, Aranesp, Nplate, Repatha, KYPROLIS, Neulasta and EVENITY.

We also market a number of other products, including MVASI, Vectibix, BLINCYTO, EPOGEN, AMGEVITA, Aimovig, Parsabiv, KANJINTI, LUMAKRAS/LUMYKRAS, TEZSPIRE, NEUPOGEN, Sensipar/Mimpara and TAVNEOS.

For additional information about our products, see Part I, Item 1.

Business—Marketing, Distribution and Selected Marketed Products.

Our strategy includes integrated activities intended to maintain and strengthen our competitive position in the industry.

We focus on six commercial areas:

inflammation, oncology/hematology, bone health, CV disease, nephrology and neuroscience.

And we conduct discovery research primarily in three therapeutic areas:

Our strategy includes integrated activities intended to strengthen our competitive position in the industry.

We operate in six commercial areas:

inflammation, oncology/hematology, bone health, cardiovascular (CV) disease, nephrology and neuroscience.

We conduct discovery research primarily in three therapeutic areas:

inflammation, oncology/hematology and general medicine.

In 2021, we advanced our innovative pipeline, launched new products, completed several strategic transactions to augment our pipeline and research capabilities, and continued providing uninterrupted supplies of our medicines globally through the second year of the COVID-19 pandemic.

We accomplished these objectives while maintaining a strategic and disciplined approach to capital allocation and while advancing our ESG efforts.

In 2021, we continued to advance our pipeline, including achieving key regulatory approvals for LUMAKRAS and TEZSPIRE.

Our external business development activities for 2021 included:

(i) acquiring Five Prime, including a later-stage gastric cancer bemarituzumab program;

(ii) entering into a license agreement with KKC to develop a later-stage molecule for atopic dermatitis and other diseases;

and (iii) acquiring Teneobio for its proprietary technologies and oncology programs in development.

We also continued to advance our biosimilar program with the launch of RIABNI in the United States and introduced our other biosimilars into new markets.

Our biosimilars are expected to continue launching in new markets throughout 2022.

During 2021, while meeting the challenges of a global pandemic and facing increased competition from biosimilars and generics, total product sales were relatively flat as volume growth was offset by lower net selling prices.

Product sales decreased 4% in the United States, driven by lower net selling prices, partially offset by volume growth, and increased 12% ROW, driven by volume growth, partially offset by lower net selling prices.

Total operating expenses increased 13%, driven by IPR&D expense from the Five Prime acquisition and the upfront payment associated with the KKC licensing agreement.

In 2022, we advanced our innovative pipeline, grew our international business, completed a strategic transaction to augment our marketed product portfolio, announced our intention to acquire Horizon and continued providing uninterrupted supplies of our medicines globally through the third year of the COVID-19 pandemic.

We accomplished these objectives while maintaining a strategic and disciplined approach to capital allocation and advancing our ESG efforts.

In 2022, we continued to advance our pipeline, initiating phase 3 clinical trials for a number of programs, including LUMAKRAS/LUMYKRAS for advanced colorectal cancer, olpasiran for CV disease and rocatinlimab for atopic dermatitis.

We continued to grow our international business, including achieving key regulatory approvals for TEZSPIRE in the EU and Japan.

Our external business development activities for 2022 included the acquisition of ChemoCentryx, adding recently launched TAVNEOS to our inflammation portfolio.

We also continued to advance our biosimilar program, with launches in new markets.

Our biosimilars are expected to continue launching in new markets throughout 2023, including the U.S.

launch of AMJEVITA in January 2023.

During 2022, while gradually recovering from the global pandemic and facing increased competition from biosimilars and generics, total product sales increased 2%, primarily driven by volume growth for certain brands, partially offset by declines in net selling prices of certain products and unfavorable changes to foreign currency exchange rates.

Product sales increased 3% in the United States, primarily driven by volume growth, partially offset by declines in net selling prices, and increased 1% in ROW, primarily driven by volume growth, partially offset by unfavorable changes to foreign currency exchange rates and declines in net selling prices.

Total operating expenses decreased 9% due to both the acquired IPR&D write-off from the Five Prime acquisition and a licensing-related upfront payment to KKC in 2021, partially offset by a loss on a nonstrategic divestiture in 2022.

Cash flows from operating activities totaled $9.7 billion, which supported investment in our business while returning capital to shareholders through the payment of cash dividends and stock repurchases.

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We also repurchased 26.1 million shares of our common stock during 2022 at an aggregate cost of $6.3 billion.

In 2021, we issued $4.9 billion and repaid $4.2 billion of debt that was coming due in 2022.

In 2022, we received net proceeds from the issuance of debt of $6.9 billion and extinguished $0.3 billion of debt.

In December 2022, in connection with the proposed acquisition of Horizon, we entered into a bridge credit agreement and a term loan credit agreement which provide for borrowings in the aggregate of $28.5 billion.

Amgen’s approach to and investment in human capital resource management is directed at attracting, motivating, developing and retaining talent to tackle the challenges of running an enterprise focused on the discovery, development and commercialization of innovative medicines.

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We have a long-standing ambition to be environmentally responsible, and we regularly set targets to challenge ourselves to deliver further improvements.

In 2020, we met or exceeded our environmental sustainability targets set out in 2013 that called for reducing fleet carbon output by up to 20%, facility carbon output by 10%, water consumption by 10% and waste disposal by 35%.

2 We achieved our 2020 targets while growing revenues, increasing production capacity and expanding to approximately 100 countries over the same 2013–20 period.

We achieved our targets for the 2013–2020 period while growing revenues, increasing production capacity and expanding to approximately 100 countries over the same period.

To continue on our path to greater environmental sustainability, in January 2021 we announced a new set of long-term environmental targets to achieve by 2027, including achieving carbon neutrality, reducing water consumption by 40% and reducing waste disposed by 75%.

2 Represents reductions against established baselines, taking into account only verified reduction projects, and does not take into account changes associated with contraction or expansion of the Company.

3 Carbon neutrality goal refers to Scope 1 and 2.

(1)(2) Additionally, in 2022 we issued our first green bonds to finance eligible projects that meet specified criteria to reduce our impact on the environment.

Our long-term success depends, to a great extent, on our ability to continue to discover, develop and commercialize innovative products and acquire or collaborate on therapies currently in development by other companies.

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We also face increasing regulatory scrutiny of safety and efficacy both before and after products launch.

Rising healthcare costs and uncertain economic conditions continue to pose challenges to our business, including increasing pressure by third-party payers, such as governments and private payers, to reduce healthcare expenditures.

Rising healthcare costs, uncertain macroeconomic conditions, including higher inflation and rising interest rates, and geopolitical conflicts continue to pose challenges to our business.

As a result of public and private healthcare-provider focus, the industry continues to be subject to cost containment measures and significant pricing pressures, including net price declines.

Moreover, legislation enacted to reduce healthcare expenditures, including provisions of the IRA, have affected, and are likely to continue to affect, our business.

Finally, wholesale and end-user buying patterns can affect our product sales.

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We continue to take appropriate steps to minimize risks to our employees, a significant number of whom have continued to work virtually.

Employee access to company facilities has been in accordance with applicable government health and safety protocols and guidance issued in response to the COVID-19 pandemic.

To date, our remote working arrangements have not significantly affected our ability to maintain critical business operations, and we have not experienced disruptions to or shortages of our supply of medicines.

Since the beginning of the COVID-19 pandemic, we have seen changes in demand for some of our products driven by changes in the frequency of patient visits to doctors’ offices that has impacted the provision of treatments to existing patients and reduced diagnoses in new patients.

During 2021, there was gradual recovery in both patient visits and diagnoses that approached pre-COVID-19 levels early in the fourth quarter.

However late in 2021, the Omicron variant began to impact the healthcare sector and as a result we expect ongoing variability in demand patterns in the first half of 2022.

The cumulative decrease in diagnoses over the course of the pandemic has suppressed the volume of new patients starting treatment, which we expect to continue to impact our business.

We will continue to closely monitor the effects of emerging COVID-19 variants on patient behavior and access to care.

Since early 2021, global vaccination efforts have been under way to control the pandemic.

However, uncertainty remains as to the length of time required for vaccination of a meaningful portion of the population and as to the efficacy of such vaccinations with regard to the trajectory of the pandemic.

Challenges to vaccination efforts, new variants and other causes of virus spread may require governments to issue additional restrictions and/or order shutdowns in various geographies.

Over the course of the pandemic we have experienced changes in demand for some of our products as fluctuations in the frequency of patient visits to doctors’ offices have impacted the provision of treatments to existing patients and reduced diagnoses in new patients.

During 2021, there was a gradual recovery in both patient visits and diagnosis rates that approached pre-pandemic levels.

In 2022, the pandemic continued to impact the healthcare sector and our business, to varying degrees across our markets.

During 2022, with the exception of the Asia Pacific region that was affected by lockdowns during most of the year, we saw greater stability in patient visits and demand patterns even in areas that were facing surges in the virus.

Given the evolution of COVID-19 since its onset, including the proliferation of variants, we cannot predict the impact of future virus surges on our business and will continue to closely monitor the impact of COVID-19 on our business and on the healthcare sector more generally.

Since early 2021, efforts have been under way to control the COVID-19 pandemic.

However, uncertainty remains as to the efficacy of these activities with respect to the ongoing trajectory of the pandemic.

Challenges to vaccination efforts, new variants and other causes of virus spread may require governments to change restrictions and/or shutdown requirements in various geographies.

As a result, we expect to see continued volatility for at least the duration of the pandemic as governments respond to current local conditions.

With respect to our drug development activities, we are continuously monitoring COVID-19 infection rates, including changes from new variants, and working to mitigate effects on future study enrollment in our clinical trials and evaluating the impacts in all countries where our clinical trials occur.

We remain focused on supporting our active clinical sites in their provision of care to patients and in our provision of investigational drug supply.

Despite the ongoing pandemic and business impacts noted above, we believe that existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditures and debt service requirements as well as to engage in capital-return and other business initiatives that we plan to pursue.

For a discussion of the risks the COVID-19 pandemic presents to our results, see Risk Factors in Part I, Item 1A.

With regard to our clinical trial activities, we are continuously monitoring COVID-19 infection rates, including changes from new variants;

we are working to mitigate effects on future study enrollment in our clinical trials;

and we are evaluating the impact in all relevant countries.

We remain focused on supporting our active clinical sites in their providing care for patients and in our providing investigational drug supply.

For a discussion of the risks the COVID-19 pandemic could present to our results, see Part I, Item 1A.

Risk Factors of this Form 10-K.

(1) Represents reductions against established baselines, taking into account only verified reduction projects and does not take into account changes associated with contraction or expansion of the Company.

(2) Carbon neutrality goal refers to Scope 1 and 2.

Selected Financial Information

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Diluted shares 541 (6) % 573

In the following discussion of changes in product sales, any reference to unit demand growth or decline refers to changes in the purchases of our products by healthcare providers (such as physicians or their clinics), dialysis centers, hospitals and pharmacies.

In the following discussion of changes in product sales, any reference to volume growth or decline refers to changes in the purchases of our products by healthcare providers (such as physicians or their clinics), dialysis centers, hospitals and pharmacies.

In addition, any reference to increases or decreases in inventory refers to changes in inventory held by wholesaler customers and end users (such as pharmacies).

Total product sales were relatively flat for 2021, as volume growth was offset by declines in net selling prices.

Total product sales increased in 2022, primarily driven by volume growth for certain brands, including Repatha, Prolia, EVENITY, Nplate, LUMAKRAS/LUMYKRAS, KYPROLIS, Otezla and TEZSPIRE, partially offset by declines in net selling prices of certain products, including Neulasta, Repatha and MVASI, and unfavorable changes to foreign currency exchange rates.

For 2023, we expect that net selling prices will continue to decline at a portfolio level driven by increased competition.

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patients work through deductibles, particularly for products acquired through pharmacy benefit programs.

Throughout the pandemic, we experienced changes in demand for some of our products.

The pandemic has interrupted many physician–patient interactions, which has led to delays in diagnoses and treatments, with varying degrees of impact across our portfolio.

In general, declines in the sales of our products that were impacted by the dynamics of the pandemic were most significant in the early months of the pandemic with product demand beginning to show some recovery in late 2020.

During 2021, we observed gradual recovery from the COVID-19 pandemic, with patient visits and diagnosis rates that approached pre-pandemic levels early in the fourth quarter.

However, late in the year, the Omicron variant began to impact the healthcare sector and as a result, we have seen some shift back to virtual engagement by our field staff and variability in demand patterns.

The cumulative decrease in diagnoses over the course of the pandemic has suppressed the volume of new patients starting treatment, which we expect to continue to impact our business.

Given the unpredictable nature of the pandemic, we expect there could be ongoing intermittent disruptions in physician–patient interactions, and as a result, we continue to expect quarter-to-quarter variability.

As a result of uncertain macroeconomic conditions, we expect volatility around foreign currency exchange rates to continue.

The impact of unfavorable changes to foreign currency exchange rates will be partially offset by corresponding decreases in our international operating expenses.

While not designed to completely address foreign currency changes, our hedging activities also seek to offset, in part, such effects on our net income by hedging our net foreign currency exposure, primarily with respect to product sales denominated in euros.

As discussed above, our product sales have been affected by reduced demand as a result of the COVID-19 pandemic.

In general, the dynamics of the pandemic were most significant on our product sales in the early months of the pandemic, with demand beginning to show some recovery in late 2020.

In late 2021 and early 2022, increased infection rates caused by variants of the virus (including Omicron) led to diminished capacity in the healthcare sector and reduced working days for our own sales force, which impacted our business.

As of the second quarter of 2022, we saw the effects of these variants recede in most markets, which allowed us to engage in increased field-facing activities .

Provider and patient activity also increased, leading to improvements in demand for our products to pre-pandemic levels.

However, the cumulative decrease in diagnoses over the course of the pandemic has suppressed the volume of new patients starting treatment, which continues to impact our business.

Given the unpredictable nature of the pandemic, there could be intermittent disruptions in physician–patient interactions, and as a result, we may experience quarter-to-quarter variability.

In addition, other changes in the healthcare ecosystem have the potential to introduce variability into product sales trends.

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employment have led to changes to the insured population.

Growth in numbers of Medicaid enrollees and uninsured individuals may have a negative impact on product demand and sales.

Growth in numbers of Medicaid enrollees and uninsured individuals, along with provisions of the IRA, may have a negative impact on product sales.

Overall, uncertainty remains around the timing and magnitude of our sales during the COVID-19 pandemic.

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of this Form 10-K.

Other revenues increased for 2021, primarily driven by the sale of COVID-19 antibody material resulting from our manufacturing collaboration.

Operating expenses increased for 2021, driven by IPR&D expense related to the bemarituzumab program acquired as part of the Five Prime acquisition and by the upfront payment associated with the KKC licensing agreement.

Although changes in foreign currency exchange rates result in increases or decreases in our reported international product sales, the benefit or detriment that such movements have on our international product sales is partially offset by corresponding increases or decreases in our international operating expenses and our related foreign currency hedging activities.

Our hedging activities seek to offset the impacts, both positive and negative, that foreign currency exchange rate changes may have on our net income by hedging our net foreign currency exposure, primarily with respect to product sales denominated in euros.

The net impact from changes in foreign currency exchange rates was not material in 2021, 2020 or 2019.

Other revenues decreased for 2022, driven by lower revenue from COVID-19 antibody material and licensing-related revenues.

Operating expenses decreased for 2022 due to both the acquired IPR&D write-off related to the bemarituzumab program acquired as part of the Five Prime acquisition and a licensing-related upfront payment to KKC in 2021, partially offset by a loss

on a nonstrategic divestiture in 2022.

See Part IV—Note 2, Acquisitions and divestitures, and Note 8, Collaborations, to the Consolidated Financial Statements.

Results of Operations

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XGEVA 2,014 — % 2,018 6 % 1,899

Neulasta 1,734 (24) % 2,293 (29) % 3,221

Aranesp 1,421 (4) % 1,480 (6) % 1,568

Nplate 1,307 27 % 1,027 21 % 850

Repatha 1,296 16 % 1,117 26 % 887

KYPROLIS 1,247 13 % 1,108 4 % 1,065

Nplate 1,027 21 % 850 7 % 795

Neulasta 1,126 (35) % 1,734 (24) % 2,293

EVENITY 787 48 % 530 51 % 350

Other products (1)

5,570 5 % 5,321 (1) % 5,374

Total product sales $ 24,801 2 % $ 24,297 — % $ 24,240

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Total product sales $ 24,801 2 % $ 24,297 — % $ 24,240

* Change in excess of 100%.

(1) Consists of product sales of our non-principal products, as well as our Gensenta and Bergamo subsidiaries.

Future sales of our products will depend in part on the factors discussed in the Overview, Part I, Item 1.

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Total ENBREL $ 4,117 (8) % $ 4,465 (11) % $ 4,996

The decrease in ENBREL sales for 2021 was driven by lower net selling price, unit demand and unfavorable changes in inventory.

The decrease in ENBREL sales for 2022 was primarily driven by unfavorable changes to estimated sales deductions, lower volume and lower net selling price.

For 2023, we expect ENBREL to follow the historical pattern of lower sales in the first quarter relative to subsequent quarters due to the impact of benefit plan changes, insurance reverification and increased co-pay expenses as U.S.

patients work through deductibles.

In addition, for 2022, we expect net selling price to decline.

The decrease in ENBREL sales for 2020 was driven by lower unit demand and net selling price, partially offset by favorable changes to estimated sales deductions and inventory.

In addition, for 2023, we expect further declines in net selling price.

The decrease in ENBREL sales for 2021 was driven by lower net selling price, volume and unfavorable changes to inventory.

Total Prolia sales by geographic region were as follows (dollar amounts in millions):

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Total Prolia $ 3,628 12 % $ 3,248 18 % $ 2,763

The increase in global Prolia sales for 2021 was primarily driven by higher unit demand.

The increase in global Prolia sales for 2020 was driven by higher unit demand and net selling price.

The increase in global Prolia sales for 2022 was driven by volume growth and higher net selling price, partially offset by unfavorable changes to foreign currency exchange rates.

The increase in global Prolia sales for 2021 was primarily driven by volume growth.

Total Otezla sales by geographic region were as follows (dollar amounts in millions):

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Total Otezla $ 2,288 2 % $ 2,249 2 % $ 2,195

* Change in excess of 100%.

The increase in global Otezla sales for 2021 was driven by higher unit demand, partially offset by lower net selling price and unfavorable changes to inventory.

The increase in global Otezla sales for 2022 was primarily driven by volume growth, partially offset by lower net selling price.

ROW Otezla sales for 2022 were impacted by unfavorable changes to foreign currency exchange rates.

For 2023, we expect Otezla to follow the historical pattern of lower sales in the first quarter relative to subsequent quarters due to the impact of benefit plan changes, insurance reverification and increased co-pay expenses as U.S.

patients work through deductibles.

Otezla was acquired on November 21, 2019, and generated $2.2 billion and $178 million in global sales for the years ended December 31, 2020 and 2019, respectively.

The increase in global Otezla sales for 2021 was driven by volume growth, partially offset by lower net selling price and unfavorable changes to inventory.

For a discussion of ongoing litigation related to Otezla, see Part IV—Note 19, Contingencies and commitments, to the Consolidated Financial Statements.

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Total XGEVA $ 2,014 — % $ 2,018 6 % $ 1,899

The increase in global XGEVA sales for 2021 was primarily driven by higher unit demand, partially offset by lower net selling price.

The decrease in global XGEVA sales for 2020 was driven by lower unit demand as a result of the COVID-19 pandemic.

Total Neulasta sales by geographic region were as follows (dollar amounts in millions):

Year ended December 31, 2021 Change Year ended December 31, 2020 Change Year ended December 31, 2019

Neulasta — U.S.

$ 1,514 (24) % $ 2,001 (29) % $ 2,814

Neulasta — ROW 220 (25) % 292 (28) % 407

Total Neulasta $ 1,734 (24) % $ 2,293 (29) % $ 3,221

The decreases in global Neulasta sales for 2021 and 2020 was primarily driven by lower net selling price and unit demand.

Increased competition as a result of biosimilar versions of Neulasta has had and will continue to have a significant adverse impact on brand sales, including accelerating net price erosion and lower unit demand.

We also expect other biosimilar versions, including biosimilars that will use an on-body injector that would compete with our Onpro injector, to be approved in the future.

For a discussion of ongoing patent litigations related to biosimilars, see Part IV—Note 19, Contingencies and commitments, to the Consolidated Financial Statements.

Global XGEVA sales were relatively unchanged for 2022 as higher net selling price was offset by lower volume as a result of increased competition and unfavorable changes to foreign currency exchange rates.

The increase in global XGEVA sales for 2021 was primarily driven by volume growth, partially offset by lower net selling price.

Total Aranesp sales by geographic region were as follows (dollar amounts in millions):

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Total Aranesp $ 1,421 (4) % $ 1,480 (6) % $ 1,568

The decrease in global Aranesp sales for 2021 was primarily driven by lower net selling price due to competition.

The decrease in global Aranesp sales for 2020 was driven by declines in net selling price and unit demand.

Aranesp continues to face competition from a long-acting ESA and from a biosimilar version of EPOGEN, which will continue to impact sales in the future.

The decrease in global Aranesp sales for 2022 was driven by lower net selling price and unfavorable changes to foreign currency exchange rates, partially offset by favorable changes to estimated sales deductions and volume growth.

The decrease in global Aranesp sales for 2021 was primarily driven by lower net selling price.

Aranesp continues to face competition from a long-acting erythropoiesis-stimulating agent (ESA) and from a biosimilar version of EPOGEN, which will impact net selling price and volume in the future.

Total Nplate sales by geographic region were as follows (dollar amounts in millions):

Year ended December 31, 2022 Change Year ended December 31, 2021 Change Year ended December 31, 2020

Nplate — U.S.

$ 848 50 % $ 566 17 % $ 485

Nplate — ROW 459 — % 461 26 % 365

Total Nplate $ 1,307 27 % $ 1,027 21 % $ 850

The increase in global Nplate sales for 2022 was driven by volume growth.

Nplate sales for 2022 included a $207 million order in the fourth quarter from the U.S.

The increase in global Nplate sales for 2021 was primarily driven by volume growth.

Total Repatha sales by geographic region were as follows (dollar amounts in millions):

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Total Repatha $ 1,296 16 % $ 1,117 26 % $ 887

The increases in global Repatha sales for 2021 and 2020 was driven by higher unit demand, partially offset by lower net selling price.

Contracting changes to improve Medicare Part D patient access resulted in the decrease to net selling price.

The increase in global Repatha sales for 2022 was driven by volume growth, partially offset by lower net selling price and unfavorable changes to foreign currency exchange rates.

Volume benefited from contracting changes to support and improve Medicare Part D and commercial patient access and the inclusion of Repatha on China’s National Reimbursement Drug List as of January 1, 2022, both of which resulted in decreases to the net selling price in 2022.

The increase in global Repatha sales for 2021 was driven by volume growth, partially offset by lower net selling price.

For a discussion of ongoing litigation related to Repatha, see Part IV—Note 19, Contingencies and commitments, to the Consolidated Financial Statements.

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Total KYPROLIS $ 1,247 13 % $ 1,108 4 % $ 1,065

The increase in global KYPROLIS sales for 2021 was primarily driven by higher unit demand.

The increase in global KYPROLIS sales for 2020 was primarily driven by an increase in net selling price and favorable changes in inventory, partially offset by lower unit demand.

The increases in global KYPROLIS sales for 2022 and 2021 were primarily driven by volume growth.

The FDA has reported that it has granted tentative or final approval of ANDAs for generic carfilzomib products filed by a number of companies.

The date of approval of those ANDAs for generic carfilzomib products is governed by the Hatch–Waxman Act and any applicable settlement agreements between us and certain companies that seek to develop generic carfilzomib products.

Total Nplate sales by geographic region were as follows (dollar amounts in millions):

Total Neulasta sales by geographic region were as follows (dollar amounts in millions):

Year ended December 31, 2022 Change Year ended December 31, 2021 Change Year ended December 31, 2020

Nplate — U.S.

Neulasta — U.S.

$ 959 (37) % $ 1,514 (24) % $ 2,001

Nplate — ROW 461 26 % 365 16 % 315

Total Nplate $ 1,027 21 % $ 850 7 % $ 795

The increases in global Nplate sales for 2021 and 2020 was primarily driven by higher unit demand.

Neulasta — ROW 167 (24) % 220 (25) % 292

Total Neulasta $ 1,126 (35) % $ 1,734 (24) % $ 2,293

The decreases in global Neulasta sales for 2022 and 2021 were driven by lower net selling price and volume.

We also expect other biosimilar versions, including biosimilars that will use an on-body injector that would compete with our Onpro injector, to be approved in the future.

Total EVENITY sales by geographic region were as follows (dollar amounts in millions):

Year ended December 31, 2022 Change Year ended December 31, 2021 Change Year ended December 31, 2020

EVENITY — U.S.

$ 533 61 % $ 331 73 % $ 191

EVENITY — ROW 254 28 % 199 25 % 159

Total EVENITY $ 787 48 % $ 530 51 % $ 350

The increases in global EVENITY sales for 2022 and 2021 were driven by volume growth across our markets.

Other products

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497 (6) % 526 12 % 469

KANJINTI — U.S.

479 1 % 475 * 118

KANJINTI — ROW 93 1 % 92 (15) % 108

EVENITY — U.S.

331 73 % 191 * 42

EVENITY — ROW 199 25 % 159 8 % 147

EPOGEN — U.S.

521 (13) % 598 (31) % 867

BLINCYTO — U.S.

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247 27 % 194 31 % 148

EPOGEN — U.S.

506 (3) % 521 (13) % 598

AMGEVITA — ROW

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398 27 % 313 (17) % 378

Aimovig — ROW 4 N/A — N/A —

Aimovig — ROW 16 * 4 NM —

Parsabiv — U.S.

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Parsabiv— ROW 129 (1) % 130 17 % 111

NEUPOGEN — U.S.

KANJINTI — U.S.

257 (46) % 479 1 % 475

NEUPOGEN — ROW 67 (17) % 81 (6) % 86

KANJINTI — ROW 59 (37) % 93 1 % 92

LUMAKRAS — U.S.

82 N/A — N/A —

222 * 82 NM —

LUMYKRAS — ROW

8 N/A — N/A —

TEZSPIRE — U.S.

170 NM — NM —

NEUPOGEN — U.S.

87 (14) % 101 (30) % 144

NEUPOGEN — ROW 57 (15) % 67 (17) % 81

Sensipar — U.S.

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Sensipar/Mimpara — ROW 54 (31) % 78 (60) % 196

TAVNEOS — U.S.

TAVNEOS — ROW (1)

296 47 % 202 85 % 109

Other — ROW (2)

135 (1) % 137 (21) % 174

Total other product sales $ 5,570 5 % $ 5,321 (1) % $ 5,374

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Total other product sales $ 5,570 5 % $ 5,321 (1) % $ 5,374

NM = not meaningful

* Change in excess of 100%

N/A = not applicable

(1) TAVNEOS was acquired on October 20, 2022 from our acquisition of ChemoCentryx.

(2) Consists of Corlanor, AVSOLA, IMLYGIC and RIABNI, as well as sales by our Gensenta and Bergamo subsidiaries.

Operating expenses

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% of total revenues 16.8 % 18.5 % 16.5 %

Acquired in-process research and development $ 1,505 N/A $ — N/A $ —

Acquired in-process research and development $ — NM $ 1,505 NM $ —

% of product sales — % 6.2 % — %

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Total operating expenses $ 16,757 (9) % $ 18,340 13 % $ 16,285

NM = not meaningful

* Change in excess of 100%

N/A = not applicable

Cost of sales

Cost of sales increased to 24.8% of total revenues for 2021, driven by unfavorable product mix and higher profit share and royalties, partially offset by lower amortization expense from acquisition-related assets and lower manufacturing costs.

Cost of sales increased to 24.2% of total revenues for 2020, primarily driven by the amortization of expenses related to our acquisition of Otezla and by higher royalty expenses and profit share, partially offset by lower manufacturing costs.

Cost of sales decreased to 24.3% of total revenues for 2022, driven by lower COVID-19 antibody shipments and manufacturing costs, partially offset by changes in our product mix.

Cost of sales increased to 24.8% of total revenues for 2021, driven by changes in our product mix and higher profit share and royalties, partially offset by lower amortization expense from acquisition-related assets and lower manufacturing costs.

Research and development

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Total R&D expense $ 4,434 $ 4,819 $ 4,207

The increase in R&D expense for 2021 was driven by a licensing-related expense from our collaboration with KKC included in later-stage clinical programs and higher spend in research and early pipeline, including other business development activities.

The increase in R&D expense for 2020 was driven by higher spend for later-stage clinical programs, including LUMAKRAS, biosimilar programs and Otezla, and higher spend for Otezla included in marketed-product support.

These increases were partially offset by recoveries from our collaboration with BeiGene that reduced expenses in later-stage clinical programs and in research and early pipeline, and lower spend in certain oncology programs included in research and early pipeline.

The decrease in R&D expense for 2022 was driven by higher business development activity in 2021 included in later-stage clinical programs and research and early pipeline and lower marketed products support, partially offset by higher later-stage clinical programs support and research and early pipeline spend.

The increase in R&D expense for 2021 was driven by a licensing-related upfront payment to KKC included in later-stage clinical programs and higher spend in research and early pipeline, including other business development activities.

Acquired in-process research and development

Acquired IPR&D expense for 2021 was related to the bemarituzumab program acquired as part of the Five Prime acquisition.

The Acquired IPR&D expense in 2021 was related to the bemarituzumab program, which was acquired as part of the Five Prime acquisition in 2021.

See Part IV—Note 2, Acquisitions and divestitures, to the Consolidated Financial Statements.

Selling, general and administrative

The increase in SG&A expense for 2022 was primarily driven by higher acquisition-related expenses.

The decrease in SG&A expense for 2021 was primarily driven by lower spend for marketed products and lower general and administrative expenses.

The increase in SG&A expense for 2020 was driven by investments in certain marketed products, primarily Otezla, and preparation for product launches, partially offset by a reduction in conference-related expenses due to the impact of COVID-19.

Other operating expenses for 2022 primarily consisted of a loss on a nonstrategic divestiture.

See Part IV—Note 2, Acquisitions and divestitures, to the Consolidated Financial Statements.

Other operating expenses for 2021 primarily consisted of expenses related to cost-savings initiatives and a legal judgment.

Other operating expenses for 2020 primarily consisted of legal settlement expenses.

Other operating expenses for 2019 primarily consisted of expenses related to cost-savings initiatives.

Nonoperating expenses/income and income taxes

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Interest expense, net $ (1,406) $ (1,197) $ (1,262)

Other income, net $ 259 $ 256 $ 753

Other (expense) income, net $ (814) $ 259 $ 256

Provision for income taxes $ 794 $ 808 $ 869

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Interest expense, net

The decrease in Interest expense, net, for 2021 was primarily due to net higher costs associated with the early retirement of debt in 2020 and lower LIBOR rates in 2021 on debt for which we effectively pay a variable rate of interest through the use of interest rate swaps, partially offset by higher overall debt outstanding.

The decrease in Interest expense, net, for 2020 was primarily due to lower LIBOR rates on debt for which we effectively pay a variable rate of interest, partially offset by net costs associated with the early retirement of debt.

Other income, net

The increase in Other income, net, for 2021 was primarily due to lower losses incurred in connection with our BeiGene investment compared with 2020, partially offset by lower income on our interest-bearing investments in 2021 and other nonrecurring gains recognized in 2020.

The decrease in Other income, net, for 2020 was primarily due to reduced interest income as a result of lower average cash balances and a decline in interest yields and losses incurred in connection with our BeiGene investment, partially offset by gains recognized on our investments in publicly traded equity securities and limited partnerships.

See Part IV—Note 9, Investments, to the Consolidated Financial Statements.

The increase in our effective tax rate for 2021 compared with 2020 was primarily driven by the non-deductible IPR&D expense arising from the acquisition of Five Prime, partially offset by earnings mix and adjustments to prior-year tax liabilities.

The decrease in our effective tax rate for 2020 compared with 2019 was primarily driven by favorable items, including audit settlements, adjustments to prior-year tax liabilities, lower interest expense on uncertain tax positions and amortization related to the Otezla acquisition, partially offset by changes in valuation allowance.

The Administration proposed and Congress is considering significant changes to existing tax law.

These changes, if enacted, could substantially increase taxes we pay to the U.S.

Further, the OECD recently reached agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries.

If enacted, this agreement could result in tax increases in both the United States and foreign jurisdictions.

Treasury recently released final foreign tax credit regulations that eliminate U.S.

creditability of the Puerto Rico Excise Tax beginning in 2023, which will increase our U.S.

The increase in Interest expense, net, for 2022 was primarily due to higher overall debt outstanding and higher LIBORs on debt for which we effectively pay a variable rate of interest through the use of interest rate swaps.

The decrease in Interest expense, net, for 2021 was primarily due to net higher costs associated with the early retirement of debt in 2020 and lower LIBORs in 2021 on debt for which we effectively pay a variable rate of interest through the use of interest rate swaps, partially offset by higher overall debt outstanding.

Other (expense) income, net

The change in Other (expense) income, net, for 2022 was primarily due to higher losses recognized in connection with our BeiGene investment compared with 2021 and losses recognized on our investments in limited partnerships, publicly traded equity securities and other strategic investments.

The change in Other (expense) income, net, for 2021 was primarily due to lower losses incurred in connection with our BeiGene investment compared with 2020, partially offset by lower income on our interest-bearing investments in 2021 and other nonrecurring gains recognized in 2020.

The decrease in our effective tax rate for 2022 compared with 2021 was primarily due to the nondeductible IPR&D expense arising from the acquisition of Five Prime in the prior year, partially offset by a nondeductible loss on a nonstrategic divestiture in 2022 and net unfavorable items as compared to the prior year.

The increase in our effective tax rate for 2021 compared with 2020 was primarily driven by the nondeductible IPR&D expense arising from the acquisition of Five Prime, partially offset by earnings mix and adjustments to prior-year tax liabilities.

The Administration and Congress continue to discuss changes to existing tax law that could substantially increase the taxes we pay to the U.S.

Further, the OECD recently reached an agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries.

If enacted, either by all OECD participants or unilaterally by individual countries, this agreement could result in a tax increase that could affect our U.S.

and foreign tax liabilities.

Treasury released final foreign tax credit regulations in December 2021 that eliminated U.S.

creditability of the Puerto Rico Excise Tax beginning in 2023, which would have increased our U.S.

tax liability.

territory of Puerto Rico is considering changes to its tax system that may minimize or eliminate this impact, but the outcome of such potential changes is uncertain.

Changes to existing tax law in the United States, the U.S.

territory of Puerto Rico, or other jurisdictions, including the potential changes discussed above, could result in tax increases where we do business and could have a material adverse effect on the results of our operations.

In 2017, we received an RAR and a modified RAR from the IRS for the years 2010, 2011 and 2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S.

In response, on June 30, 2022, the U.S.

territory of Puerto Rico enacted Act 52-2022, which provides for an alternate fixed tax rate on industrial development income that the U.S.

Treasury confirmed will be creditable under federal law.

As part of this new law, eligible businesses will be subject to incremental income and withholding taxes in lieu of payment of the Puerto Rico Excise Tax.

In order to qualify for the alternative fixed tax rate, our current tax grant with the Puerto Rico government was amended in December 2022.

We qualify for this alternative fixed tax rate, beginning January 1, 2023 and our tax expense will increase.

In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S.

territory of Puerto Rico.

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In July 2021, we filed a petition in the U.S.

Tax Court to contest two duplicate Notices for 2010, 2011 and 2012 that we received in May and July 2021 which seek to increase our U.S.

taxable income.

The Notices seek to increase our U.S.

taxable income by an amount that would result in additional federal tax of approximately $3.6 billion plus interest.

Any additional tax that could be imposed would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings.

We firmly believe that the IRS’s positions set forth in the Notices are without merit, and we are contesting the Notices through the judicial process.

In 2020, we received an RAR and a modified RAR from the IRS for the years 2013, 2014 and 2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S.

territory of Puerto Rico similar to those proposed for the years 2010, 2011 and 2012.

We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office.

We were unable to reach resolution at the administrative appeals level, and we anticipate that we will receive a statutory notice of deficiency for these years as well.

We expect to contest any such notice related to 2013–15 through the judicial process.

We are also currently under examination by the IRS for the years 2016, 2017 and 2018 and by a number of state and foreign tax jurisdictions.

Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for the years 2010–2012 that we received in May and July 2021, which seek to increase our U.S.

taxable income for the years 2010–2012 by an amount that would result in additional federal tax of approximately $3.6 billion plus interest.

Any additional tax that could be imposed for the years 2010–2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings.

In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S.

territory of Puerto Rico similar to those proposed for the years 2010–2012.

We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution.

In July 2022, we filed a petition in the U.S.

Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S.

taxable income for the years 2013–2015 by an amount that would result in additional federal tax of approximately $5.1 billion, plus interest.

In addition, the Notice asserts penalties of approximately $2.0 billion.

Any additional tax that could be imposed for the years 2013–2015 would be reduced by up to approximately $2.2 billion of repatriation tax previously accrued on our foreign earnings.

We firmly believe that the IRS positions set forth in the 2010–2012 and 2013–2015 Notices are without merit.

We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process.

The two cases were consolidated in U.S.

Tax Court on December 19, 2022.

We are currently under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period.

In addition, we are under examination by a number of state and foreign tax jurisdictions.

Final resolution of these complex matters is not likely within the next 12 months.

We believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities;

however, due to the complexity of the provision for income taxes and the uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our consolidated financial statements.

We continue to believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities;

however, due to the complexity of the provision for income taxes and

uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our consolidated financial statements.

See Part I, Item 1A.

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Part II, Item 7.

MD&A—Critical Accounting Policies and Estimates—Income taxes;

Management’s Discussion and Analysis or Financial Condition and Results of Operations—Critical Accounting Policies and Estimates, Income taxes;

and Part IV—Note 6, Income taxes, to the Consolidated Financial Statements for further discussion.

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Capital allocation

Consistent with the objective to optimize our capital structure, we deploy our accumulated cash balances in a strategic manner and consider a number of alternatives, including strategic transactions (including those that expand our portfolio of products in areas of therapeutic interest), repayment of debt, payment of dividends and stock repurchases.

Consistent with the objective to optimize our capital structure, we deploy our accumulated cash balances in a strategic manner and consider a number of alternatives, including investments in innovation, both internally and externally, strategic transactions (including those that expand our portfolio of products in areas of therapeutic interest), repayment of debt, payment of dividends and stock repurchases.

We intend to continue investing in our business while returning capital to stockholders through the payment of cash dividends and stock repurchases, thereby reflecting our confidence in the future cash flows of our business and our desire to optimize our cost of capital.

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We also returned capital to stockholders through our stock repurchase program.

During 2021, we repurchased and had cash settlements of $5.0 billion of common stock.

During 2022, we repurchased $6.3 billion of common stock, including $6.0 billion under ASR agreements and had cash settlements for stock repurchases of $6.4 billion.

In 2021, we repurchased and had cash settlements of $5.0 billion of common stock.

In 2019, we repurchased $7.6 billion of common stock and had cash settlements of $7.7 billion.

In March 2021, October 2021 and December 2021, the Board of Directors increased the amount authorized under our stock repurchase program by $3.4 billion, $4.5 billion and $5.0 billion, respectively.

In 2020, we repurchased and had cash settlements of $3.5 billion of common stock.

In October 2022, the Board of Directors increased the amount authorized under our stock repurchase program by $2.4 billion.

As of December 31, 2022, $7.0 billion remained available under the stock repurchase program.

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The carrying values of our long-term borrowings are net of fair value adjustments for interest rate swaps and unamortized discounts, premiums and offering costs.

As of December 31, 2021, S&P, Moody’s and Fitch assigned credit ratings to our outstanding senior notes of A– with a stable outlook, Baa1 with a stable outlook and BBB+ with a stable outlook, respectively, which are considered investment grade.

As of December 31, 2022, S&P, Moody’s and Fitch assigned credit ratings to our outstanding senior notes of BBB+, Baa1 and BBB+, respectively, which are considered investment grade.

Unfavorable changes to these ratings may have an adverse impact on future financings.

During 2021 and 2020, we issued debt with aggregate principal amounts of $5.0 billion and $9.0 billion, respectively.

During 2019, we did not issue any debt or debt securities.

During 2021, 2020 and 2019, we repaid/redeemed debt of $4.2 billion, $6.5 billion and $4.5 billion, respectively.

During 2022, 2021 and 2020, we issued debt with aggregate principal amounts of $7.0 billion, $5.0 billion and $9.0 billion, respectively.

During 2022, we repurchased portions of our debt at a cost of $0.3 billion.

During 2021 and 2020, we repaid/redeemed debt of $4.2 billion and $6.5 billion, respectively.

In addition, during 2020, we exchanged $0.7 billion of certain of our outstanding note issuances with $0.9 billion of newly issued notes with a lower interest rate and later maturity date.

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These interest rate swap contracts qualify and are designated as fair value hedges.

As of December 31, 2021 and 2020, we had interest rate swap contracts with aggregate notional amounts of $6.7 billion and $5.9 billion, respectively.

As of both December 31, 2022 and 2021, we had interest rate swap contracts with aggregate notional amount of $6.7 billion.

To hedge our exposure to foreign currency exchange rate risk associated with certain of our long-term notes denominated in foreign currencies, we entered into cross-currency swap contracts, which effectively convert the interest payments and principal repayment of the respective notes from euros, pounds sterling and Swiss francs to U.S.

These cross-currency swap contracts qualify and are designated as cash flow hedges.

As of both December 31, 2021 and 2020, we had cross-currency swap contracts with aggregate notional amounts of $3.4 billion and $4.8 billion, respectively.

As of both December 31, 2022 and 2021, we had cross-currency swap contracts with aggregate notional amount of $3.4 billion.

As of December 31, 2022, we had a commercial paper program that allows us to issue up to $2.5 billion of unsecured commercial paper to fund our working-capital needs.

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Annual commitment fees for this agreement are 0.1% of the unused portion of the facility based on our current credit rating.

Generally, we would be charged interest for any amounts borrowed under this facility, based on our current credit rating, at (i) LIBOR plus 1% or (ii) the highest of (A) the syndication agent bank base commercial lending rate, (B) the overnight federal funds rate plus 0.50% or (C) one-month LIBOR plus 1%.

The agreement contains provisions related to the determination of successor rates to address the possible phaseout or unavailability of designated reference rates.

In December 2022, this revolving credit agreement was further amended to replace LIBOR with SOFR as the reference rate, pursuant to provisions contained therein related to determination of successor rates in case of phaseout or unavailability of existing designated reference rates.

Generally, we would be charged interest for any amounts borrowed under this facility, based on our current credit rating, at (i) SOFR plus 1.125% or (ii) the highest of (A) the syndication agent bank base commercial lending rate, (B) the overnight federal funds rate plus 0.50% or (C) one-month SOFR plus 1.1%.

As of December 31, 2022 and 2021, no amounts were outstanding under this facility.

As of December 31, 2022, no amounts have been borrowed under either agreement.

See Part IV—Note 2, Acquisitions and divestitures, to the Consolidated Financial Statements.

It is anticipated that the U.S.

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As such, we expect SOFR to become widely adopted by market participants.

We do not expect this change to have a material impact on our financial statements.

We do not expect this change to have a material impact on our consolidated financial statements.

See Part I, Item 1A.

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Under this shelf registration statement, all of the securities available for issuance may be offered from time to time with terms to be determined at the time of issuance.

This shelf registration statement expires in February 2023.

This shelf registration statement expires in February 2023, and our Board has approved a new shelf registration statement to replace it.

Certain of our financing arrangements contain nonfinancial covenants.

In addition, our revolving credit agreement includes a financial covenant that requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (Consolidated EBITDA) to (ii) Consolidated Interest Expense, each as defined and described in the credit agreement.

In addition, our revolving credit agreement, bridge credit agreement and term loan credit agreement include a financial covenant that requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (Consolidated EBITDA) to (ii) Consolidated Interest Expense, each as defined and described in the respective agreements.

We were in compliance with all applicable covenants under these arrangements as of December 31, 2022.

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Net cash provided by operating activities $ 9,721 $ 9,261 $ 10,497

Net cash provided by (used in) investing activities $ 733 $ (5,401) $ 5,709

Net cash (used in) provided by investing activities $ (6,044) $ 733 $ (5,401)

Net cash used in financing activities $ (4,037) $ (8,271) $ (4,867)

Cash provided by operating activities has been and is expected to continue to be our primary recurring source of funds.

Cash provided by operating activities increased in 2022 primarily due to the timing of payments for sales incentives and discounts, vendor purchases, liabilities to tax authorities and receipts from corporate partners, partially offset by higher manufacturing activities in the current year.

Cash provided by operating activities decreased during 2021 primarily due to the monetization of interest rate swaps that occurred in 2020 and the timing of payments for sales incentives and discounts.

Cash provided by operating activities increased during 2020 primarily due to higher Net income after adding back the noncash amortization related to the acquisition of Otezla, the monetization of interest rate swap contracts and working-capital adjustments.

Cash used in investing activities during 2022 was primarily due to our $3.8 billion purchase of ChemoCentryx and net cash outflows related to marketable securities of $1.4 billion.

Cash provided by investing activities during 2021 was primarily due to net cash inflows related to marketable securities of $4.3 billion, partially offset by cash used in the acquisitions of Teneobio and Five Prime of $2.5 billion.

Cash used in investing activities during 2020 was primarily due to our $3.2 billion of purchases of equity method investments, primarily BeiGene, and net cash outflows related to marketable securities of $1.5 billion.

Cash provided by investing activities during 2019 was primarily due to net cash inflows related to marketable securities of $20.0 billion which occurred primarily to fund our acquisition of Otezla and investment in BeiGene.

Capital expenditures were $936 million, $880 million and $608 million in 2022, 2021 and 2020, respectively.

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A majority of the increase in expenditures relates to expansion of manufacturing capacity to enable supply of products and product candidates.

Cash used in financing activities during 2022 was primarily due to payments to repurchase our common stock of $6.4 billion and dividends paid of $4.2 billion, partially offset by proceeds from the issuance of debt of $6.9 billion.

Cash used in financing activities during 2021 was primarily due to payments to repurchase our common stock of $5.0 billion and the payment of dividends of $4.0 billion, partially offset by proceeds from the issuance of debt, net of repayments of $0.8 billion.

Cash used in financing activities during 2020 was primarily due to the payment of dividends of $3.8 billion and payments to repurchase our common stock of $3.5 billion, partially offset by proceeds from issuance of debt, net of repayments of $2.5 billion.

Cash used in financing activities during 2019 was primarily due to payments to repurchase our common stock of $7.7 billion, repayment of debt of $4.5 billion and payments of dividends of $3.5 billion.

See Part IV—Note 9, Investments;

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Except with respect to the fair value of the contingent consideration of approximately $0.3 billion, these obligations are not recorded on our Consolidated Balance Sheets.

As of December 31, 2021, the maximum amount that may be payable in the future for agreements we have entered into with third parties is $7.4 billion, including $1.6 billion of contingent consideration payments in connection with our Teneobio acquisition.

As of December 31, 2022, the maximum amount that may be payable in the future for agreements we have entered into with third parties is $5.6 billion.

We have recorded liabilities for UTBs that, because of their nature, have a high degree of uncertainty regarding the timing of future cash payment and other events that extinguish these liabilities.

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and we accrue these rebates in the period the related sales are recorded.

We then adjust the rebate accruals as more information becomes available and to reflect actual claims experience.

We then adjust the rebate accruals as more information becomes available and to reflect

actual claims experience.

Estimating such rebates is complicated, in part because of the time delay between the date of sale and the actual settlement of the liability.

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We provide for income taxes based on pretax income and applicable tax rates in the various jurisdictions in which we operate.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities based on the technical merits of the position.

The tax benefit recognized in the consolidated financial statements for a particular tax position is measured based on the largest benefit that is more likely than not to be realized.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by tax authorities based on the technical merits of the position.

The tax benefit recognized in the consolidated financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized.

The amount of UTBs is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by tax authorities, new information obtained during a tax examination or resolution of an examination.

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Income from our operations in Puerto Rico is subject to tax incentive grants through 2050.

territory of Puerto Rico.

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In July 2021, we filed a petition in the U.S.

Tax Court to contest two duplicate Notices for 2010, 2011 and 2012 that we received in May and July 2021, which seek to increase our U.S.

taxable income.

The Notices seek to increase our U.S.

taxable income by an amount that would result in additional federal tax of approximately $3.6 billion plus interest.

Any additional tax that could be imposed would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings.

We firmly believe that the IRS’s positions set forth in the Notices are without merit, and we are contesting the Notices through the judicial process.

territory of Puerto Rico and that are similar to those proposed for the years 2010, 2011 and 2012.