What changed in this filing

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Item 2. Management’s Discussion and Analysis

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The following MD&A is intended to assist the reader in understanding Amgen’s business.

MD&A is provided as a supplement to and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022, and our Quarterly Report on Form 10-Q for the period ended March 31, 2023.

MD&A is provided as a supplement to and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022, and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023.

Our results of operations discussed in MD&A are presented in conformity with GAAP.

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Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022, and in Part II, Item 1A.

Risk Factors of our Quarterly Report on Form 10-Q for the period ended March 31, 2023.

Risk Factors of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023.

We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made.

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Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Amgen is a biotechnology company committed to unlocking the potential of biology for patients suffering from serious illnesses.

Amgen is a biotechnology company committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics.

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 Prolia, ENBREL, XGEVA, Otezla, Repatha, Aranesp, KYPROLIS, Nplate and EVENITY.

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

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

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

Macroeconomic challenges

Uncertain macroeconomic conditions, including higher inflation, rising interest rates and instability in the financial system, geopolitical conflicts and rising healthcare costs continue to pose challenges to our business.

Uncertain macroeconomic conditions, including higher inflation, rising interest rates and instability in the financial system, as well as rising healthcare costs continue to pose challenges to our business.

Further, ongoing geopolitical conflicts continue to create additional uncertainty in global macroeconomic conditions.

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.

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Significant developments

Following is a summary of selected significant developments affecting our business that occurred since the filing of our Quarterly Report on Form 10-Q for the period ended March 31, 2023.

For additional developments or for a more comprehensive discussion of certain developments discussed below, see our Annual Report on Form 10-K for the year ended December 31, 2022, and our Quarterly Report on Form 10-Q for the period ended March 31, 2023.

FTC challenges to our proposed acquisition of Horizon Therapeutics plc

In May 2023, the FTC filed a complaint in the U.S.

District Court for the Northern District of Illinois (Northern Illinois District Court) seeking a temporary restraining order and preliminary injunction enjoining our proposed acquisition of Horizon, and the parties have since agreed to, and the Northern Illinois District Court has granted, a stipulated temporary restraining order providing that Horizon and Amgen would not close the proposed acquisition until the earlier of October 31, 2023, or the second business day after the Northern Illinois District Court rules on the FTC’s request for a preliminary injunction.

The Northern Illinois District Court scheduled an evidentiary hearing on the FTC’s request for a preliminary injunction beginning on September 11, 2023.

Attorneys general for California, Minnesota, New York, Illinois, Washington and Wisconsin joined the Northern Illinois District Court lawsuit as co-complainants.

On June 22, 2023, the FTC filed an administrative complaint alleging that our proposed acquisition of Horizon would violate federal antitrust laws.

See Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

Following is a summary of selected significant developments affecting our business that occurred since the filing of our Quarterly Report on Form 10-Q for the period ended June 30, 2023.

Acquisition of Horizon Therapeutics plc

On October 6, 2023, Amgen completed its acquisition of Horizon for $116.50 per share in cash, representing a transaction equity value of approximately $27.8 billion.

Horizon is a global biotechnology company focused on the discovery, development and commercialization of medicines that address critical needs of patients impacted by rare, autoimmune and severe inflammatory diseases.

The acquisition aligns with Amgen’s core strategy of delivering innovative medicines that make a significant difference for patients suffering from serious diseases and strengthens Amgen’s leading inflammation portfolio by adding first-in-class, early-in-lifecycle medicines such as TEPEZZA ® (teprotumumab-trbw), KRYSTEXXA ® (pegloticase) and UPLIZNA ® (inebilizumab-cdon), which treat rare inflammatory diseases.

See Part II, Item 1A.

Risk Factors— Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions , of this Quarterly Report.

Products/Pipeline

On August 3, 2023, the Company announced positive top-line results from two late stage clinical studies in oncology.

The DeLLphi-301 study, evaluating tarlatamab, a first-in-class DLL3 targeting bi-specific T-cell engager (BiTE ® ) molecule, in patients with relapsed or refractory small cell lung cancer (SCLC) who had failed two or more prior lines of treatment, demonstrated a durable objective response rate (primary endpoint) that substantially exceeds what was previously reported in the Phase 1 study.

Safety and tolerability were also more favorable compared to the Phase 1 study, with no new safety signals identified.

The Company will discuss these potentially registrational data with regulatory agencies to evaluate tarlatamab as a potential treatment for patients with relapsed or refractory SCLC.

Detailed results will be presented at an upcoming medical congress.

On October 20, 2023, we announced results from the global Phase 2 DeLLphi-301 study, evaluating tarlatamab, an investigational delta-like ligand 3 (DLL3) targeting BiTE ® (bispecific T-cell engager) molecule, in patients with advanced stage small cell lung cancer (SCLC) who had failed two or more prior lines of treatment.

With a median follow-up of 10.6 months, an intention-to-treat analysis that included 100 patients at the selected 10 mg dose, tarlatamab demonstrated an objective response rate (ORR;

primary endpoint) of 40%.

For key secondary endpoints, median progression-free survival (mPFS) was 4.9 months and median overall survival (mOS) was 14.3 months.

There were no new safety signals observed compared to the Phase 1 study.

LUMAKRAS/LUMYKRAS

The CodeBreaK 300 study, a global Phase 3 study evaluating LUMAKRAS/LUMYKRAS combined with Vectibix in patients with chemorefractory metastatic KRAS G12C mutated colorectal cancer (CRC), met its primary endpoint of progression-free survival (PFS) for both the 240 mg and 960 mg doses of LUMAKRAS/LUMYKRAS.

At comparable doses, efficacy results were consistent with what was observed in CodeBreaK 101 with no new safety signals.

The Company will discuss these data with regulatory agencies to evaluate LUMAKRAS/LUMYKRAS in combination with Vectibix as a potential treatment for patients with metastatic KRAS G12C mutated CRC.

Detailed results will be presented at an upcoming medical congress.

The FDA recently granted Breakthrough Therapy Designation to LUMAKRAS in combination with Vectibix for the treatment of patients with metastatic KRAS G12C mutated CRC, as determined by an FDA approved test, who have received prior chemotherapy, based on data from the previous CodeBreaK 101 study.

On October 5, 2023, the FDA convened an Oncologic Drugs Advisory Committee (ODAC) to discuss whether the LUMAKRAS CodeBreaK 200 study could be considered an adequate and well-controlled trial as part of the FDA’s evaluation of whether this data supports the conversion of LUMAKRAS’ accelerated approval for the treatment of non-small cell lung cancer (NSCLC) to a full approval.

Upon review, a majority of the ODAC committee members voted that the CodeBreaK 200 primary endpoint (progression-free survival (PFS) per the blinded independent central review) could not be reliably interpreted.

Regulatory review by the FDA is currently ongoing, and while we cannot speculate on the actions of the FDA and subsequent impact to LUMAKRAS, we will continue to work closely with the FDA on the full approval pathway for this important medicine.

See Part II, Item 1A.

Risk Factors— Our current products and products in development cannot be sold without regulatory approval , of this Quarterly Report.

On October 22, 2023, we announced data from the global Phase 3 CodeBreaK 300 trial evaluating two doses of LUMAKRAS/LUMYKRAS (960 mg or 240 mg) in combination with Vectibix.

Both doses demonstrated a statistically significant superiority in PFS over the investigator’s choice of therapy in patients with chemorefractory G12C-mutated metastatic colorectal cancer (mCRC).

After a median follow-up of 7.8 months, the median PFS was 5.6 months and 3.9 months with LUMAKRAS/LUMYKRAS 960 mg plus Vectibix and LUMAKRAS/LUMYKRAS 240 mg plus Vectibix, respectively, versus 2.2 months with investigator’s choice of therapy (trifluridine and tipiracil, or regorafenib).

Patients at both dose regimens of LUMAKRAS/LUMYKRAS plus Vectibix experienced a longer duration of treatment than those treated with investigator’s choice therapy.

Selected financial information

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In the following discussion of changes in product sales, any reference to unit demand growth or decline refers to changes in 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 increased for the three months ended June 30, 2023, driven by volume growth for certain brands, including Repatha, Prolia, TEZSPIRE, EVENITY, AMJEVITA/AMGEVITA and BLINCYTO, partially offset by declines in net selling prices of certain products, including Neulasta, MVASI and KANJINTI, higher inventory drawdowns compared to the prior year and unfavorable changes to foreign currency exchange rates.

Total product sales increased for the six months ended June 30, 2023, driven by volume growth for certain brands, including Repatha, EVENITY, TEZSPIRE, Prolia, Nplate, BLINCYTO and AMJEVITA/AMGEVITA, partially offset by declines in net selling prices of certain products, including Neulasta, MVASI and KANJINTI, higher inventory drawdowns compared to the prior year, unfavorable changes to estimated sales deductions and unfavorable changes to foreign currency exchange rates.

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) as may be noted.

Total product sales increased for the three months ended September 30, 2023, driven by volume growth for certain brands, including Repatha, Nplate, TEZSPIRE, EVENITY, BLINCYTO and Prolia, partially offset by declines in net selling prices of certain other products, including Neulasta, MVASI and Repatha, and unfavorable changes to estimated sales deductions, including for ENBREL, Neulasta, Otezla and LUMAKRAS/LUMYKRAS.

Total product sales increased for the nine months ended September 30, 2023, primarily driven by volume growth for certain brands, including Repatha, TEZSPIRE, EVENITY, Nplate, Prolia and BLINCYTO, partially offset by declines in net selling prices of certain other products, including Neulasta, MVASI, KANJINTI, Otezla, ENBREL and Repatha, unfavorable changes to estimated sales deductions, including for ENBREL, Prolia and LUMAKRAS/LUMYKRAS, and unfavorable changes to foreign currency exchange rates.

For the remainder of 2023, we expect that net selling price will continue to decline year-over-year at a portfolio level, driven by increased competition.

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

As a result of uncertain macroeconomic conditions and geopolitical conflicts, we expect continued volatility around foreign currency exchange rates.

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.

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.

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

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

In addition, other disruptions, including changes in the healthcare ecosystem, uncertain macroeconomic conditions and geopolitical conflicts, have the potential to introduce variability into product sales.

For example, growth in numbers of Medicaid enrollees and uninsured individuals, provisions of the IRA and actions by governments and other entities to curb high inflation may have a negative impact on product sales.

Our product sales were affected by reduced demand as a result of the COVID-19 pandemic, and the cumulative decrease in diagnoses over the course of the pandemic suppressed the volume of new patients starting treatment, which continues to impact the business.

Given the unpredictable nature of the pandemic, there could be future intermittent disruptions in physician–patient interactions.

In addition, other disruptions, including uncertain macroeconomic conditions, changes in the healthcare ecosystem and geopolitical conflicts, have the potential to introduce variability into product sales.

For example, actions by governments and other entities to curb high inflation, provisions of the IRA and growth in numbers of Medicaid enrollees and uninsured individuals may have a negative impact on product sales.

See Part II, Item 1A.

Risk Factors, of this Quarterly Report.

Other revenues decreased for the three and six months ended June 30, 2023, due to lower revenue from our COVID-19 manufacturing collaboration.

Operating expenses decreased for the three months ended June 30, 2023, driven by a loss on a nonstrategic divestiture in the prior period, partially offset by higher Cost of sales, higher R&D spend and an impairment charge associated with an IPR&D asset.

Operating expenses increased for the six months ended June 30, 2023, driven by higher Cost of sales, expenses related to our restructuring plan, higher R&D spend and an impairment charge associated with an IPR&D asset, partially offset by a loss on a nonstrategic divestiture in the prior period.

See Note 2, Restructuring, and Note 3, Acquisitions and divestitures, to the condensed consolidated financial statements.

Other revenues decreased for the three and nine months ended September 30, 2023, due to lower revenue from our COVID-19 manufacturing collaboration.

Operating expenses increased for the three months ended September 30, 2023, driven by a net impairment charge resulting from the termination of AMG 340, higher profit share expenses and changes in our product mix.

See Note 9, Goodwill and other intangible assets, and Note 12, Fair value measurement, to the condensed consolidated financial statements.

Operating expenses increased for the nine months ended September 30, 2023, primarily driven by a net impairment charge resulting from the termination of AMG 340, changes in our product mix, higher profit share expenses, higher amortization expense from acquisition-related assets and expenses related to our restructuring plan initiated in the first quarter of 2023, partially offset by our loss on the divestiture of Gensenta in the prior period.

See Note 2, Restructuring;

Note 3, Acquisitions and divestitures;

Note 9, Goodwill and other intangible assets;

and Note 12, Fair value measurement, to the condensed consolidated financial statements.

Results of operations

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Repatha 406 309 31 % 1,218 963 26 %

Aranesp 365 357 2 % 720 715 1 %

KYPROLIS 346 317 9 % 704 604 17 %

Nplate 419 288 45 % 1,091 838 30 %

KYPROLIS 349 318 10 % 1,053 922 14 %

Aranesp 323 358 (10) % 1,043 1,073 (3) %

EVENITY 307 201 53 % 842 562 50 %

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Total product sales $ 6,548 $ 6,237 5 % $ 19,077 $ 18,249 5 %

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

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

Future sales of our products will depend in part on the factors discussed below and in the following sections of this report:

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and (iii) Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Results of operations—Product sales, as well as in our Quarterly Report on Form 10-Q for the period ended March 31, 2023:

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Results of operations—Product sales, as well as in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023:

(i) Part I, Item 2.

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Total Prolia $ 986 $ 862 14 % $ 2,941 $ 2,636 12 %

The increase in global Prolia sales for the three and six months ended June 30, 2023, was driven by volume growth.

For a discussion of litigation related to Prolia, see Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

The increase in global Prolia sales for the three and nine months ended September 30, 2023, was primarily driven by volume growth and higher net selling price.

For a discussion of litigation related to Prolia, see Part I—Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended June 30, 2023;

and Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

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

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Total ENBREL $ 1,035 $ 1,106 (6) % $ 2,682 $ 3,019 (11) %

The increase in ENBREL sales for the three months ended June 30, 2023, was driven by favorable changes to estimated sales deductions and higher net selling price, partially offset by lower inventory.

The decrease in ENBREL sales for the six months ended June 30, 2023, was driven by lower inventory, unfavorable changes to estimated sales deductions and lower net selling price.

For the remainder of 2023, we expect improved payer coverage will lead to continued growth in new patients that supports volume, and declining net selling price.

The decrease in ENBREL sales for the three months ended September 30, 2023, was primarily driven by unfavorable changes to estimated sales deductions.

The decrease in ENBREL sales for the nine months ended September 30, 2023, was driven by lower inventory, unfavorable changes to estimated sales deductions and lower net selling price.

For the remainder of 2023, we expect improved coverage will lead to growth in new patients and declining net selling price.

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

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Total XGEVA $ 519 $ 495 5 % $ 1,585 $ 1,530 4 %

The decrease in global XGEVA sales for the three months ended June 30, 2023, was primarily driven by unfavorable changes to estimated sales deductions, lower inventory and unfavorable changes to foreign currency exchange rates, partially offset by higher net selling price.

The increase in global XGEVA sales for the six months ended June 30, 2023, was driven by higher net selling price and volume growth, partially offset by unfavorable changes to estimated sales deductions and foreign currency exchange rates.

For a discussion of litigation related to XGEVA, see Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

The increase in global XGEVA sales for the three months ended September 30, 2023, was driven by higher net selling price.

The increase in global XGEVA sales for the nine months ended September 30, 2023, was driven by higher net selling price, partially offset by unfavorable changes to estimated sales deductions.

For a discussion of litigation related to XGEVA, see Part I—Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended June 30, 2023;

and Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

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

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Total Otezla $ 567 $ 627 (10) % $ 1,559 $ 1,672 (7) %

The increase in global Otezla sales for the three months ended June 30, 2023, was driven by volume growth.

The decrease in global Otezla sales for the six months ended June 30, 2023, was driven by lower inventory and net selling price and unfavorable changes to foreign currency exchange rates, partially offset by volume growth.

For the remainder of 2023, we expect new patient demand to continue to be impacted by free drug programs from newly launched competition.

The decrease in global Otezla sales for the three months ended September 30, 2023, was driven by lower net selling price, unfavorable changes to estimated sales deductions and lower inventory, partially offset by volume growth.

The decrease in global Otezla sales for the nine months ended September 30, 2023, was driven by lower net selling price and inventory, partially offset by volume growth.

For the remainder of 2023, we expect demand to be affected by free drug programs from newly launched competition.

For a discussion of litigation related to Otezla, see Part IV—Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022;

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Total Repatha $ 406 $ 309 31 % $ 1,218 $ 963 26 %

The increase in global Repatha sales for the three and six months ended June 30, 2023, was primarily driven by volume growth, partially offset by lower net selling price.

The increase in global Repatha sales for the three and nine months ended September 30, 2023, 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 in our Annual Report on Form 10-K for the year ended December 31, 2022;

Part I—Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2023;

Part I—Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023;

and Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

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

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

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Aranesp — U.S.

Nplate — U.S.

$ 322 $ 162 99 % $ 744 $ 474 57 %

Aranesp — ROW 242 225 8 % 482 446 8 %

Total Aranesp $ 365 $ 357 2 % $ 720 $ 715 1 %

The increase in global Aranesp sales for the three months ended June 30, 2023, was driven by volume growth and favorable changes to estimated sales deductions, partially offset by unfavorable changes to foreign currency exchange rates and lower net selling price.

The increase in global Aranesp sales for the six months ended June 30, 2023, was driven by volume growth, partially offset by unfavorable changes to foreign currency exchange rates and lower net selling price.

ROW Aranesp sales for the three and six months ended June 30, 2023, were favorably impacted by the timing of orders in certain markets outside the United States.

Aranesp sales for the three and six months ended June 30, 2023, decreased due to lower unit demand as a result of independent and medium-sized dialysis organizations transitioning from Aranesp to EPOGEN.

We expect Aranesp to continue to face competition from EPOGEN and its biosimilars, which will impact volume and net selling price in the future.

Nplate — ROW 97 126 (23) % 347 364 (5) %

Total Nplate $ 419 $ 288 45 % $ 1,091 $ 838 30 %

The increase in global Nplate sales for the three and nine months ended September 30, 2023, was driven by volume growth resulting from U.S.

government orders of $142 million and $224 million, respectively.

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

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Total KYPROLIS $ 349 $ 318 10 % $ 1,053 $ 922 14 %

The increase in global KYPROLIS sales for the three months ended June 30, 2023, was driven by volume growth, partially offset by lower net selling price.

The increase in global KYPROLIS sales for the six months ended June 30, 2023, was driven by volume growth.

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

The increase in global KYPROLIS sales for the three and nine months ended September 30, 2023, was primarily driven by volume growth.

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

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Nplate — U.S.

Aranesp — U.S.

$ 107 $ 128 (16) % $ 345 $ 397 (13) %

Nplate — ROW 134 128 5 % 250 238 5 %

Total Nplate $ 310 $ 284 9 % $ 672 $ 550 22 %

The increase in global Nplate sales for the three months ended June 30, 2023, was driven by volume growth, partially offset by unfavorable changes to foreign currency exchange rates.

The increase in global Nplate sales for the six months ended June 30, 2023, was driven by volume growth, partially offset by unfavorable changes to estimated sales deductions and foreign currency exchange rates.

Nplate sales for the six months ended June 30, 2023, included an $82 million order from the U.S.

Aranesp — ROW 216 230 (6) % 698 676 3 %

Total Aranesp $ 323 $ 358 (10) % $ 1,043 $ 1,073 (3) %

The decrease in global Aranesp sales for the three months ended September 30, 2023, was driven by lower volume and net selling price and unfavorable changes to foreign currency exchange rates.

The decrease in global Aranesp sales for the nine months ended September 30, 2023, was driven by unfavorable changes to foreign currency exchange rates and lower net selling price, partially offset by volume growth.

Aranesp sales for the three and nine months ended September 30, 2023, decreased due to lower unit demand as a result of independent and medium-sized dialysis organizations transitioning from Aranesp to EPOGEN.

We expect Aranesp to continue to face competition from EPOGEN and its biosimilars, which will impact volume and net selling price in the future.

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

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Total EVENITY $ 307 $ 201 53 % $ 842 $ 562 50 %

The increase in global EVENITY sales for the three and six months ended June 30, 2023, was primarily driven by volume growth across our markets.

The increase in global EVENITY sales for the three and nine months ended September 30, 2023, was driven by volume growth.

Other products

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Neulasta — U.S.

$ 199 $ 263 (24) % $ 410 $ 567 (28) %

Neulasta — ROW 37 47 (21) % 75 91 (18) %

Vectibix — U.S.

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73 70 4 % 228 228 — %

Neulasta — U.S.

92 205 (55) % 502 772 (35) %

Neulasta — ROW 32 42 (24) % 107 133 (20) %

AMJEVITA — U.S.

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* Change in excess of 100%

(1) Consists of AVSOLA, Corlanor, RIABNI, NEUPOGEN, IMLYGIC, Sensipar/Mimpara and BEKEMV as well as sales by our Bergamo and Gensenta subsidiaries.

(1) Consists of AVSOLA, Corlanor, RIABNI, NEUPOGEN, IMLYGIC, Sensipar/Mimpara and BEKEMV as well as sales in prior periods of our divested Bergamo and Gensenta subsidiaries.

Operating expenses

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Total operating expenses $ 4,882 $ 3,992 22 % $ 13,368 $ 12,148 10 %

* Change in excess of 100%

Cost of sales

Cost of sales increased to 26.0% and 27.0% of total revenues for the three and six months ended June 30, 2023, respectively, primarily driven by higher profit share expenses, higher amortization expense from acquisition-related assets and changes in our product mix.

Cost of sales increased to 26.2% and 26.7% of total revenues for the three and nine months ended September 30, 2023, respectively, primarily driven by higher profit share expenses, higher amortization expense from acquisition-related assets and changes in our product mix, partially offset by the impact of the Puerto Rico tax law change.

The 2022 Puerto Rico tax law change replaced an excise tax with an income tax beginning in 2023.

See Note 5, Income taxes, to the condensed consolidated financial statements.

Research and development

The increase in R&D expense for the three months ended June 30, 2023, was driven by higher spend in late-stage development and marketed product support.

The increase in R&D expense for the six months ended June 30, 2023, was driven by higher spend in late-stage development, marketed product support, and research and early pipeline.

The decrease in R&D expense for the three months ended September 30, 2023, was driven by lower spend in research and early pipeline, partially offset by higher spend in later-stage clinical programs and marketed products.

The increase in R&D expense for the nine months ended September 30, 2023, was driven by higher spend in later-stage clinical programs and marketed products, partially offset by lower spend in research and early pipeline.

Selling, general and administrative

The decrease in SG&A expense for the three months ended June 30, 2023, was primarily driven by lower marketed product support, partially offset by higher acquisition-related expenses.

SG&A expense for the six months ended June 30, 2023, remained relatively unchanged, as lower marketed product support was offset by higher general and administrative expenses, including acquisition-related expenses.

Other operating expenses for the three and six months ended June 30, 2023, consisted primarily of expenses related to our restructuring plan and an impairment charge associated with an IPR&D asset.

See Note 2, Restructuring, to the condensed consolidated financial statements.

Other operating expenses for the three and six months ended June 30, 2022, consisted primarily of a loss on a nonstrategic divestiture.

The increase in SG&A expense for the three and nine months ended September 30, 2023, was primarily driven by higher general and administrative expenses, including acquisition-related expenses, partially offset by lower spend for marketed products.

Other operating expenses for the three and nine months ended September 30, 2023, consisted of a net impairment charge resulting from the termination of AMG 340 and expenses related to our restructuring plan initiated in the first quarter of 2023.

See Note 2, Restructuring;

Note 9, Goodwill and other intangible assets;

and Note 12, Fair value measurement, to the condensed consolidated financial statements.

Other operating expenses for the three months ended September 30, 2022, consisted primarily of an impairment charge associated with an intangible asset acquired in a business combination.

Other operating expenses for the nine months ended September 30, 2022, consisted primarily of our loss on the divestiture of Gensenta.

See Note 3, Acquisitions and divestitures, to the condensed consolidated financial statements.

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Interest expense, net $ (759) $ (368) $ (2,054) $ (991)

Other (expense) income, net $ (318) $ (317) $ 1,746 $ (847)

Other income (expense), net $ 685 $ 100 $ 2,431 $ (747)

Provision for income taxes $ 217 $ 249 $ 1,053 $ 662

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Interest expense, net

The increase in Interest expense, net, for the three and six months ended June 30, 2023, was primarily due to higher overall debt outstanding and higher interest rates on debt for which we effectively pay a variable rate of interest through the use of interest rate swaps.

Other (expense) income, net

The increase in Interest expense, net, for the three and nine months ended September 30, 2023, was primarily due to higher overall debt outstanding and higher interest rates on the debt.

Other income (expense), net

During the first quarter of 2023, we changed the method of accounting for our investment in BeiGene from the equity method to recording the investment at fair value, with changes in fair value recognized in earnings.

See Note 7, Investments, to the condensed consolidated financial statements.

Other (expense) income, net, for the three months ended June 30, 2023, was relatively unchanged compared with the prior period.

The losses recorded in the current period exceeded the losses recorded in the prior period for BeiGene and other strategic equity investments and were substantially offset by increased interest income due to the higher cash balance and higher interest rates.

The change in Other (expense) income, net, for the six months ended June 30, 2023, was primarily due to the net gain recognized in the current year period on our investment in BeiGene, the increase in interest income due to the higher cash balance and higher interest rates and the impact of higher losses on our other strategic equity investments recognized in the prior year.

The increase in our effective tax rate for the three months ended June 30, 2023, was primarily due to the new Puerto Rico income tax beginning in 2023, partially offset by the current period change in the fair value of our equity investments and net favorable items.

The increase in our effective tax rate for the six months ended June 30, 2023, was primarily due to the new Puerto Rico income tax beginning in 2023, current year change in the fair value of our equity investments and an increase in interest expense on tax reserves, partially offset by net favorable items.

The increase in Other income (expense), net, for the three and nine months ended September 30, 2023, was primarily due to the net gain recognized in the current year period on our investment in BeiGene and the increase in interest income due to the higher cash balance and higher interest rates.

The increase in our effective tax rate for the three months ended September 30, 2023, was primarily due to the Puerto Rico income tax beginning in 2023, partially offset by a prior year nondeductible loss from the divestiture of Gensenta and net earnings mix including the tax benefit from a net impairment charge related to AMG 340.

See Note 9, Goodwill and other intangible assets, to the condensed consolidated financial statements.

The increase in our effective tax rate for the nine months ended September 30, 2023, was primarily due to the Puerto Rico income tax beginning in 2023 and net change in earnings mix, partially offset by a prior year nondeductible loss from the divestiture of Gensenta.

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.

Some individual countries, including those in the EU, have begun to implement the global minimum tax agreement with effective dates as early as 2024.

Some individual jurisdictions, including the United Kingdom and some EU member countries, have begun to implement the global minimum tax agreement with effective dates as early as January 1, 2024.

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.

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Selected financial data were as follows (in millions):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash, cash equivalents and marketable securities $ 34,741 $ 9,305

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Cash, cash equivalents and marketable securities

Our balance of cash, cash equivalents and marketable securities was $34.2 billion as of June 30, 2023, of which $27.8 billion is anticipated to be used for the proposed acquisition of Horizon.

Our balance of cash, cash equivalents and marketable securities was $34.7 billion as of September 30, 2023, the majority of which was used for the acquisition of Horizon.

See Note 3, Acquisitions and divestitures, to the condensed consolidated financial statements.

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We intend to continue to invest 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.

The timing and amount of future dividends and stock repurchases will vary based on a number of factors, including future capital requirements for strategic transactions, availability of financing on acceptable terms, debt service requirements, our credit rating, changes in applicable tax laws or corporate laws, changes in our business model and periodic determination by our Board of Directors that cash dividends and/or stock repurchases are in the best interests of stockholders and are in compliance with applicable laws and the Company’s agreements.

In addition, the timing and amount of stock repurchases may also be affected by our overall level of cash, stock price and blackout periods, during which we are restricted from repurchasing stock.

service requirements, our credit rating, changes in applicable tax laws or corporate laws, changes in our business model and periodic determination by our Board of Directors that cash dividends and/or stock repurchases are in the best interests of stockholders and are in compliance with applicable laws and the Company’s agreements.

In addition, the timing and amount of stock repurchases may also be affected by our overall level of cash, our stock price and blackout periods, during which we are restricted from repurchasing stock.

The manner of stock repurchases may include block purchases, tender offers, ASRs and market transactions.

In March 2023 and December 2022, our Board of Directors declared quarterly cash dividends of $2.13 per share of common stock, which were paid in June 2023 and March 2023, respectively, and was an increase of 10% over the quarterly cash dividends paid each quarter in 2022.

In August 2023, our Board of Directors declared a quarterly cash dividend of $2.13 per share of common stock that will be paid in September 2023.

During the six months ended June 30, 2023, we did not repurchase any of our common stock.

As of June 30, 2023, $7.0 billion of authorization remained available under our stock repurchase program.

As a result of stock repurchases and quarterly dividend payments, we have an accumulated deficit as of June 30, 2023 and December 31, 2022.

In August 2023, March 2023 and December 2022, our Board of Directors declared quarterly cash dividends of $2.13 per share, which were paid in September 2023, June 2023 and March 2023, respectively, and was an increase of 10% over the quarterly cash dividends paid each quarter in 2022.

In October 2023, our Board of Directors declared a quarterly cash dividend of $2.13 per share that will be paid in December 2023.

During the nine months ended September 30, 2023, we did not repurchase any of our common stock.

As of September 30, 2023, $7.0 billion of authorization remained available under our stock repurchase program.

As a result of stock repurchases and quarterly dividend payments, we have an accumulated deficit as of September 30, 2023 and December 31, 2022.

Our accumulated deficit is not anticipated to affect our future ability to operate, repurchase stock, pay dividends or repay our debt given our continuing profitability and strong financial position.

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This shelf registration statement expires in February 2026.

During the three months ended March 31, 2023, in connection with the proposed acquisition of Horizon, we issued $24.0 billion of debt composed of eight series of notes.

If the proposed acquisition of Horizon does not occur by a specified date or at all, we will be required to redeem all but one of the series of notes at a price equal to 101% of the principal amount of the notes plus accrued and unpaid interest.

During the three months ended March 31, 2023, in connection with the acquisition of Horizon, we issued $24.0 billion of debt composed of eight series of notes.

In connection with the issue of these notes, we elected to terminate all remaining commitments under the bridge credit agreement we entered into in December 2022.

In October 2023, in connection with the completion of the acquisition of Horizon, we borrowed $4.0 billion under a term loan credit agreement that we entered into in December 2022.

This borrowing has an interest rate of three-month SOFR plus 1.225%, of which $2.0 billion is due in April 2025 and $2.0 billion is due in October 2026.

See Note 10, Financing arrangements, to the condensed consolidated financial statements.

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Generally, we would be charged interest for any amounts borrowed under this facility, based on our current credit rating, at (i) SOFR plus 1.01% or (ii) the highest of (A) the administrative 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 June 30, 2023 and December 31, 2022, no amounts were outstanding under this facility.

As of September 30, 2023 and December 31, 2022, no amounts were outstanding under this facility.

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 earnings before interest, taxes, depreciation and amortization) to (ii) consolidated interest expense, each as defined and described in the credit agreement.

We were in compliance with all applicable covenants under these arrangements as of June 30, 2023.

We were in compliance with all applicable covenants under these arrangements as of September 30, 2023.

Our summarized cash flow activity was as follows (in millions):

Six months ended

Nine months ended

September 30,

Net cash provided by operating activities $ 7,933 $ 7,072

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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 during the six months ended June 30, 2023, increased due to timing of payments to tax authorities and other working capital items, partially offset by lower net income after adjustments for noncash items.

Cash provided by investing activities during the six months ended June 30, 2023, was primarily due to net cash inflows from sales and maturities of marketable securities of $1.7 billion, partially offset by capital expenditures of $615 million, including construction costs of new plants in North Carolina and Ohio.

Cash used in investing activities during the six months ended June 30, 2022, was primarily due to net cash outflows from purchases of marketable securities, net of maturities, of $1.9 billion and capital expenditures of $436 million.

Cash provided by operating activities during the nine months ended September 30, 2023, increased due to timing of payments to tax authorities, partially offset by lower net income after adjustments for noncash items.

Cash provided by investing activities during the nine months ended September 30, 2023, was primarily due to net cash inflows from sales and maturities of marketable securities of $1.7 billion, partially offset by capital expenditures of $863 million, including construction costs of new plants in North Carolina and Ohio.

Cash used in investing activities during the nine months ended September 30, 2022, was primarily due to net cash outflows related to marketable securities activity of $1.9 billion and capital expenditures of $596 million.

We currently estimate 2023 spending on capital projects to be approximately $950 million.

Cash provided by financing activities during the six months ended June 30, 2023, was primarily due to proceeds from the issuance of debt of $23.8 billion, partially offset by the payment of dividends of $2.3 billion as well as the repayment and extinguishment of debt of $1.1 billion.

Cash used in financing activities during the six months ended June 30, 2022, was primarily due to payments to repurchase our common stock of $6.4 billion, including amounts paid under our ASR agreements, and the payment of dividends of $2.1 billion, partially offset by proceeds from the issuance of debt of $4.0 billion.

Cash provided by financing activities during the nine months ended September 30, 2023, was primarily due to proceeds from the issuance of debt of $23.8 billion, partially offset by the payment of dividends of $3.4 billion as well as the repayment and extinguishment of debt of $2.0 billion.

Cash used in financing activities during the nine months ended September 30, 2022, was primarily due to payments to repurchase our common stock of $6.4 billion, including amounts paid under the ASR agreements, the payment of dividends of $3.2 billion and the extinguishment of debt of $297 million, partially offset by proceeds from the issuance of debt of $6.9 billion.

See Note 10, Financing arrangements, and Note 11, Stockholders’ equity, to the condensed consolidated financial statements for further discussion.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis