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, 2023, and our Quarterly Report on Form 10-Q for the period ended March 31, 2024.

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, 2023, and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024.

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, 2023, and in Part II, Item 1A.

Risk Factors of our Quarterly Report on Form 10-Q for the period ended March 31, 2024.

Risk Factors of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024.

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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Our robust pipeline includes potential first-in-class medicines at all stages of development.

Our principal products are Prolia, ENBREL, XGEVA, Repatha, Otezla, TEPEZZA, KYPROLIS, EVENITY, Aranesp, Nplate, KRYSTEXXA, Vectibix, BLINCYTO and TEZSPIRE.

We also market a number of other products, including but not limited to MVASI, AMJEVITA/AMGEVITA, Neulasta, Parsabiv, RAVICTI, UPLIZNA, LUMAKRAS/LUMYKRAS, Aimovig, TAVNEOS, PROCYSBI, EPOGEN and IMDELLTRA.

Our principal products are Prolia, ENBREL, XGEVA, Repatha, Otezla, TEPEZZA, EVENITY, KYPROLIS, Nplate, Aranesp, KRYSTEXXA, BLINCYTO, Vectibix and TEZSPIRE.

We also market a number of other products, including but not limited to MVASI, AMJEVITA/AMGEVITA, Neulasta, RAVICTI, Parsabiv, UPLIZNA, LUMAKRAS/LUMYKRAS, Aimovig, TAVNEOS, PROCYSBI, EPOGEN and IMDELLTRA.

Macroeconomic and other challenges

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Additionally, with public and private healthcare-provider focus, the industry continues to be subject to cost containment measures and significant pricing pressures, resulting in 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.

Moreover, provisions of the IRA, as well as the 340B Drug Pricing Program, 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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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, 2024.

For additional developments, see our Annual Report on Form 10-K for the year ended December 31, 2023, and our Quarterly Report on Form 10-Q for the period ended March 31, 2024.

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, 2024.

For additional developments, see our Annual Report on Form 10-K for the year ended December 31, 2023, and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024.

Products/Pipeline

In May 2024, we announced IMDELLTRA received accelerated approval from the FDA for the treatment of adult patients with extensive-stage small cell lung cancer (ES-SCLC) with disease progression on or after platinum-based chemotherapy.

In June 2024, we announced BLINCYTO received approval from the FDA in frontline consolidation for patients with CD19-positive Philadelphia chromosome-negative B-cell precursor acute lymphoblastic leukemia (B-ALL).

In June 2024, we announced positive topline results from our Phase 3 registrational trial evaluating UPLIZNA for the treatment of Immunoglobulin G4-related disease (IgG4-RD).

The trial met its primary endpoint, showing a statistically significant 87% reduction in the risk of IgG4-RD flare compared to placebo during the 52-week placebo-controlled period.

All key secondary endpoints were also met, which were annualized flare rate;

flare-free, treatment-free complete remission;

and flare-free, corticosteroid-free complete remission.

No new safety signals were identified.

In September 2024, we announced TEPEZZA was approved for the treatment of active or high clinical activity score (CAS) thyroid eye disease (TED) in Japan.

In September 2024, we announced top-line results of the Phase 3 MINT trial of UPLIZNA, an anti-CD19 humanized monoclonal antibody.

MINT is a Phase 3, randomized, placebo-controlled, double-blind trial assessing the efficacy and safety of UPLIZNA in patients with generalized myasthenia gravis (gMG).

The trial met its primary endpoint, with a statistically significant change from baseline in Myasthenia Gravis Activities of Daily Living (MG-ADL) score for UPLIZNA compared with placebo at week 26 of the combined patient population.

UPLIZNA demonstrated a statistically significant and clinically meaningful change from baseline compared to placebo for four out of five key secondary endpoints.

The overall safety results during the placebo-controlled period of the trial were consistent with the known safety profile of UPLIZNA.

In September 2024, we announced top-line results of the Phase 3 ROCKET HORIZON trial of rocatinlimab, an investigational therapy targeting the OX40 receptor.

ROCKET HORIZON is a Phase 3, randomized, placebo-controlled, double-blind trial assessing the efficacy, safety and tolerability of rocatinlimab monotherapy in adults with moderate to severe atopic dermatitis.

The study met its co-primary endpoints and reached statistically significant difference from placebo for all key secondary endpoints.

Overall safety findings in the study were comparable to those seen in the Phase 2b study.

Selected financial information

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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 20% and 21% for the three and six months ended June 30, 2024, respectively, driven by volume growth of 26% for both periods, partially offset by declines in net selling price of 3% and 2%, respectively.

For the three months ended June 30, 2024, U.S.

Total product sales increased 24% and 22% for the three and nine months ended September 30, 2024, respectively, primarily driven by volume growth of 29% and 27%, respectively, partially offset by declines in net selling price of 2% and 3%, respectively.

For the three months ended September 30, 2024, U.S.

volume grew 34% and ROW volume grew 18%.

Product sales from acquired Horizon products contributed $1.1 billion, with volume growth of 10% from our other brands, including Repatha, TEZSPIRE, Prolia and EVENITY.

For the six months ended June 30, 2024, U.S.

Product sales from acquired Horizon products contributed $1.1 billion, with volume growth of 12% from our other brands, including Repatha, TEZSPIRE, EVENITY, BLINCYTO and Prolia.

For the nine months ended September 30, 2024, U.S.

volume grew 31% and ROW volume grew 17%.

Product sales from

acquired Horizon products contributed $2.0 billion, with volume growth of 9% from our other brands, including Repatha, TEZSPIRE, EVENITY and Prolia.

Product sales from acquired Horizon products contributed $3.1 billion, with volume growth of 10% from our other brands, including Repatha, TEZSPIRE, EVENITY, Prolia and BLINCYTO.

For the remainder of 2024, we expect product sales growth from acquired Horizon products and volume growth from our other brands to be partially offset by net selling price declines on a year-over-year basis at a portfolio level.

Uncertain macroeconomic conditions, changes in the healthcare ecosystem and geopolitical conflicts have the potential to introduce variability into product sales.

Furthermore, product sales continue to be impacted by actions from governments and other entities to curb high inflation, provisions of the IRA and growth in numbers of Medicaid enrollees and uninsured individuals.

Furthermore, product sales continue to be impacted by actions from governments and other entities to curb high inflation, provisions of the IRA, the 340B Drug Pricing Program and growth in numbers of Medicaid enrollees and uninsured individuals.

See Part I, Item 1A.

Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023, and Part II, Item 1A.

Risk Factors, of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024.

Other revenues increased for the three months ended June 30, 2024, driven by higher royalty income from licensed products.

Other revenues increased for the six months ended June 30, 2024, driven by higher royalty income and corporate partner revenue from licensed products.

Operating expenses increased for the three and six months ended June 30, 2024, primarily driven by higher amortization expense from Horizon acquisition-related assets and expenses from the acquired Horizon business.

Risk Factors, of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024, June 30, 2024 and September 30, 2024.

Other revenues remained relatively unchanged for the three months ended September 30, 2024.

Other revenues increased for the nine months ended September 30, 2024, driven by higher royalty income and corporate partner revenue from licensed products.

Operating expenses increased for the three and nine months ended September 30, 2024, primarily driven by higher amortization expense from Horizon acquisition-related assets and expenses from the acquired Horizon business.

Results of operations

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488 — N/A 1,391 — N/A

KYPROLIS 377 346 9 % 753 704 7 %

EVENITY 399 307 30 % 1,132 842 34 %

Aranesp 348 365 (5) % 697 720 (3) %

KYPROLIS 378 349 8 % 1,131 1,053 7 %

Nplate 456 419 9 % 1,119 1,091 3 %

Aranesp 337 323 4 % 1,034 1,043 (1) %

KRYSTEXXA (1)

310 — N/A 839 — N/A

Vectibix 270 248 9 % 517 481 7 %

BLINCYTO 327 220 49 % 835 620 35 %

Vectibix 282 252 12 % 799 733 9 %

269 161 67 % 676 390 73 %

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(i) Part I, Item 1.

Business—Marketing, Distribution and Selected Marketed

Business—Marketing, Distribution and Selected Marketed Products;

(ii) Part I, Item 1A.

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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, 2024:

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, 2024 and June 30, 2024:

(i) Part I, Item 2.

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Total Prolia $ 1,045 $ 986 6 % $ 3,209 $ 2,941 9 %

The increase in global Prolia sales for the three and six months ended June 30, 2024 was primarily driven by volume growth.

The increase in global Prolia sales for the three months ended September 30, 2024 was driven by volume growth of 9%,

partially offset by lower inventory.

The increase in global Prolia sales for the nine months ended September 30, 2024 was driven by volume growth.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, Part I, Item 1.

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For a discussion of litigation related to Prolia, see Part IV—Note 20, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023;

and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024.

and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024, June 30, 2024 and September 30, 2024.

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

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Total ENBREL $ 825 $ 1,035 (20) % $ 2,301 $ 2,682 (14) %

The decrease in ENBREL sales for the three and six months ended June 30, 2024 was primarily driven by lower net selling price.

The decrease in ENBREL sales for the three months ended September 30, 2024 was primarily driven by unfavorable changes to estimated sales deductions of 13% and lower net selling price of 12%.

The decrease in ENBREL sales for the nine months ended September 30, 2024 was driven by lower net selling price.

Going forward, we expect relatively flat volumes with continued declines in net selling price, including the impact from the IRA Medicare Part D price set by CMS beginning in 2026.

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Total XGEVA $ 541 $ 519 4 % $ 1,664 $ 1,585 5 %

The increase in global XGEVA sales for the three and six months ended June 30, 2024 was driven by higher net selling price.

The increase in global XGEVA sales for the three and nine months ended September 30, 2024 was driven by higher net selling price.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, Part I, Item 1.

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For a discussion of litigation related to XGEVA, see Part IV—Note 20, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023;

and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024.

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

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Total Repatha $ 567 $ 406 40 % $ 1,616 $ 1,218 33 %

The increase in global Repatha sales for the three and six months ended June 30, 2024 was driven by volume growth of 46% and 45%, respectively, partially offset by lower net selling price of 20% and 16%, respectively.

For a discussion of ongoing litigation related to Repatha, see Part IV—Note 20, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023, and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024.

The increase in global Repatha sales for the three months ended September 30, 2024 was driven by volume growth of 41% and favorable changes to estimated sales deductions of 8%, partially offset by lower net selling price of 10%.

The increase in global Repatha sales for the nine months ended September 30, 2024 was driven by volume growth of 44%, partially offset by lower net selling price of 13%.

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

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Total Otezla $ 564 $ 567 (1) % $ 1,502 $ 1,559 (4) %

The decrease in global Otezla sales for the three months ended June 30, 2024 was driven by lower net selling price of 7% and unfavorable changes to estimated sales deductions of 6%, partially offset by volume growth of 2%.

The decrease in global Otezla sales for the six months ended June 30, 2024 was driven by lower net selling price of 7% and unfavorable changes to estimated sales deductions of 4%, partially offset by higher inventory of 4%.

The decrease in global Otezla sales for the three months ended September 30, 2024 was primarily driven by lower net selling price of 7%, partially offset by volume growth of 5%.

The decrease in global Otezla sales for the nine months ended September 30, 2024 was driven by lower net selling price of 8%, partially offset by higher inventory of 3% and volume growth of 2%.

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

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N/A = not applicable

TEPEZZA was acquired on October 6, 2023 from our Horizon acquisition and generated $479 million and $903 million in product sales for the three and six months ended June 30, 2024, respectively.

TEPEZZA was acquired on October 6, 2023 from our Horizon acquisition and generated $488 million and $1.4 billion in product sales for the three and nine months ended September 30, 2024, respectively.

As TEPEZZA was acquired on October 6, 2023, there were no recorded product sales for the comparative prior periods.

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

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KYPROLIS — U.S.

$ 240 $ 234 3 % $ 474 $ 468 1 %

KYPROLIS — ROW 137 112 22 % 279 236 18 %

Total KYPROLIS $ 377 $ 346 9 % $ 753 $ 704 7 %

The increase in global KYPROLIS sales for the three and six months ended June 30, 2024 was primarily driven by volume growth outside the United States.

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

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Total EVENITY $ 399 $ 307 30 % $ 1,132 $ 842 34 %

The increase in global EVENITY sales for the three and six months ended June 30, 2024 was primarily driven by volume growth.

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

The increase in global EVENITY sales for the three and nine months ended September 30, 2024 was driven by volume growth.

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

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Aranesp — U.S.

KYPROLIS — U.S.

$ 238 $ 231 3 % $ 712 $ 699 2 %

Aranesp — ROW 257 242 6 % 506 482 5 %

Total Aranesp $ 348 $ 365 (5) % $ 697 $ 720 (3) %

The decrease in global Aranesp sales for the three and six months ended June 30, 2024 was driven by unfavorable changes to estimated sales deductions of 8% and 5%, respectively, partially offset by volume growth outside the United States and higher net selling price.

KYPROLIS — ROW 140 118 19 % 419 354 18 %

Total KYPROLIS $ 378 $ 349 8 % $ 1,131 $ 1,053 7 %

The increase in global KYPROLIS sales for the three and nine months ended September 30, 2024 was primarily driven by volume growth outside the United States.

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

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Total Nplate $ 456 $ 419 9 % $ 1,119 $ 1,091 3 %

The increase in global Nplate sales for the three months ended June 30, 2024 was driven by higher net selling price and volume growth.

Global Nplate sales for the six months ended June 30, 2024 decreased 1%.

Excluding a U.S.

government order of $82 million in the first quarter of 2023 from this comparison, Nplate sales increased 12% for the six months ended June 30,

2024, driven by higher net selling price and volume growth.

Global Nplate sales for the three months ended September 30, 2024 increased 9% and included U.S.

government orders of $128 million and $142 million for the three months ended September 30, 2024 and 2023, respectively.

Excluding the U.S.

government orders from this comparison, global Nplate sales increased 18% for the three months ended September 30, 2024, driven by volume growth of 14% and higher net selling price.

Global Nplate sales for the nine months ended September 30, 2024 increased 3% and included U.S.

government orders of $128 million and $224 million for the nine months ended September 30, 2024 and 2023, respectively.

Excluding the U.S.

government orders from this comparison, global Nplate sales increased 14% for the nine months ended September 30, 2024, driven by volume growth of 9% and higher net selling price.

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

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Aranesp — U.S.

$ 105 $ 107 (2) % $ 296 $ 345 (14) %

Aranesp — ROW 232 216 7 % 738 698 6 %

Total Aranesp $ 337 $ 323 4 % $ 1,034 $ 1,043 (1) %

The increase in global Aranesp sales for the three months ended September 30, 2024 was driven by volume growth outside the United States.

The decrease in global Aranesp sales for the nine months ended September 30, 2024 was driven by unfavorable changes to estimated sales deductions and unfavorable changes to foreign currency exchange rates, partially offset by volume growth outside the United States.

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

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N/A = not applicable

KRYSTEXXA was acquired on October 6, 2023 from our Horizon acquisition and generated $294 million and $529 million in product sales for the three and six months ended June 30, 2024, respectively.

KRYSTEXXA was acquired on October 6, 2023 from our Horizon acquisition and generated $310 million and $839 million in product sales for the three and nine months ended September 30, 2024, respectively.

As KRYSTEXXA was acquired on October 6, 2023, there were no recorded product sales for the comparative prior periods.

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

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Vectibix — U.S.

$ 133 $ 118 13 % $ 253 $ 229 10 %

Vectibix — ROW 137 130 5 % 264 252 5 %

Total Vectibix $ 270 $ 248 9 % $ 517 $ 481 7 %

The increase in global Vectibix sales for the three and six months ended June 30, 2024 was driven by higher net selling price and volume growth, partially offset by unfavorable changes to foreign currency exchange rates.

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

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Total BLINCYTO $ 327 $ 220 49 % $ 835 $ 620 35 %

The increase in global BLINCYTO sales for the three and six months ended June 30, 2024 was driven by volume growth resulting from broad prescribing across academic and community segments for patients with B-ALL.

In June 2024, BLINCYTO was granted approval by the FDA in frontline consolidation for patients with CD-19 positive Philadelphia chromosome-negative B-ALL.

The increase in global BLINCYTO sales for the three and nine months ended September 30, 2024 was primarily driven by volume growth.

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

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Vectibix — U.S.

$ 132 $ 116 14 % $ 385 $ 345 12 %

Vectibix — ROW 150 136 10 % 414 388 7 %

Total Vectibix $ 282 $ 252 12 % $ 799 $ 733 9 %

The increase in global Vectibix sales for the three and nine months ended September 30, 2024 was primarily driven by volume growth.

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

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$ 269 $ 161 67 % $ 676 $ 390 73 %

The increase in TEZSPIRE sales for the three and six months ended June 30, 2024 was primarily driven by volume growth.

The increase in TEZSPIRE sales for the three and nine months ended September 30, 2024 was primarily driven by volume growth.

Other products

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AMJEVITA — U.S.

(9) 19 N/A 21 70 (70) %

28 23 22 % 49 93 (47) %

AMGEVITA — ROW

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Neulasta — ROW 26 32 (19) % 87 107 (19) %

Parsabiv — U.S.

67 54 24 % 132 112 18 %

Parsabiv — ROW 39 33 18 % 79 66 20 %

RAVICTI — U.S.

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9 — N/A 12 — N/A

Parsabiv — U.S.

32 59 (46) % 164 171 (4) %

Parsabiv — ROW 38 36 6 % 117 102 15 %

UPLIZNA — U.S.

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* Change in excess of 100%

AMJEVITA product sales for the three and six months ended June 30, 2024, included unfavorable changes to estimated sales deductions.

(1) RAVICTI, UPLIZNA and PROCYSBI were acquired from our Horizon acquisition on October 6, 2023, and include product sales in the periods after the acquisition date.

(3) Consists of product sales from (i) KANJINTI, RIABNI, Corlanor, NEUPOGEN, AVSOLA, IMLYGIC, BEKEMV, Sensipar/Mimpara and WEZLANA/WEZENLA;

and (ii) ACTIMMUNE, RAYOS, BUPHENYL, PENNSAID, QUINSAIR and DUEXIS in the periods after our Horizon acquisition on October 6, 2023.

(2) Consists of product sales from (i) KANJINTI, RIABNI, Corlanor, AVSOLA, NEUPOGEN, IMLYGIC, BEKEMV, WEZLANA/WEZENLA and Sensipar/Mimpara;

and (ii) ACTIMMUNE, RAYOS, BUPHENYL, QUINSAIR, PENNSAID and DUEXIS in the periods after our Horizon acquisition on October 6, 2023.

Operating expenses

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Cost of sales

Cost of sales increased to 38.6% and 40.6% of total revenues for the three and six months ended June 30, 2024, respectively, driven by higher amortization expense from Horizon acquisition-related assets and, to a lesser extent, higher royalty and profit share expense.

The increases were partially offset by the impact of the 2022 Puerto Rico tax law change, which replaced an excise tax with an income tax beginning in 2023.

Cost of sales increased to 38.9% and 40.0% of total revenues for the three and nine months ended September 30, 2024, respectively, driven by higher amortization expense from Horizon acquisition-related assets and, to a lesser extent, higher royalty and profit share expense.

The increase for the nine months ended September 30, 2024 was partially offset by the prior year impact of the 2022 Puerto Rico tax law change, which replaced an excise tax with an income tax beginning in 2023.

See Note 4, Income taxes, to the condensed consolidated financial statements.

Research and development

The increase in R&D expense for the three months ended June 30, 2024, was driven by higher spend in later-stage clinical programs and research and early pipeline, including Horizon-acquired programs.

The increase in R&D expense for the six months ended June 30, 2024, was driven by higher spend in later-stage clinical programs, marketed product support and research and early pipeline, including Horizon-acquired programs.

The increase in R&D expense for the three and nine months ended September 30, 2024, was driven by higher spend in later-stage clinical programs, marketed product support and research and early pipeline, including Horizon-acquired programs.

We expect to continue to grow our spend on later-stage clinical programs as we advance our pipeline.

Selling, general and administrative

The increase in SG&A expense for the three and six months ended June 30, 2024, was primarily driven by expenses from the acquired Horizon business and other commercial expenses.

Other operating expenses for the three months ended June 30, 2024, consisted primarily of changes in the fair values of contingent consideration liabilities related to our Teneobio, Inc.

The increase in SG&A expense for the three months ended September 30, 2024, was primarily driven by commercial expenses related to Horizon-acquired products.

The increase in SG&A expense for the nine months ended September 30, 2024, was driven by expenses from the acquired Horizon business and other commercial expenses.

Other operating expenses for the three and nine months ended September 30, 2024, consisted primarily of impairment charges associated with IPR&D assets and changes in the fair values of contingent consideration liabilities, both related to our Teneobio, Inc.

acquisition from 2021.

Other operating expenses for the six months ended June 30, 2024, consisted primarily of a net impairment charge associated with an IPR&D asset and changes in the fair values of contingent consideration liabilities, both related to our Teneobio, Inc.

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

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.

Nonoperating expense/income and income taxes

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Interest expense, net $ (776) $ (759) $ (2,408) $ (2,054)

Other (expense) income, net $ (307) $ (318) $ (542) $ 1,746

Other income, net $ 1,830 $ 685 $ 1,288 $ 2,431

Provision for income taxes $ 271 $ 217 $ 364 $ 1,053

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Interest expense, net

The increase in Interest expense, net, for the three and six months ended June 30, 2024, was primarily due to higher average debt outstanding and higher weighted-average fixed and variable interest rates on the debt.

Other (expense) income, net

The change in Other (expense) income, net, for the three months ended June 30, 2024, was primarily due to lower unrealized losses on our strategic equity investments, primarily BeiGene and Neumora, offset by reduced interest income as a result of lower average cash balances.

The change in Other (expense) income, net, for the six months ended June 30, 2024, was primarily due to current year unrealized losses on our strategic equity investments, primarily BeiGene and Neumora, compared with net unrealized gains in the prior comparative period.

Prior period net gains were principally composed of amounts recognized on our BeiGene investment in the first quarter of 2023 as a result of a change from the equity method of accounting to recording this investment at fair value, with changes in fair value recognized in earnings.

Interest expense, net, remained relatively unchanged for the three months ended September 30, 2024.

The increase in Interest expense, net, for the nine months ended September 30, 2024, was primarily due to higher average debt outstanding and higher weighted-average fixed and floating interest rates on the debt.

Other income, net

The increase in Other income, net, for the three months ended September 30, 2024, was primarily due to higher unrealized gains on our strategic equity investments, primarily BeiGene, partially offset by reduced interest income as a result of lower average cash balances.

The decrease in Other income, net, for the nine months ended September 30, 2024, was primarily due to lower current year net unrealized gains on our strategic equity investments, primarily BeiGene, and reduced interest income as a result of lower average cash balances.

Prior period net gains on our strategic equity investments were principally composed of amounts recognized on our BeiGene investment in the first quarter of 2023 as a result of a change from the equity method of accounting to recording this investment at fair value with changes in fair value recognized in earnings.

See Note 6, Investments, to the condensed consolidated financial statements.

The decrease in our effective tax rate for the three months ended June 30, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business (including the amortization of Horizon acquired assets).

The decrease in our effective tax rate for the six months ended June 30, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business (including the amortization of Horizon acquired assets) and the year-to-date 2024 unrealized losses on our equity investments.

See Note 6, Investments —BeiGene, Ltd.

and Neumora Therapeutics, Inc., to the condensed consolidated financial statements.

The decrease in our effective tax rate for the three months ended September 30, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business (including the amortization of Horizon acquired assets), partially offset by the quarter-to-date unrealized gains on our strategic equity investments (primarily BeiGene).

See Note 6, Investments —BeiGene, Ltd., to the condensed consolidated financial statements.

The decrease in our effective tax rate for the nine months ended September 30, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business (including the amortization of Horizon acquired assets).

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

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Selected financial data were as follows (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 9,011 $ 10,944

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Cash and cash equivalents

Our balance of cash and cash equivalents was $9.3 billion as of June 30, 2024.

Our balance of cash and cash equivalents was $9.0 billion as of September 30, 2024.

The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk.

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

In March 2024 and December 2023, our Board of Directors declared quarterly cash dividends of $2.25 per share of common stock, which were paid in June 2024 and March 2024, respectively, and was an increase of 6% over the quarterly cash dividends paid each quarter in 2023.

In August 2024, our Board of Directors declared a quarterly cash dividend of $2.25 per share of common stock that will be paid in September 2024.

During the six months ended June 30, 2024, we did not repurchase any of our common stock under our stock repurchase program.

As of June 30, 2024, $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, 2024 and December 31, 2023.

In August 2024, March 2024 and December 2023, our Board of Directors declared quarterly cash dividends of $2.25 per share of common stock, which were paid in September 2024, June 2024 and March 2024, respectively, and was an increase of 6% over the quarterly cash dividends paid each quarter in 2023.

In October 2024, our Board of Directors declared a quarterly cash dividend of $2.25 per share of common stock that will be paid in December 2024.

During the nine months ended September 30, 2024, we did not repurchase any of our common stock under our stock repurchase program.

As of September 30, 2024, $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, 2024 and December 31, 2023.

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

During the six months ended June 30, 2024 and 2023, debt repayments totaled $1.4 billion and $704 million, respectively.

During the nine months ended September 30, 2024 and 2023, debt repayments totaled $3.6 billion and $1.5 billion, respectively.

In addition, we opportunistically repurchase our debt when market conditions are favorable.

During the six months ended June 30, 2024 and 2023, we spent $410 million and $420 million, respectively, to extinguish principal amounts of debt of $544 million and $539 million, respectively.

During the nine months ended September 30, 2024 and 2023, we paid $659 million and $550 million, respectively, to extinguish principal amounts of debt of $875 million and $739 million, respectively.

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 expenditure and debt service requirements, as well as our plans to reduce debt, pay dividends and repurchase stock, and other business initiatives we plan to strategically pursue, including acquisitions and licensing activities.

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In addition, our revolving 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 earnings before interest, taxes, depreciation and amortization) 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 June 30, 2024.

We were in compliance with all applicable covenants under these arrangements as of September 30, 2024.

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

Six months ended

Nine months ended

September 30,

Net cash provided by operating activities $ 6,719 $ 7,933

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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, 2024, decreased compared with the prior year period due to timing of payments to the IRS, including repatriation taxes of $1.5 billion paid in the second quarter of 2024 and an advance deposit of $800 million paid in the first quarter of 2024.

Cash used in investing activities during the six months ended June 30, 2024, was primarily due to capital expenditures of $468 million, including construction costs of new plants in North Carolina and Ohio.

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.

We currently estimate 2024 spending on capital projects to be approximately $1.3 billion.

Cash used in financing activities during the six months ended June 30, 2024, was primarily due to the payment of dividends of $2.4 billion and the repayment and extinguishment of debt of $1.4 billion and $410 million, respectively.

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 $704 million and $420 million, respectively.

Cash provided by operating activities during the nine months ended September 30, 2024, decreased compared with the prior year period due to the timing of repatriation and income tax payments to the IRS, partially offset by higher net income after adjustments for noncash items and timing of working capital.

Cash used in investing activities during the nine months ended September 30, 2024, was primarily due to capital expenditures of $725 million, including construction costs of new plants in North Carolina and Ohio.

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.

We currently estimate full year 2024 spending on capital projects to be approximately $1.3 billion.

Cash used in financing activities during the nine months ended September 30, 2024, was primarily due to the payment of dividends of $3.6 billion and the repayment and extinguishment of debt of $3.6 billion and $659 million, respectively.

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 $1.5 billion and $550 million, respectively.

See Note 9, Financing arrangements, and Note 10, Stockholders’ equity, to the condensed consolidated financial statements for further discussion.

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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