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Item 1A. Risk Factors

2025-08-06 compared with 2025-05-02 · 219 added, 196 removed, 138 unchanged (75% of the section changed)

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Continued intense public scrutiny of the price of drugs and other healthcare costs, together with payer dynamics, have limited, and are likely to continue to limit, our ability to set or adjust the price of our products based on their value, which can have a material adverse effect on our business.

In the United States, particularly over the past few years, a number of legislative and regulatory proposals have been introduced and/or signed into law to lower drug prices.

In the United States, a number of legislative and regulatory proposals have been introduced and/or signed into law to lower drug prices.

These include the IRA law that enables the U.S.

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government to impose penalties if drug prices are increased at a rate faster than inflation (IRA Inflation Penalties).

On July 4, 2025, the OBBBA was signed into law that included several changes to Medicare, Medicaid and Affordable Care Act policies, that when implemented, may adversely affect coverage and reimbursement for certain of our products.

On May 12, 2025, the Administration issued the Most-Favored-Nations (MFN) Prescription Drug Pricing Executive Order (MFN EO) aimed at using price benchmarks from comparable developed countries to set U.S.

pricing targets.

Subsequently, on July 31, 2025 the Administration sent letters to many pharmaceutical manufacturers, including Amgen (the July MFN Letter) as further described below, outlining voluntary steps that such manufacturers could take to advance actions consistent with elements of the MFN EO.

Such actions could reasonably be expected to adversely affect our business.

Additional proposals focused on drug pricing continue to be debated, and additional executive orders or regulatory initiatives focused on drug pricing and competition are likely to be adopted and implemented in some form.

It is unclear what policies the new Administration will advance with respect to IRA implementation, other drug pricing proposals, including international reference pricing or changes to healthcare regulations affecting pharmaceuticals.

Further, state government activity has been dynamic, including certain states enacting new laws limiting drug reimbursement under state run Medicaid programs and prohibiting restrictions on 340B Program use.

It remains unclear what further policies and/or actions the Administration will advance with respect to the MFN EO, IRA implementation, sector-specific trade policies, other drug pricing proposals, or other healthcare regulations affecting pharmaceuticals.

Further, state government activity has been dynamic, including a number of states enacting new laws prohibiting restrictions on 340B Program use and limiting drug reimbursement under state run Medicaid programs.

Such state laws could also eventually be adopted at the federal level.

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federal reimbursement policy.

For example, the IRA includes provisions requiring that, beginning in 2026, mandatory price setting be introduced in Medicare for certain drugs paid for under Parts B and D, whereby

manufacturers must accept a price established by the government or face penalties on all U.S.

For example, the IRA includes provisions requiring that, beginning in 2026, mandatory price setting be introduced in Medicare for certain drugs paid for under Parts B and D, whereby manufacturers must accept a price established by the government or face penalties on all U.S.

sales (starting with 10 drugs in 2026, adding 15 in 2027 and 2028, and adding 20 in 2029 and subsequent years such that, by 2031, approximately 100 drugs could be subject to such set prices).

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For example, in April 2024, CMS finalized policy changes that will give Part D plans more flexibility to substitute biosimilars for innovator products on formularies in 2025.

Implementation of the OBBBA also may impact access to and reimbursement of our products.

For example, the Congressional Budget Office has projected significant cuts to federal Medicaid spending over the next decade and an increase in the number of people without health insurance.

This would place greater stress on state budgets and hospital finances, and could result in reduced access to medicines, additional pressure to further discount medicines and growth of 340B Program utilization.

Additionally, various government agencies have taken actions designed to reduce expenditures on prescription drugs.

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The April 2025 EO also directs HHS to provide recommendations within 180 days to accelerate the approval of generics, biosimilars, combination products and second-in-class medications, as well as to address Medicaid drug rebates and Medicaid drug payment methodologies, and, within one year, to develop and implement a plan to test a payment model to enable Medicare to obtain pharmaceuticals at lower cost.

Other CMS policy changes and demonstration projects to test new care, delivery and payment models can also significantly affect how drugs, including our products, are covered and reimbursed.

The MFN EO directs HHS to set MFN price targets, which HHS identified in a press release as the lowest price in an OECD country with a GDP per capita of at least 60% of the U.S.

GDP per capita and applicable to brand products that do not currently have generic or biosimilar competition.

The MFN EO outlined potential actions if significant progress towards MFN price targets is not made including:

proposing a rulemaking plan to impose MFN pricing;

considering actions to support importation of drugs in certain circumstances;

undertaking enforcement action against anti-competitive practices;

considering actions regarding the export of drugs or precursor material;

and reviewing and potentially modifying or revoking approvals granted for drugs that are newly determined to be unsafe, ineffective or improperly marketed.

The MFN EO also directs the Secretary of Commerce and the U.S.

Trade Representative to take all necessary and appropriate action to ensure foreign countries are not engaged in any act, policy or practice that may be unreasonable or discriminatory, and directs HHS to facilitate direct-to-consumer purchasing programs at MFN prices.

The July MFN Letter calls for drug manufacturers, by September 29, 2025, to voluntarily:

1) extend MFN pricing to Medicaid;

2) guarantee MFN pricing to Medicaid, Medicare and commercial payers on all newly launched drugs;

3) use future increased revenues from outside the U.S.

to lower U.S.

and 4) participate in direct-to-consumer

models to provide MFN pricing for certain drugs.

The details of these requests and how they might be operationalized are unclear, but if put into place they could reasonably be expected to adversely affect our business.

Separate from the MFN EO and July MFN Letter, other CMS policy changes and demonstration projects to test new care, delivery and payment models can also significantly affect how drugs, including our products, are covered and reimbursed.

We also face risks related to the reporting of pricing data that affects reimbursement of and discounts provided for our products.

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At the state level, legislation, government actions and ballot initiatives can also affect how our products are covered and reimbursed and/or create additional pressure on our pricing decisions.

Existing and proposed state pricing laws have added complexity to the pricing of drugs and may already be affecting industry pricing decisions.

Existing and proposed state pricing laws, which may move forward more rapidly than similar efforts at the federal level, have added complexity to the pricing of drugs.

A number of states have adopted, and many other states are considering, PDABs, drug importation programs, reference pricing schemes and other drug pricing actions, including proposals designed to require biopharmaceutical manufacturers to report to the state proprietary pricing information or provide advance notice of certain price increases.

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For Medicaid patients, states have established a Medicaid drug spending cap (New York) and implemented a new review and supplemental rebate negotiation process (Massachusetts).

Eight states (Colorado, Maine, New Hampshire, New

Jersey, Maryland, Minnesota, Oregon and Washington) have enacted laws that establish PDABs to identify drugs that pose affordability challenges, and four such states include authority for the state PDABs to set upper payment limits on certain drugs for in-state patients, payers and providers.

In 2024, no fewer than 17 states introduced PDAB legislation.

Eight states (Colorado, Maine, New Hampshire, New Jersey, Maryland, Minnesota, Oregon and Washington) have enacted laws that establish PDABs to identify drugs that pose affordability challenges, and four such states include authority for the state PDABs to set upper payment limits on certain drugs for in-state patients, payers and providers.

In 2024 and 2025, no fewer than 17 states and nine states, respectively, introduced PDAB legislation, and in 2025 Maryland expanded the scope of its PDAB law to include the commercial market.

The eight states with enacted PDAB laws are in various phases of implementation, with Colorado’s PDAB being the furthest along.

The Colorado PDAB deemed three of five drugs “unaffordable,” including ENBREL, and are subject to rulemaking to establish an Upper Payment Limit (UPL) commencing in the second quarter of 2025 and that could be effective as soon as the first quarter of 2026.

The Colorado PDAB deemed three of five drugs “unaffordable,” including ENBREL, and rulemaking to establish an Upper Payment Limit (UPL) commenced in the second quarter of 2025 that could be effective as soon as the first quarter of 2026.

On July 16, 2025, Washington state’s PDAB selected ENBREL for one of its first affordability reviews.

Following the timeline and process established by the state for such affordability review, the manufacturer and the PDAB will undertake a number of required interactions.

However, the Washington state PDAB may not establish a UPL for any prescription drug before January 1, 2027.

Further, inappropriate expanded utilization of the 340B Program from broadened application of the 340B discounts has had, and is expected to continue to have, a negative impact on the Company’s product sales, business and results of operations.

Thirteen states (Louisiana, Arkansas, West Virginia, Minnesota, Kansas, Mississippi, Missouri, Maryland, North Dakota, South Dakota, Utah, Nebraska and New Mexico) have enacted laws with mandates on manufacturers participating in the 340B Program, and, in 2025, no fewer than 28 states are considering similar legislation.

These bills vary, but typically include provisions on restricting a manufacturer’s ability to direct drugs in 340B channels, recognizing 340B contract pharmacies and a prohibition on requiring the inclusion of 340B claims modifiers.

In March 2024, the U.S.

Court of Appeals for the 8th Circuit ruled that Arkansas’ Act 1103, which prohibits drugmakers from restricting the acquisition or delivery of 340B drugs to covered entities and their contract pharmacies, was not preempted by the federal 340B statute.

The decision contributed to an increase in the number of states considering similar legislation.

In July 2024, the U.S.

District Court for the Southern District of Mississippi denied motions for a preliminary injunction in two cases challenging a similar law in Mississippi, finding that neither plaintiff had demonstrated a substantial likelihood of success on the merits.

These orders are being appealed at the U.S.

Court of Appeals for the 5th Circuit.

In September 2024, the U.S.

District Court for the Western District of Louisiana dismissed a lawsuit challenging Louisiana’s 340B contract pharmacy mandate law, and the U.S.

District Court for the District of Maryland denied a motion for preliminary injunction challenging a similar law in Maryland.

These lawsuits challenging states on their 340B contract pharmacy laws are subsequent to Genesis Health Care, Inc.

Becerra, where the U.S.

District Court for the District of South Carolina issued an order in November 2023 that enjoins the Health Resources and Services Administration from enforcing its more restrictive interpretation of who is considered a patient under the 340B Program, to the potential benefit of healthcare systems seeking to expand the application of 340B discounts.

Additionally, on January 5, 2024, the FDA authorized Florida to move forward with its importation program proposal, though the state has not yet completed any significant steps towards importation within the two-year authorization window.

Twenty states (Louisiana, Arkansas, West Virginia, Minnesota, Mississippi, Missouri, Maryland, North Dakota, South Dakota, Utah, Nebraska, New Mexico, Colorado, Tennessee, Oregon, Vermont, Hawaii, Oklahoma, Rhode Island and Maine) have enacted laws with mandates on manufacturers participating in the 340B Program, and, in 2025, no fewer than 30 states have introduced similar legislation.

These bills vary, but typically include provisions restricting a manufacturer’s ability to direct drugs in 340B channels, recognizing 340B contract pharmacies and a prohibition on requiring the inclusion of 340B claims modifiers.

With the OBBBA’s reductions to federal Medicaid funding to states, increased pressure is anticipated for providers to find and preserve existing revenue sources at the state level, which may result in increased use of 340B contract pharmacy mandates.

In Genesis Health Care, Inc.

Becerra , the U.S.

District Court for the District of South Carolina issued an order in November 2023 enjoining the Health Resources and Services Administration from enforcing a more restrictive interpretation of who qualifies as a patient under the 340B Program, potentially expanding access to 340B discounts for healthcare systems.

Since this decision, courts have rejected arguments that state 340B laws are preempted by the federal 340B statute and have declined to enjoin such laws.

These rulings, including decisions in Arkansas, Mississippi, Louisiana, and Maryland, have accompanied a growing number of states to pursue similar legislation.

Additionally, in 2024, the FDA authorized Florida to move forward with its importation program proposal, though the state has not yet completed any significant steps towards importation within the two-year authorization window.

Colorado, Maine, New Hampshire, New Mexico, Texas and Vermont have also enacted state importation laws, and some have submitted plans for approval to the FDA.

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Further, the April 2025 EO also directs HHS to, within 90 days, streamline and improve the drug importation program to ease the process for states to obtain drug importation approvals.

On May 21, 2025, the FDA issued a press release indicating it was taking steps to enhance state importation programs and would offer individual states and

tribes the opportunity to submit draft proposals for pre-review and to meet with the agency to obtain initial feedback prior to formally submitting importation proposals.

While under federal law biologics remain exempt from such state importation activities, our small molecule products could be impacted by these initiatives.

Ultimately, as with U.S.

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These factors have limited, and may continue to limit, patient affordability and use, negatively affecting Repatha sales.

Further, significant consolidation in the health insurance industry has resulted in a few large insurers and PBMs, which places greater pressure on pricing and usage negotiations with biopharmaceutical manufacturers, significantly increasing

discount and rebate requirements and limiting patient access and usage.

For example, in the United States, the FTC’s interim report released in 2024 showed that the top six integrated health plans and PBMs controlled about 94% of all pharmacy prescriptions.

See our Annual Report on Form 10-K for the year ended December 31, 2024, Part I, Item 1A.

Risk Factors —Concentration of sales at certain of our wholesaler distributors, and consolidation of private payers, such as insurers, and PBMs has negatively affected, and may continue to negatively affect, our business.

This high degree of consolidation among insurers, PBMs and other payers, including integrated healthcare delivery systems and/or with specialty or mail-order pharmacies and pharmacy retailers, has increased the negotiating leverage such entities have over us and other biopharmaceutical manufacturers and has resulted in greater price discounts, rebates and service fees realized by those payers from our business.

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marketplace could have downstream implications or consequences for our business and how we interact with these entities.

For example, in September 2024, the FTC brought action against the three largest PBMs alleging anticompetitive and unfair rebating practices.

For example, in September 2024, the Federal Trade Commission brought action against the three largest PBMs alleging anticompetitive and unfair rebating practices.

In addition, multiple Congressional Committees have been investigating PBM practices and have also proposed legislation that could increase transparency and reporting of these practices and/or impact rebates and service fees.

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Such failures and changes have had, and could in the future have, a material adverse effect on our product sales, business and results of operations.

A breakdown of our information technology systems, cyberattack or information security breach could significantly compromise the confidentiality, integrity and availability of our information technology systems, network-connected control systems and/or our data, interrupt the operation of our business and/or affect our reputation.

To achieve our business objectives, we rely on sophisticated information technology systems, including hardware, software, technology infrastructure, online sites and networks for both internal and external operations, mobile applications,

cloud services and network-connected control systems, some of which are managed, hosted, provided or serviced by third parties.

Internal or external events that compromise the confidentiality, integrity and availability of our systems and data may significantly interrupt the operation of our business, result in significant costs and/or adversely affect our reputation.

Our information technology systems are highly integrated into our business, including our R&D efforts, our clinical and commercial manufacturing processes and our product sales and distribution processes.

Further, as the majority of our employees work remotely for some portion of their jobs in our hybrid work environment, our reliance on our and third-party information technology systems has increased substantially and is expected to continue to increase.

Remote and hybrid working arrangements, including those of many third-party providers, can increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.

The complexity and interconnected nature of software, hardware and our systems make them vulnerable to breakdown or other service interruptions, and to software errors or defects, misconfiguration and other security vulnerabilities.

For example, in July 2024, businesses worldwide were affected by an information technology outage due to a faulty software update issued by a cybersecurity firm.

Although our systems and operations were temporarily affected by the outage, the impact of this firm’s faulty update on the Company was immaterial to our business operations.

However, there can be no assurance that a future similar incident would not result in a material adverse effect on our business or results of operations.

Upgrades or changes to our systems or the software that we use have resulted and we expect, in the future, will result in the introduction of new cybersecurity vulnerabilities and risks.

In 2022, we identified a number of security vulnerabilities introduced into our information systems as a result of flaws that we subsequently identified in software that we had purchased and installed, and these flaws required that we apply emergency patches to certain of our systems.

While we did not experience any significant adverse effects as a result of these vulnerabilities, there can be no assurance that we will timely identify and address future vulnerabilities.

Our systems are also subject to frequent perimeter network reconnaissance and scanning, phishing and other cyberattacks.

For example, as a result of our cybersecurity monitoring of the Horizon legacy information systems, we detected phishing activity in the accounts of two Horizon executives.

These accounts were de-activated, the incidents were investigated and the determination was made separately by both our internal cybersecurity team and our external digital forensics and incident response supplier that no confidential information had been exfiltrated, and the incidents are now closed.

As the cyber-threat landscape evolves, these attacks are growing in frequency, sophistication, and intensity, and are becoming increasingly difficult to detect and increasingly sophisticated in using techniques and tools—including artificial intelligence—that circumvent security controls, evade detection and remove forensic evidence.

Such attacks could include the use of harmful and virulent malware, including ransomware or other denials of service, which can be deployed through various means, including the software supply chain, e-mail, malicious websites and/or the use of social engineering/phishing.

We have also experienced denial of service attacks against our network, and, although such attacks did not succeed, there can be no assurance that our efforts to guard against the wide and growing variety of potential attack techniques will be successful in the future.

Attacks such as those experienced by government entities (including those that approve and/or regulate our products, such as the EMA) and other multi-national companies, including some of our peers, could leave us unable to utilize key business systems or access or protect important data, and could have a material adverse effect on our ability to operate our business, including developing, gaining regulatory approval for, manufacturing, selling and/or distributing our products.

For example, in 2017, a pharmaceutical company experienced a cyberattack involving virulent malware that significantly disrupted its operations, including its research and sales operations and the production of some of its medicines and vaccines.

As a result of the cyberattack, its orders and sales for certain products were negatively affected.

In late 2020, SolarWinds Corporation, a leading provider of software for monitoring and managing information technology infrastructure, disclosed that it had suffered a cybersecurity incident whereby attackers had inserted malicious code into legitimate software updates for its products that were installed by myriad private and government customers, enabling the attackers to access a backdoor to such systems.

In 2022, Okta, Inc., a provider of software that helps companies manage user authentication, disclosed that several hundred of its corporate customers were vulnerable to a security breach that allowed attackers to access Okta’s internal network.

Although this breach did not have a significant effect on our business, there can be no assurance that a similar future breach would not result in a material adverse effect on our business or results of operations.

Our systems also contain and use a high volume of sensitive data, including intellectual property, trade secrets and other proprietary business information, financial information, regulatory information, strategic plans, sales trends and forecasts, litigation materials and/or personal identifiable information belonging to us, our staff, our patients, customers and/or other parties.

In some cases, we utilize third-party service providers to collect, process, store, manage or transmit such data, which have increased our risk.

Intentional or inadvertent data privacy or security breaches (including cyberattacks) resulting from attacks or lapses by employees, service providers (including providers of information technology-specific services), business partners, nation states (including groups associated with or supported by foreign intelligence agencies), organized crime organizations, “hacktivists” or others, create risks that our sensitive data may be exposed to unauthorized persons, our competitors or the public.

Malicious actors, including those working under state-sponsored campaigns, have sought employment, often in remote information technology roles, as a means to gain inside access at targeted companies.

In two separate incidents, the most recent of which occurred in the first quarter of 2025, individuals used fraudulent identification in

connection with their hiring by the Company.

While these individuals were detected and terminated before any data was extracted or malware installed, there can be no assurance that future attempts by similar actors will be unsuccessful.

System vulnerabilities and/or cybersecurity breaches experienced by our third-party service providers have constituted a substantial share of the information security risks that have affected us.

For example, in the first half of 2021, a supplier experienced a data breach in which an unauthorized third party acquired access to certain information provided to the supplier in the course of its provision of services to us, including business documents and certain personally identifiable patient information (not including social security or other financial or health insurance information).

As required, we promptly notified the applicable state attorneys general and the individuals whose personally identifiable information was affected of this data breach at the supplier.

In the third quarter of 2022, another service provider experienced a similar cybersecurity breach in which an attacker exfiltrated certain data (including non-significant Amgen data) from the service provider’s systems.

Additionally, in April 2024, one of our former vendors notified us that its subsidiary that had provided us with certain patient support services until mid-2022, experienced a cybersecurity incident that it discovered in February 2024 and that data containing individually identifiable health information of over 1.7 million Amgen patients (that was retained as required by FDA regulations) was involved in the incident.

Pursuant to the Health Breach Notification Rule requirements, we notified the FTC of this incident.

Although these supplier data breaches have not resulted in material adverse effects on our business, there can be no assurance that a similar future cybersecurity incident would not result in a material adverse effect on our business or results of operations.

Further, the timeliness of our awareness of a cybersecurity incident affects our ability to respond to and work to mitigate the severity of such events.

For example, in 2020 and 2022, two of our vendors experienced cyberattacks and each initially reported to us that neither event involved our data.

However, upon further investigation, they each subsequently informed us that the attackers had accessed limited, non-significant Amgen information.

Although neither of these breaches had a significant adverse effect on our business, in the future we may again not receive timely reporting of cybersecurity events, and such events could have a material adverse effect on our business.

Cyberattackers are also increasingly exploiting vulnerabilities in commercially available software from shared or open-source code.

We rely on third party commercial software that have had and may have such vulnerabilities, but as use of open-source code is frequently not disclosed, our ability to fully assess this risk to our systems is limited.

For example, in December 2021, a remote code execution vulnerability was discovered in a software library that is widely used in a variety of commercially available software and services.

Although this vulnerability has not resulted in any significant adverse effects on us, there can be no assurances that a similar future vulnerability in the software and services that we use would not result in a material adverse effect on our business or results of operations.

Domestic and global government regulators, our business partners, suppliers with whom we do business, companies that provide us or our partners with business services and companies we have acquired or may acquire face similar risks.

Security breaches of their systems or service outages have adversely affected systems and could, in the future, affect our systems and security, leave us without access to important systems, products, raw materials, components, services or information, or expose our confidential data or sensitive personal information.

For example, in 2019, two vendors that perform testing and analytical services that we use in developing and manufacturing our products experienced cyberattacks, and in April and September of 2020, vendors that provide us with information technology services and clinical data services, respectively, each experienced ransomware attacks.

Although there was no breach of our systems, each of these incidents required us to disconnect our systems from those vendors’ systems.

While we were able to reconnect our systems following restoration of these vendors’ capabilities without significantly affecting product availability, a more extended service outage affecting these or other vendors, particularly where such vendor is the single source from which we obtain the services, could have a material adverse effect on our business or results of operations.

In February 2024, Change Healthcare, a large U.S.

insurance claim and co-pay card processing clearinghouse, experienced a ransomware attack that has caused significant disruptions to healthcare provider and pharmacy operations.

While Change Healthcare does not directly provide us with services, disruptions to co-pay card support, insurance billing and Medicaid rebate processing led to lost sales and required us to take action to help patients access their medications and to provide extended payment terms to certain customers.

Although services have been rerouted and restored, and the impact on our business has been immaterial, similar disruptions may occur in the future stemming from the interconnectedness of the U.S.

healthcare ecosystem and industry reliance on centralized claims processing systems and networks, and such future disruptions may have a material adverse effect on our business or results of operations.

In addition, we distribute our products in the United States primarily through three pharmaceutical wholesalers, and a security breach that impairs the distribution operations of our wholesalers could significantly impair our ability to deliver our products to healthcare providers and patients.

There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls, or procedures, will be fully implemented, complied with or effective in protecting our information technology systems and sensitive data.

Although we have experienced system breakdowns, attacks and information security breaches, we do not believe such breakdowns, attacks and breaches have had a material adverse effect on our business or results of operations.

We will continue to experience varying degrees of cyberattacks and other incidents in the future.

Even though we continue to invest in the monitoring, protection and resilience of our critical and/or sensitive data and systems, there can be no assurances that our efforts will detect, prevent or fully recover systems or data from all breakdowns, service interruptions, attacks and/or breaches of our systems that could adversely affect our business and operations and/or result in the loss or exposure of critical, proprietary, private, confidential or otherwise sensitive data, which could result in material financial, legal business or reputational harm to us or negatively affect our stock price.

While we maintain cyber-liability insurance, our insurance is not sufficient to cover us against all losses that could potentially result from a service interruption, breach of our systems or loss of our critical or sensitive data.

We are also subject to various laws and regulations globally regarding cybersecurity, privacy and data protection, including laws and regulations relating to the collection, storage, handling, use, disclosure, transfer and security of personal data.

The legislative and regulatory environment regarding privacy and data protection is continuously evolving and developing and the subject of significant attention globally.

For example, we are subject to the EU’s General Data Protection Regulation, which became effective in May 2018, and the California Consumer Privacy Act of 2018 (CCPA), which became effective in January 2020, both of which provide for substantial penalties for noncompliance.

The CCPA was amended in late 2020, to create the California Privacy Rights Act to create opt in requirements for the use of sensitive personal data and the formation of a new dedicated agency for the enforcement of the law, the California Privacy Protection Agency.

Similar consumer privacy laws went into effect in 13 other states, have been enacted (but not yet in effect) in six other states, and have been proposed in 14 additional states.

Outside the United States, other jurisdictions where we operate have passed, or continue to propose, data privacy or cybersecurity legislation and/or regulations.

For example, in China, the Personal Information Protection Law and the Data Security Law, which regulate data processing activities associated with personal and nonpersonal data, are in effect and build upon the existing Cybersecurity Law.

Failure to comply with these current and future laws could result in significant penalties and reputational harm and could have a material adverse effect on our business and results of operations.

We are adopting and exploring the use of artificial intelligence (AI) in our business, and as an emerging and rapidly evolving technology, our use of AI introduces potential opportunities but also presents risks that could adversely affect our operations, information security and reputation.

AI systems may produce inaccurate or flawed outputs due to flawed algorithms, or insufficient and/or erroneous training data.

Reliance on flawed outputs could result in lower quality decision-making or prevent us from effectively utilizing AI in our business.

We may also become vulnerable to operational disruptions if the AI technologies we use experience downtimes or are compromised by cyberattacks.

If we do not effectively implement guardrails and train our staff on the safe and proper use of AI, or if our staff fail to effectively adhere to our established guardrails and training on the use of AI, we may experience adverse effects on our business, including data breaches, the loss of confidential information (including our intellectual property), unintentional disclosure of personal data, or other misuse of our proprietary information.

Further, several governments and regulatory authorities have proposed or passed laws and regulations governing the use of AI.

For example, in March 2024, the European Parliament adopted the Artificial Intelligence Act that provides for EU-wide rules on data quality, transparency, human oversight and accountability with respect to the use of artificial intelligence.

In April 2024, the EU also revised its Cybersecurity Directive NIS2 rules that create new cybersecurity risk management and reporting obligations.

Failure to comply with these current and future laws could result in significant penalties and reputational harm and could have a material adverse effect on our business and results of operations.

Our current products and products in development cannot be sold without regulatory approval.

Our business is subject to extensive regulation by numerous state and federal government authorities in the United States, including the FDA, and by foreign regulatory authorities, including the EMA.

We are required in the United States and in the other regions and countries in which we, or our partners and affiliates, sell to obtain approval from regulatory authorities before we manufacture, market and sell our products.

Once our products are approved, the FDA and other U.S.

regulatory agencies have substantial authority to require additional testing and reporting, perform inspections, change product labeling or mandate withdrawals of our products.

Failure to comply with applicable regulatory requirements may subject us to administrative and/or judicially imposed sanctions or monetary penalties as well as reputational and other harms.

The sanctions could include the FDA’s or ex-U.S.

regulatory authorities’ refusals to approve pending applications, delays in obtaining or withdrawals of approvals, delays or suspensions of clinical trials, warning letters, product recalls or seizures, total or partial suspensions of our operations, injunctions, fines, civil penalties and/or criminal prosecutions.

Obtaining and maintaining regulatory approvals have been, and will continue to be, increasingly difficult, time-consuming and costly.

Legislative bodies or regulatory agencies could enact new laws or regulations, change existing laws or regulations or change their interpretations of laws or regulations at any time, which could affect our ability to obtain or maintain approval of our products or product candidates.

The rate and degree of change in existing laws and regulations and regulatory expectations have accelerated in established markets, and regulatory expectations continue to evolve in emerging markets.

We are unable to

predict whether and when any further changes to laws or regulatory policies affecting our business could occur, such as changes to laws or regulations governing manufacturer communications concerning drug products and drug product candidates and whether such changes could have a material adverse effect on our product sales, business and results of operations.

Further, we are reliant on regulators having the resources necessary to evaluate and approve our products.

In the United States, a partial federal government shutdown halted the work of many federal agencies and their employees from late December 2018 through late January 2019.

A subsequent extended shutdown or, pursuant to the new Administration’s actions in early 2025 to freeze or reduce the federal workforce, significant reductions of, or disruptions to, staffing and resources available to government agencies could result in reductions or delays of FDA’s activities, including with respect to our ongoing clinical programs, our manufacturing of our products and product candidates and our product approvals.

Recent initiatives to reduce the size and budgets of government agencies, including the HHS, FDA and NIH, may adversely impact our operations.

In particular, reductions in staffing and resources at the FDA could result in delays in regulatory review timelines and marketing approvals.

The FDA may also have limited capacity to engage in pre-approval or guidance meetings or meetings to negotiate labeling or post-marketing commitments.

Further, reductions in communication and policymaking roles has reduced the transparency of agency actions.

Additionally, any funding reductions and caps on research overhead costs imposed on the NIH and its programs may result in grant funding cutbacks for scientific and disease-related research at academic institutions and research centers, and such reductions, over the longer term, may slow the overall discovery and development of new therapies and/or slow or interrupt the flow of innovation into the pharmaceutical development pipeline.

These developments and others associated with the reduction of personnel and budgets at the regulatory agencies that oversee our industry and operations may adversely affect our business activities, including our ongoing and future clinical research and drug development programs, research collaborations, manufacturing activities and regulatory submissions.

Regulatory authorities have questioned, and may in the future question, the sufficiency for approval of the endpoints we select for our clinical trials.

A number of our products and product candidates have been evaluated in clinical trials using surrogate endpoints that measure an effect that is known to correlate with an ultimate clinical benefit.

For example, a therapeutic oncology product candidate may be evaluated for its ability to reduce or eliminate minimal residual disease (MRD), or to extend the length of time during and after the treatment that a patient lives without the disease worsening, measured by progression-free survival (PFS).

Demonstrating that the product candidate induces MRD-negative responses or produces a statistically significant improvement in PFS does not necessarily mean that the product candidate will show a statistically significant improvement in overall survival or the time that the patients remain alive.

In the cardiovascular setting, a heart disease therapeutic candidate may be evaluated for its ability to reduce low-density lipoprotein cholesterol (LDL-C) levels, as an elevated LDL-C level has been a surrogate endpoint for cardiovascular events such as death, heart attack and stroke.

The use of surrogate endpoints such as PFS and LDL-C reduction, in the absence of other measures of clinical benefit, may not be sufficient for broad usage or approval even when such results are statistically significant.

Regulatory authorities could also add new requirements, such as the completion of enrollment in a confirmatory study or the completion of an outcomes study or a meaningful portion of an outcomes study, as conditions for obtaining approval or obtaining an indication.

For example, despite demonstrating that Repatha reduced LDL-C levels in a broad patient population, only after our large phase 3 outcomes study evaluating the ability of Repatha to prevent cardiovascular events met certain of its primary composite endpoint and key secondary composite endpoint did the FDA grant a broader approval of Repatha to reduce the risk of certain cardiovascular events.

There may also be situations in which demonstrating the efficacy and safety of a product candidate may not be sufficient to gain regulatory approval unless superiority to other existing treatment options can be shown.

The imposition of additional requirements or our inability to meet them in a timely fashion, or at all, has delayed, and may in the future delay, our clinical development and regulatory filing efforts, delay or prevent us from obtaining regulatory approval for new product candidates or new indications for existing products, or prevent us from maintaining our current product labels.

Some of our products have been approved by U.S.

regulatory authorities on an accelerated or conditional basis with full approval conditioned upon fulfilling the requirements of regulators.

For example, the FDA has approved LUMAKRAS under accelerated approval for the treatment of adult patients with KRAS G12C-mutated local advanced or metastatic non-small cell lung cancer (NSCLC).

Following our submission of the LUMAKRAS/LUMYKRAS CodeBreaK 200 Phase 3 confirmatory data in March 2023 to the FDA and EMA, we received a Complete Response Letter from the FDA and a new post-marketing requirement for an additional confirmatory study to support full approval.

Regulatory authorities are placing greater focus on whether the sponsors of products originally approved on an accelerated or conditional basis have met the conditions of the accelerated or conditional approvals.

If we are unable to fulfill the regulators’ requirements that were conditions of a product’s accelerated or conditional approval and/or if regulators reevaluate the data or risk-benefit profile of our product, the conditional approval may not result in full approval or may be revoked or not renewed.

Alternatively, we may be required to change the product’s labeled indications, conduct an additional confirmatory clinical trial, or even withdraw the product from the market.

Regulatory authorities can also impose post-marketing pediatric study requirements.

Failure to fulfill such requirements may result in regulatory or enforcement action, including financial penalties or the invalidation of a product’s marketing authorization.

Safety problems or signals can arise as our products and product candidates are evaluated in clinical trials, including investigator sponsored studies, or as our marketed products are used in clinical practice.

We are required continuously to collect and assess adverse events reported to us and to communicate to regulatory agencies these adverse events and safety signals regarding our products.

Regulatory agencies periodically perform inspections of our pharmacovigilance processes, including our adverse event reporting.

In the United States, for our products with approved Risk Evaluation and Mitigation Strategies (REMS, see Part I, Item 1.

Business—Government Regulation—Postapproval Phase, of our Annual Report on Form 10-K for the year ended December 31, 2024), we are required to submit periodic assessment reports to the FDA to demonstrate that the goals of the REMS are being met.

REMS and other risk management programs are designed to help ensure that a drug’s benefits outweigh the risks and vary in the elements they contain.

If the FDA is not satisfied with the results of the periodic assessment reports we submit for any of our REMS, the FDA may also modify our REMS or take other regulatory actions, such as implementing revised or restrictive labeling.

The drug delivery devices approved for use in combination with our products are also subject to regulatory oversight and review for safety and malfunctions.

We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation including the OBBBA.

Such tax liabilities could adversely affect our profitability and results of operations.

We are subject to income and other taxes in the United States and other jurisdictions in which we do business.

As a result, our provision for income taxes is derived from a combination of applicable tax rates in the various places we operate.

Significant judgment is required for determining our provision for income tax.

One or more of our legal entities file income tax returns in the U.S.

federal jurisdiction, various U.S.

state jurisdictions and foreign jurisdictions.

Our income tax returns are routinely examined by tax authorities in those jurisdictions.

Significant disputes can and have arisen with tax authorities involving issues regarding the timing and amount of deductions, the use of tax credits and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws, regulations and relevant facts, and such tax authorities (including the IRS) are becoming more aggressive in its audits and are particularly focused on such matters.

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.

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

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

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.

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 and asserts penalties.

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 cases were consolidated on December 19, 2022.

The trial began on November 4, 2024 and concluded on January 17, 2025.

The parties filed opening post-trial briefs on June 13, 2025, and the Court held oral argument on July 16, 2025.

The parties are scheduled to file post-trial reply briefs in October 2025.

The Company expects a decision from the U.S.

Tax Court no earlier than 2026.

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

We expect that the IRS will begin its audit of 2019–2022 in 2025 or early 2026, and we believe that it may seek to continue to audit similar issues related to the allocation of income between the United States and our foreign jurisdictions.

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

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

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 effect on the results of our operations.

See Part 1, Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, Income Taxes, and Part 1—Note 4, Income taxes, to the condensed consolidated financial statements.

Our provision for income taxes and results of operations in the future could be adversely affected by changes to our operating structure, changes in the mix of income and expenses in countries with differing tax rates, changes in the valuation of deferred tax assets and liabilities and changes in applicable tax laws, regulations or administrative interpretations thereof.

The 2017 Tax Act is complex and a large volume of regulations and guidance has been issued and could be subject to different interpretations.

We could face audit challenges to our application of the 2017 Tax Act.

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.

As of January 1, 2025, select individual countries, including the United Kingdom, EU member countries, and Singapore, have enacted the global minimum tax agreement.

Our legal entities in the countries that have enacted the agreement, along with their direct and indirect subsidiaries, are now subject to a 15% minimum tax rate on adjusted financial statement income.

In June 2025, the United States and the other six countries that make up the G7 nations jointly announced that U.S.

companies would be exempted from certain minimum taxes relating to the OECD agreement.

However, significant details regarding the G7 announcement remain uncertain and individual countries that have enacted the OECD agreement, including countries not within the G7, must amend their local legislation for the G7 announcement to become effective.

Additional provisions of the OECD agreement may also come into effect in future years, and the OECD is expected to continue to release additional guidance that may impact the application and interpretation of the agreement that could further increase our tax liabilities.

The continued response of other countries, including the U.S.

territory of Puerto Rico, to the OECD agreement and the G7 announcement remains highly uncertain.

The continued enactment of the OECD agreement, either by all OECD participants or unilaterally by individual countries, could result in tax increases or double taxation in the United States or foreign jurisdictions.

The OBBBA includes significant provisions related to taxation, such as the permanent extension of certain expiring provisions of the 2017 Tax Act, and modifications to the international tax framework.

This legislation has multiple effective dates, with certain provisions effective in 2026 and beyond.

The OBBBA is complex and we are awaiting guidance to be issued.

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

territory of Puerto Rico or other jurisdictions, including the changes and 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.

Our sales and operations are subject to the risks of doing business internationally, including in emerging markets.

As we continue our expansion efforts in emerging markets around the world, through acquisitions and licensing transactions as well as through the development and introduction, both independently and through collaborations such as our collaboration with BeOne, of our products in new markets, we face numerous risks to our business.

There is no guarantee that our efforts and strategies to expand sales in emerging markets will succeed.

Our international business, including in China and emerging market countries, may be especially vulnerable to periods of global and local political, legal, regulatory and financial instability, including issues of geopolitical relations, the imposition of international sanctions in response to certain state actions and/or sovereign debt issues, and management of health policy in response to pressures such as global pandemics.

For example, the BIOSECURE Act would prohibit federal contracting with companies that have commercial connections with enumerated “biotechnology companies of concern” located in certain geographies, including China, has passed in the U.S.

House of Representatives, and, if passed by the U.S.

Senate and signed into law by the Administration, could restrict our ability to contract or collaborate with such biotechnology companies in the future.

If relations between the United States and other governments deteriorate, our business and investments in such markets may also be adversely affected.

We may also be required to increase our reliance on third-party agents and unfamiliar operations and arrangements, including those previously utilized by companies we partner with or acquire in emerging markets.

See our Annual Report on Form 10-K for the year ended December 31, 2024, Part I, Item 1A.

Risk Factors —Some of our products are used with drug delivery or companion diagnostic devices that have their own regulatory, manufacturing and other risks.

If regulatory agencies determine that we or other parties (including our clinical trial investigators, those operating our patient support programs or licensees of our products) have not complied with the applicable reporting, other pharmacovigilance or other safety or quality assessment requirements, we may become subject to additional inspections, warning letters or other enforcement actions, including fines, marketing authorization withdrawal and other penalties.

Our product candidates and marketed products can also be affected by safety problems or signals occurring with respect to products that are similar to ours or that implicate an entire class of products.

Further, as a result of clinical trials, including sub-analyses or meta-analyses of earlier clinical trials (a meta-analysis involves the use of various statistical methods to combine results from previous separate but related studies) performed by us or others, concerns may arise about the sufficiency of the data or studies underlying a product’s approved label.

Such actual or perceived safety problems or concerns can lead to:

• revised or restrictive labeling for our products, or the potential for restrictive labeling that has resulted, and may in the future result, in our decision not to commercialize a product candidate;

• requirement of risk management or minimization activities or other regulatory agency compliance actions related to the promotion and sale of our products;

• post-marketing commitments, mandated post-marketing requirements or pharmacovigilance programs for our approved products;

• product recalls of our approved products;

• required changes to the processes used in the manufacture of our products, which could increase our manufacturing costs and affect the availability of contract manufacturers we may utilize to assist in such manufacturing;

• revocation of approval for our products from the market completely, or within particular therapeutic areas or patient types;

• increased timelines or delays in being approved by the FDA or other regulatory bodies;

• treatments or product candidates not being approved by regulatory bodies.

For example, after an imbalance in positively adjudicated cardiovascular serious adverse events was observed in one of the phase 3 clinical trials for EVENITY but not in another, larger phase 3 study, in April 2019 the FDA approved EVENITY for the treatment of osteoporosis in postmenopausal women at high risk for fracture, along with a post-marketing requirement.

The requirement includes a five-year observational feasibility study that could be followed by a comparative safety study or trial.

Regulatory authorities also require that our products are tested and controlled for impurities.

Impurities exceeding established limits may lead to delayed product approvals or disrupt the manufacture and distribution of our products.

For example, certain jurisdictions and regulatory agencies, including the FDA and EMA, require risk assessments, and if applicable, testing, for the presence of nitrosamine impurities in certain small molecule drugs, and we are following the established process of evaluating potentially impacted small molecule products.

Testing of our cinacalcet product has indicated the presence of nitrosamines in certain lots above established limits.

After working closely with regulatory agencies in each impacted country we have stopped distribution of cinacalcet in certain countries and initiated recalls in certain Middle Eastern countries.

In addition to our innovative products, we are working to develop and commercialize biosimilar versions of a number of products currently manufactured, marketed and sold by other pharmaceutical companies.

In some markets outside the United States and EU, there is not yet a legislative or regulatory pathway for the approval of biosimilars.

In the United States, the BPCIA provided for such a pathway.

Discussions within the FDA and other regulatory authorities, and between regulatory authorities and sponsors, continue as to the evidence needed to demonstrate biosimilarity or interchangeability for specific products.

Risk Factors —We must conduct clinical trials in humans before we commercialize and sell any of our product candidates or existing products for new indications .

Our expansion efforts in China and emerging markets

around the world are dependent upon the establishment of an environment that is predictable, navigable and supportive of biopharmaceutical innovation, sustained access for our products and predictable pricing controls.

China continues to strengthen regulations on the collection, use and transmission of Chinese human genetic resources, and has expanded regulations on the conduct of biotechnology R&D activities in China.

For example, between 2020 and 2022, we experienced delays in our applications to the Human Genetic Resources Administration of China that sought approval to conduct clinical trials in China.

Further, recent increases in tariffs imposed on certain goods imported into the United States, including inputs relevant to biopharmaceutical manufacturing, have raised our production costs to a limited degree in the first half of 2025, and, going forward, such tariffs, together with the imposition of tariffs from agreements the Administration has made with other countries and other potential future tariffs, could more significantly increase our production costs and potentially disrupt the operation of our supply chain.

Additionally, any tariffs imposed directly on the pharmaceutical industry would have the potential to adversely affect our sales.

See Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

Our international operations and business may also be subject to less protective intellectual property or other applicable laws, diverse data privacy and protection requirements, changing tax laws and tariffs, trade restrictions or other barriers designed to protect industry in the home country against foreign competition, far-reaching antibribery and anticorruption laws and regulations and/or evolving legal and regulatory environments.

For example, recent cross-border data transfer compliance requirements in China, as well as a new U.S.

Department of Justice final rule on preventing access to Americans’ bulk sensitive personal data by “countries of concern,” may also impose additional costs of doing business, including costs associated with localizing operations.

In response to the ongoing armed conflict in U kraine, the U.S.

government, numerous state governments, the EU and other countries in which we conduct business have imposed a wide range of economic sanctions that restrict commerce and business dealings with Russia, certain regions of Ukraine and certain entities and individuals.

Additionally, the recent armed conflict in the Middle East has caused regional disruptions to economic activity.

For a description of the conflict’s impact on our third-party contract manufacturing of KRYSTEXXA, see our Annual Report on Form 10-K for the year ended December 31, 2024, Part I, 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 .

T hese conflicts, in addition to other geopolitical tensions, may also precipitate or amplify the other risks described herein, including risks relating to cybersecurity, global economic conditions, clinical trials and supply chains, which could adversely affect our business, operations and financial condition and results.

As we expand internationally , we are subject to fluctuations in foreign currency exchange rates relative to the U.S.

While we have a program in place that is designed to reduce our exposure to foreign currency exchange rate fluctuations through foreign currency hedging arrangements, our hedging efforts do not completely offset the effect of these fluctuations on our revenues and earnings.

Overall, the legal and operational challenges of our international business operations, along with government controls, the challenges of attracting and retaining qualified personnel and obtaining and/or maintaining necessary regulatory or pricing approvals of our products, may result in material adverse effects on our international product sales, business and results of operations.

Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.

Manufacturing biologic and small molecule human therapeutic products is difficult, complex and highly regulated.

We manufacture many of our commercial products and product candidates internally.

In addition, we use third-party contract manufacturers to produce, or assist in the production of, a number of our products, and we currently use contract manufacturers to produce, or assist in the production of, a number of our late-stage product candidates and drug delivery devices.

The number of third-party contract manufacturers that we use has increased with our acquisition of Horizon, as Horizon required such contract manufacturers for all of its products.

See our Annual Report on Form 10-K for the year ended December 31, 2024, Part I, Item 1.

Business—Manufacturing, Distribution and Raw Materials—Manufacturing;

and our Annual Report on Form 10-K for the year ended December 31, 2024, Part I, Item 1A.

Our ability to adequately and timely manufacture and supply our products (and product candidates to support our clinical trials) is dependent on the uninterrupted and efficient operation of our facilities and those of our third-party contract manufacturers, which may be affected by:

• capacity of manufacturing facilities;

• contamination by microorganisms or viruses, or foreign particles from the manufacturing process;

• natural or other disasters, including hurricanes, earthquakes, volcanoes or fires;

• labor disputes or shortages, including the effects of health emergencies (such as novel viruses or pandemics) or natural disasters;

• compliance with regulatory requirements;

• changes in forecasts of future demand;

• timing and actual number of production runs and production success rates and yields;

• updates of manufacturing specifications;

• contractual disputes with our suppliers and contract manufacturers;

• timing and outcome of product quality testing;

• power failures and/or other utility failures;

• cyberattacks on supplier systems;

• breakdown, failure, substandard performance or improper installation or operation of equipment (including our information technology systems and network-connected control systems or those of our contract manufacturers or third-party service providers);

• delays in the ability of the FDA or foreign regulatory agencies to provide us necessary reviews, inspections and approvals, including as a result of a subsequent extended U.S.

federal or other government shutdowns;

• tariffs or other trade barriers that increase costs, limit availability, or disrupt the flow of goods;

• geopolitical conflicts (such as the ongoing conflicts in Ukraine and the Middle East).

If any of these or other problems affect production in one or more of our facilities or those of our third-party contract manufacturers, or if we do not accurately forecast demand for our products or the amount of our product candidates required in clinical trials, we may be unable to start or increase production in our unaffected facilities to meet demand.

If the efficient manufacture and supply of our products or product candidates is interrupted, we may experience delayed shipments, delays in our clinical trials, supply constraints, stock-outs, adverse event trends, contract disputes and/or recalls of our products.

From time to time, we have initiated recalls of certain lots of our products.

For example, in July 2014 we initiated a voluntary recall of an Aranesp lot distributed in the EU after particles were detected in a quality control sample following distribution of that lot, and in April 2018 we initiated a precautionary recall of two batches of Vectibix distributed in Switzerland after potential crimping defects were discovered in the metal seals on some product vials.

If we are at any time unable to provide an uninterrupted supply of our products to patients, we may lose patients and physicians may elect to prescribe competing therapeutics instead of our products, which could have a material adverse effect on our product sales, business and results of operations.

Our manufacturing processes, those of our third-party contract manufacturers and those of certain of our third-party service providers must undergo regulatory approval processes and are subject to continued review by the FDA and other regulatory authorities.

It can take longer than five years to build, validate and license another manufacturing plant, and it can take longer than three years to qualify and license a new contract manufacturer or service provider.

If we elect or are required to make changes to our manufacturing processes because of new regulatory requirements, new interpretations of existing requirements or other reasons, this could increase our manufacturing costs and result in delayed shipments, delays in our clinical trials, supply constraints, stock-outs, adverse event trends or contract negotiations or disputes.

Such manufacturing challenges may also occur if our existing contract manufacturers are unable or unwilling to timely implement such changes, or at all.

We are expanding our manufacturing capabilities to support current and anticipated demand for our products and product candidates.

However, recent tariffs on imported equipment, construction materials, and key inputs have increased our costs to a limited extent in the first half of 2025, and, going forward, such tariffs, or other tariffs imposed in the future, could further increase costs, potentially disrupt supply chains, and put at risk the timely and cost-effective execution of these projects.

Further, these efforts, often rely on a single or small number of vendors and suppliers, and finding alternatives for such vendors and suppliers may not be feasible or could require significant time and expense due to the specialized nature of our facility requirements.

In addition, construction or quality assurance challenges at the facilities we are building or expanding, labor

shortages, contractual disputes with our suppliers, negative outcomes from agency officials, or other delays or challenges in operationalizing additional manufacturing capacity could limit our ability to capitalize on demand for our products and product candidates.

In addition, regulatory agencies conduct routine monitoring and inspections of our manufacturing facilities and processes as well as those of our third-party contract manufacturers and service providers.

If regulatory authorities determine that we or our third-party contract manufacturers or certain of our third-party service providers have violated regulations, they may mandate corrective actions and/or issue warning letters, or even restrict, suspend or revoke our prior approvals, prohibiting us from manufacturing our products or conducting clinical trials or selling our marketed products, either until we or the affected third-party contract manufacturers or third-party service providers comply, or indefinitely.

See our Annual Report on Form 10-K for the year ended December 31, 2024, Part I, Item 1A.

Risk Factors —We currently face competition from biosimilars and generics and expect to face increasing competition from biosimilars and generics in the future.

Delays or uncertainties in the development or implementation of such pathways, or changes in existing regulatory pathways, including degradation of regulatory standards, could result in delays or difficulties in getting our biosimilar products approved by regulatory authorities, subject us to unanticipated development costs or otherwise reduce the value of the investments we have made in the biosimilars area.

Further, we cannot predict the extent to which any potential legislative or policy initiatives would affect the biosimilar pathway or have a material adverse effect on our development of biosimilars, on our marketed biosimilars or on our pursuit of interchangeability designations for any biosimilar.

In addition, if we are unable to bring our biosimilar products to market on a timely basis and secure “first-to-market” or other advantageous positions, our future biosimilar sales, business and results of operations could be materially and adversely affected.

Risk Factors —Our current products and products in development cannot be sold without regulatory approval.

Such issues may also delay the approval of product candidates we have submitted for regulatory review, even if such product candidates are not directly related to the products, devices or processes at issue with regulators.

Because our third-party contract manufacturers and certain of our third-party service providers are subject to the FDA and foreign regulatory authorities, alternative qualified third-party contract manufacturers and third-party service providers may not be available on a timely basis, or at all.

If we or our third-party contract manufacturers or third-party service providers cease or interrupt production or if our third-party contract manufacturers and third-party service providers fail to supply materials, products or services to us, we may experience delayed shipments, delays in our clinical trials, supply constraints, contract disputes, stock-outs and/or recalls of our products.

Additionally, we distribute a substantial volume of our commercial products through our primary distribution centers in Louisville, Kentucky for the United States and in Breda, Netherlands for Europe and much of the rest of the world.

We also conduct most of the labeling and packaging of our products distributed in Europe and much of the rest of the world in Breda.

Our ability to timely supply products is dependent on the uninterrupted and efficient operations of our distribution and logistics centers, our third-party logistics providers and our labeling and packaging facility in Breda.

Further, we rely on commercial transportation, including air and sea freight, for the distribution of our products to our customers, which has been negatively affected by the COVID-19 pandemic, labor unrest, natural disasters and geopolitical security threats.

Changes in laws or regulations with respect to the use and/or presence of certain chemicals in our products or the components used in the research, development, manufacture and/or packaging of our products could also disrupt or restrict our ability to develop, produce or sell our products.

For example, the EU, the U.S.

Congress, the U.S.

Environmental Protection Agency, and several U.S.

states are considering legislation and/or policies to address the reporting, presence, and/or use, of certain chemicals in certain of the components used in the manufacture or packaging of commercial products, including chemicals known as per- and polyfluorinated substances (PFAS).

In 2024, Canada (through Environment and Climate Change Canada) issued a notice requiring reporting on PFAS manufacture, import, and use in Canada.

In addition, proposed legislation in several jurisdictions are under consideration to prohibit or otherwise regulate the importation, manufacture, or distribution of goods containing PFAS, and some such proposals do not provide exemptions for drug products, medical devices, their packaging, or the materials used in the research, development, or manufacture of such products or devices.

For example, the EU is considering a ban on PFAS in the manufacturing and packaging of pharmaceutical products that could affect pharmaceutical research and development activities and commercial distribution.

Some proposals, if enacted without exemptions for pharmaceutical products, and materials used in their research, development, and manufacture, or without adequate time to research and develop or otherwise identify alternative materials or suppliers, may cause significant disruptions to our ability to manufacture and supply products to the affected jurisdictions, potentially resulting in a material adverse effect on our business.

There have also been legislative and administrative proposals seeking to incentivize greater drug manufacturing in the United States with the stated goal of improving supply reliability in the United States.

For example, on August 6, 2020, an Executive Order was issued that was aimed at boosting domestic production of essential medicines, medical countermeasures, and critical inputs titled “Executive Order on Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs are Made in the United States.” Additionally, one legislative proposal would have prohibited the U.S.

Department of Veterans Affairs from purchasing certain drugs that have active pharmaceutical ingredients manufactured outside the United States.

While we perform a substantial majority of our commercial manufacturing activities in the United States, including in the U.S.

territory of Puerto Rico, and a substantial majority of our clinical manufacturing activities at our facility in Thousand Oaks, California, the passage of such legislation could result in foreign governments enacting retaliatory legislation or regulatory actions, which may have an adverse effect on our product sales, business and results of operations.

Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

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The economic downturn resulting from the COVID-19 pandemic precipitated a global recession, which was followed by high rates of inflation and actions taken by financial regulators to raise interest rates.

Instability in the financial system, tighter lending standards and higher interest rates have added stress that may create additional vulnerabilities in the global economy, the effects of which may be of an extended duration.

Instability in the financial system, tighter lending standards and higher interest rates have added stress that may create additional vulnerabilities in the global economy, the effects

of which may be of an extended duration.

Additionally, with higher interest rates, deficits (including those associated with the pandemic), and other fiscal pressures, governments may be unable to sustain their previously high levels of fiscal spending.

Further, in the United States, although Congress has approved stopgap measures to fund the government through early March, the federal government continues to be at risk of a shutdown if legislation providing funding for the fiscal year is not passed as a result of political divisions in Congress and an impasse on budgetary and spending matters.

Congress must also reach an agreement to extend the federal debt ceiling in 2025 to avoid default on U.S.

government debt, and such negotiation will also likely include a focus on decreasing government spending (which the new Administration and Congressional majorities have indicated will be a priority).

Further, in the United States, although Congress has approved measures to fund the government through September 2025, the federal government continues to be at risk of a shutdown if legislation providing funding for the subsequent fiscal year is not passed as a result of political divisions in Congress and an impasse on budgetary and spending matters.

Consequently, these and other financial pressures have caused, and may continue to cause, government or other third-party payers to more aggressively seek cost containment measures in healthcare and other settings.

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Our operational costs, including the cost of energy, materials, labor, distribution and our other operational and facilities costs are subject to market conditions and are being adversely affected by inflationary pressures.

Inflationary pressure has increased, potentially due, in part, to newly imposed tariffs and retaliatory trade actions.

Although we monitor our distributors’, customers’ and suppliers’ financial condition and their liquidity to mitigate our business risks, some of our distributors, customers and suppliers may become insolvent, which could have a material adverse effect on our product sales, business and results of operations.

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While the April 2025 Tariff EO exempts pharmaceuticals, the universal 10% tariff and any foreign retaliatory tariffs will increase certain of our costs, including the materials we use to manufacture our products as well as to conduct our research and development activities, such as delivery devices, consumable supplies and certain other laboratory materials, and the tariffs imposed by China may negatively affect our business in that country.

On April 1, 2025, the Administration initiated an investigation under Section 232 of the Trade Expansion Act of 1962 of the importation of

pharmaceuticals, pharmaceutical ingredients and their derivative products, which may lead to the imposition of a sector-specific tariff on such products.

If the current tariff exemptions applicable to pharmaceutical products are revoked, or if new sector-specific tariffs targeting pharmaceuticals, pharmaceutical ingredients and their derivative products are imposed, our product sales and research and development activities may be adversely affected.

The Administration has since suspended China’s country-specific rate until August 12, 2025 and suspended Mexico’s country-specific rate until October 30, 2025.

In July 2025, preliminary tariff agreements have been announced for countries such as Vietnam, Japan, the United Kingdom, the EU and South Korea.

In addition, in late July, the Administration signed executive orders that raised the tariffs on imports from Brazil and Canada to 50% and 35%, respectively (the Brazil and Canada Tariff EOs), and modified the country-specific tariffs for more than 60 countries that will become effective on August 7, 2025 (the Modified Country-Specific Tariff EO, together with the Brazil and Canada Tariff EOs, the July Tariff EOs).

The Administration has also stated that it will impose an additional penalty tariff of an unspecified amount on top of the 25% tariff on imports from India enumerated in the Modified Country-Specific Tariff EO.

Certain details of such preliminary agreements, the July Tariff EOs and the potential tariffs on India are not yet available, and we will assess their potential effects when such details become available.

In April 2025, the Administration also initiated an investigation under Section 232 of the Trade Expansion Act of 1962 of the importation of pharmaceuticals, pharmaceutical ingredients and their derivative products, which may lead to the imposition of a sector-specific tariff on such products.

In July 2025, the Administration stated the intention that such tariff rate could be up to 200% and could be effective in 12 to 18 months following such tariff’s finalization.

Further details about such potential tariff on pharmaceuticals remain uncertain.

Depending on the scope of any final Section 232 tariff on the pharmaceuticals, it could apply not only to finished pharmaceutical products but also to active pharmaceutical ingredients (APIs), and key starting and upstream materials, potentially increasing our manufacturing and development costs.

As such, a Section 232 tariff on pharmaceuticals could significantly increase our costs, particularly for our products that rely on globally distributed manufacturing, transportation or sourcing networks.

Additionally, if the current tariff exemptions applicable to pharmaceutical products are revoked, our product sales and research and development activities may also be adversely affected.

Further, the administrative requirements of tariffs across global trade could also slow and/or delay the processing and delivery of products and materials in supply chains.

12 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 1A. Risk Factors