NetApp : Leading automotive manufacturers will measure progress based on data insights
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, 2021, and
our Quarterly Report on Form 10-Q for the period ended March 31, 2022. Our
results of operations discussed in MD&A are presented in conformity with GAAP.
Amgen operates in one business segment: human therapeutics. Therefore, our
results of operations are discussed on a consolidated basis.

Forward-looking statements


This report and other documents we file with the SEC contain forward-looking
statements that are based on current expectations, estimates, forecasts and
projections about us, our future performance, our business, our beliefs and our
management's assumptions. In addition, we, or others on our behalf, may make
forward-looking statements in press releases, written statements or our
communications and discussions with investors and analysts in the normal course
of business through meetings, webcasts, phone calls and conference calls. Such
words as "expect," "anticipate," "outlook," "could," "target," "project,"
"intend," "plan," "believe," "seek," "estimate," "should," "may," "assume" and
"continue" as well as variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are not
guarantees of future performance and they involve certain risks, uncertainties
and assumptions that are difficult to predict. We describe our respective risks,
uncertainties and assumptions that could affect the outcome or results of
operations in Item 1A. Risk Factors in Part II herein and in Part I, Item 1A.
Risk Factors of our Annual Report on Form 10-K for the year ended December 31,
2021, and in Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q
for the period ended March 31, 2022. 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. We caution you
that actual outcomes and results may differ materially from what is expressed,
implied or forecasted by our forward-looking statements. Reference is made in
particular to forward-looking statements regarding product sales, regulatory
activities, clinical trial results, reimbursement, expenses, EPS, liquidity and
capital resources, trends, planned dividends, stock repurchases, collaborations
and effects of pandemics. Except as required under the federal securities laws
and the rules and regulations of the SEC, we do not have any intention or
obligation to update publicly any forward-looking statements after the
distribution of this report, whether as a result of new information, future
events, changes in assumptions or otherwise.


Overview


Amgen is a biotechnology company committed to unlocking the potential of biology
for patients suffering from serious illnesses. A biotechnology pioneer since
1980, Amgen has grown to be one of the world's leading independent biotechnology
companies, has reached millions of patients around the world and is developing a
pipeline of medicines with breakaway potential.

Our principal products are ENBREL, Prolia, Otezla, XGEVA, Aranesp, Neulasta,
Repatha, KYPROLIS and Nplate. We also market a number of other products,
including MVASI, Vectibix, EVENITY, BLINCYTO, EPOGEN, AMGEVITA, Aimovig,
Parsabiv, KANJINTI, LUMAKRAS/LUMYKRAS, NEUPOGEN, Sensipar/Mimpara and TEZSPIRE.

COVID-19 pandemic


Since the onset of the pandemic in 2020, we have been closely monitoring the
pandemic's effects on our global operations. We continue to take appropriate
steps to minimize risks to our employees, a significant number of whom have
continued to work virtually. To date, our remote working arrangements have not
significantly affected our ability to maintain critical business operations, and
we have not experienced disruptions to or shortages of our supply of medicines.

Over the course of the pandemic we have experienced changes in demand for some
of our products as fluctuations in the frequency of patient visits to doctors'
offices have impacted the provision of treatments to existing patients and
reduced diagnoses in new patients. During 2021, there was a gradual recovery in
both patient visits and diagnosis rates that approached pre-pandemic levels. In
2022, the pandemic has continued to impact the healthcare sector, and our
business, to varying degrees across our markets. To date in 2022, in most of our
major markets, with the exception of the Asia Pacific region that has been
affected by sustained lockdowns, we have seen greater stability in patient
visits and demand patterns even in areas facing surges in the virus. Given the
evolution of COVID-19 since its onset, including the proliferation of variants,
we cannot predict the impact of future virus surges on our business and will
continue to closely monitor the impact of COVID-19 on our business and on the
healthcare sector more generally.

                                       29

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With respect to our drug development activities, we continue to work to mitigate
COVID-19 effects on future study enrollment in our clinical trials around the
world. We remain focused on effectively supporting the delivery of care and
investigational drug supply to patients enrolled in our active clinical sites.

Despite the ongoing pandemic and business impacts noted above, we believe that
existing funds, cash generated from operations and existing sources of and
access to financing are adequate to satisfy our needs for working capital,
capital expenditures and debt service requirements as well as to engage in
capital-return and other business initiatives that we plan to pursue. For a
discussion of risks the COVID-19 pandemic presents to our results, see Risk
Factors in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for
the year ended December 31, 2021, and in Part II, Item 1A. Risk Factors of our
Quarterly Report on Form 10-Q for the period ended March 31, 2022.


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 quarter ended March 31, 2022. For additional developments or for a more
comprehensive discussion of certain developments discussed below, see our Annual
Report on Form 10-K for the year ended December 31, 2021, and our Quarterly
Report on Form 10-Q for the period ended March 31, 2022.

Products/Pipeline

General Medicine

Olpasiran

•In May 2022, we announced positive topline data from the Phase 2 OCEAN(a)-DOSE
clinical study, evaluating olpasiran (formerly AMG 890) in adult patients with
lipoprotein(a), or Lp(a), levels over 150 nmol/L and evidence of atherosclerotic
cardiovascular disease (ASCVD). Olpasiran is a small interfering RNA (siRNA)
designed to lower the body's production of apolipoprotein(a), a key component of
Lp(a) that has been associated with an increased risk of cardiovascular events.
In the double-blind placebo-controlled treatment period, olpasiran was
administered up to 225 mg subcutaneously every 12 weeks to patients with a
median baseline Lp(a) of approximately 260 nmol/L. These data demonstrated a
significant reduction from baseline in Lp(a) of up to or greater than 90 percent
at week 36 (primary endpoint) and week 48 (end of treatment period) for the
majority of doses. No new safety concerns were identified during this treatment
period.

Inflammation

TEZSPIRE

•In July 2022, our partner AstraZeneca plc announced that the Committee for
Medicinal Products for Human Use of the EMA has recommended TEZSPIRE for
marketing authorization in the European Union as an add-on therapy in patients
12 years and older with severe asthma who are inadequately controlled with high
dose inhaled corticosteroids plus another medicinal product for maintenance
treatment.

Business development

Proposed acquisition of ChemoCentryx, Inc.


•On August 4, 2022, Amgen announced its proposed acquisition of ChemoCentryx for
$52.00 per share in cash, for a total transaction price of approximately
$4.0 billion. ChemoCentryx is a biopharmaceutical company focused on
orally-administered therapeutics to treat autoimmune diseases, inflammatory
disorders and cancer. In the United States, ChemoCentryx markets TAVNEOS®, the
first approved orally administered inhibitor of the complement 5a receptor as an
adjunctive treatment for adult patients with severe active anti-neutrophil
cytoplasmic autoantibody-associated vasculitis (ANCA vasculitis). The
transaction is expected to close in the fourth quarter of 2022.



                                       30

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Selected financial information

The following is an overview of our results of operations (in millions, except
percentages and per-share data):

                           Three months ended                          Six months ended
                                June 30,                                   June 30,
                            2022            2021        Change        2022          2021        Change
Product sales
U.S.                  $    4,446          $ 4,374          2  %    $  8,483      $  8,277          2  %
ROW                        1,835            1,740          5  %       3,529         3,429          3  %
Total product sales        6,281            6,114          3  %      12,012        11,706          3  %
Other revenues               313              412        (24) %         820           721         14  %
Total revenues        $    6,594          $ 6,526          1  %    $ 12,832      $ 12,427          3  %
Operating expenses    $    4,418          $ 5,698        (22) %    $  8,156      $  9,470        (14) %
Operating income      $    2,176          $   828             *    $  4,676      $  2,957         58  %
Net income            $    1,317          $   464             *    $  2,793      $  2,110         32  %
Diluted EPS           $     2.45          $  0.81             *    $   5.13      $   3.65         41  %
Diluted shares               537              576         (7) %         544           578         (6) %

* Change in excess of 100%


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

Total product sales increased for the three months ended June 30, 2022,
primarily driven by higher unit demand for certain brands including Repatha,
Prolia, EVENITY, LUMAKRAS/LUMYKRAS and KYPROLIS, partially offset by declines in
the net selling prices of certain products and unfavorable changes in foreign
currency exchange rates. Total product sales increased for the six months ended
June 30, 2022, primarily driven by higher unit demand for certain brands,
including Repatha, Prolia, EVENITY, LUMAKRAS/LUMYKRAS and KYPROLIS, and by
favorable changes to estimated sales deductions, partially offset by declines in
the net selling prices of certain products and unfavorable changes in foreign
currency exchange rates. For the remainder of 2022, we expect that net selling
prices will continue to decline at a portfolio level, driven by increased
competition.

Over the course of the COVID-19 pandemic we experienced changes in demand for
some of our products as fluctuations in the frequency of patient visits to
doctors' offices have impacted the provision of treatments to existing patients
and reduced diagnoses in new patients. In general, declines in the sales of our
products that were impacted by the dynamics of the pandemic were most
significant in the early months of the pandemic, with product demand beginning
to show some recovery in late 2020. During 2021, there was a gradual recovery in
both patient visits and diagnosis rates that approached pre-pandemic levels;
however, variants (including Omicron) began to impact the healthcare sector and
our business in late 2021 and early 2022. This led to diminished capacity in the
healthcare sector and reduced working days for our own sales force. For the
second quarter 2022, we have seen the impact of these variants recede in most
markets, with the exception of some markets in the Asia Pacific region, which
has allowed us to engage in increased field-facing activities. Provider and
patient activity has also increased, leading to improvements in demand for our
products to pre-pandemic levels. However, the cumulative decrease in diagnoses
over the course of the pandemic has suppressed the volume of new patients
starting treatment, which continues to impact our business. Given the
unpredictable nature of the pandemic, there could be intermittent disruptions in
physician-patient interactions, and as a result, we may experience
quarter-to-quarter variability. In addition, other changes in the healthcare
ecosystem have the potential to introduce variability into product sales trends.
For example, changes in U.S. employment have led to changes to the insured
population. Growth in numbers of Medicaid enrollees and uninsured individuals
may have a negative impact on product demand and sales. Overall, uncertainty
remains around the timing and magnitude of our sales during the COVID-19
pandemic. See Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K
for the year ended December 31, 2021, and in Part II, Item 1A. Risk Factors of
our Quarterly Report on Form 10-Q for the period ended March 31, 2022.

                                       31

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Other revenues decreased for the three months ended June 30, 2022, driven by
lower revenue from COVID-19 antibody material and increased for the six months
ended June 30, 2022, primarily driven by higher revenue from COVID-19 antibody
material.

Operating expenses decreased for the three and six months ended June 30, 2022,
primarily due to the Acquired IPR&D expense related to the Five Prime
acquisition in 2021, partially offset by a loss on a nonstrategic divestiture in
2022. See Note 2, Acquisitions and divestitures.

Although changes in foreign currency exchange rates result in increases or
decreases in our reported international product sales, the benefit or detriment
that such movements have on our international product sales is partially offset
by corresponding increases or decreases in our international operating expenses
and our related foreign currency hedging activities. Further, while not designed
to completely address foreign currency changes, our hedging activities seek to
offset, in part, the effects of foreign currency exchange rate changes, both
favorable and unfavorable, on our net income by hedging our net foreign currency
exposure, primarily with respect to product sales denominated in euros. The net
impact from changes in foreign currency exchange rates was not material for the
three and six months ended June 30, 2022 and 2021.

Results of operations

Product sales

Worldwide product sales were as follows (dollar amounts in millions):

                                 Three months ended                          Six months ended
                                      June 30,                                   June 30,
                                  2022            2021        Change        2022          2021        Change
      ENBREL                $    1,051          $ 1,144         (8) %    $  1,913      $  2,068         (7) %
      Prolia                       922              814         13  %       1,774         1,572         13  %
      Otezla                       594              534         11  %       1,045         1,010          3  %
      XGEVA                        533              488          9  %       1,035           956          8  %
      Aranesp                      357              367         (3) %         715           722         (1) %
      Neulasta                     310              486        (36) %         658           968        (32) %
      Repatha                      325              286         14  %         654           572         14  %
      KYPROLIS                     317              280         13  %         604           531         14  %
      Nplate                       284              245         16  %         550           472         17  %
      Other products             1,588            1,470          8  %       3,064         2,835          8  %

Total product sales $ 6,281 $ 6,114 3 % $ 12,012 $ 11,706 3 %



Future sales of our products will depend in part on the factors discussed below
and in the following sections of this report: (i) Part I, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Overview, and Selected Financial Information; and (ii) Part II, Item
1A. Risk Factors, and in the following sections of our Annual Report on Form
10-K for the year ended December 31, 2021: (i) Part I, Item 1.
Business-Marketing, Distribution and Selected Marketed Products; (ii) Part I,
Item 1A. Risk Factors; 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, 2022: (i) Part I, Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations-Results of
Operations-Product Sales; and (ii) Part II, Item 1A. Risk Factors.

                                       32

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ENBREL


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

                               Three months ended                          Six months ended
                                    June 30,                                   June 30,
                                2022            2021        Change        2022          2021        Change
        ENBREL - U.S.     $    1,036          $ 1,113         (7) %    $   1,879      $ 2,007         (6) %
        ENBREL - Canada           15               31        (52) %           34           61        (44) %
        Total ENBREL      $    1,051          $ 1,144         (8) %    $   1,913      $ 2,068         (7) %

The decrease in ENBREL sales for the three and six months ended June 30, 2022,
was primarily driven by lower net selling price and lower unit demand.

For the remainder of 2022, we expect that net selling price will continue to
decline driven by increased competition.

Prolia


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

                              Three months ended                           Six months ended
                                   June 30,                                    June 30,
                                2022             2021       Change        2022          2021        Change
        Prolia - U.S.   $      611              $ 538         14  %    $   1,193      $ 1,039         15  %
        Prolia - ROW           311                276         13  %          581          533          9  %
        Total Prolia    $      922              $ 814         13  %    $   1,774      $ 1,572         13  %

The increase in global Prolia sales for the three and six months ended June 30,
2022
, was primarily driven by higher unit demand.

Otezla


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

                      Three months ended                           Six months ended
                           June 30,                                    June 30,
                        2022             2021       Change        2022          2021        Change
Otezla - U.S.   $      487              $ 423         15  %    $     837      $   789          6  %
Otezla - ROW           107                111         (4) %          208          221         (6) %
Total Otezla    $      594              $ 534         11  %    $   1,045      $ 1,010          3  %

The increase in global Otezla sales for the three months ended June 30, 2022,
was driven by higher unit demand and favorable changes to estimated sales
deductions, partially offset by lower net selling price.


The increase in global Otezla sales for the six months ended June 30, 2022, was
primarily driven by higher unit demand and favorable changes to estimated sales
deductions, partially offset by lower net selling price and unfavorable changes
to inventory.

For a discussion of litigation related to Otezla, see Part IV-Note 19,
Contingencies and commitments, to the consolidated financial statements in our
Annual Report on Form 10-K for the year ended December 31, 2021, and Note 13,
Contingencies and commitments, to the condensed consolidated financial
statements in this Quarterly Report.

                                       33

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XGEVA


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

                            Three months ended                            Six months ended
                                 June 30,                                     June 30,
                              2022             2021       Change           2022           2021       Change
       XGEVA - U.S.   $      391              $ 355         10  %    $      759          $ 689         10  %
       XGEVA - ROW           142                133          7  %           276            267          3  %
       Total XGEVA    $      533              $ 488          9  %    $    1,035          $ 956          8  %


The increase in global XGEVA sales for the three and six months ended June 30,
2022, was primarily driven by higher net selling price and favorable changes to
estimated sales deductions.

Aranesp

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

                            Three months ended                             Six months ended
                                 June 30,                                      June 30,
                              2022             2021       Change           2022            2021       Change
     Aranesp - U.S.   $      132              $ 135         (2) %    $     269            $ 260          3  %
     Aranesp - ROW           225                232         (3) %          446              462         (3) %
     Total Aranesp    $      357              $ 367         (3) %    $     715            $ 722         (1) %

The decrease in global Aranesp sales for the three months ended June 30, 2022,
was primarily driven by lower net selling price.


The decrease in global Aranesp sales for the six months ended June 30, 2022, was
driven by lower net selling price and unfavorable changes in foreign currency
exchange rates, partially offset by favorable changes to estimated sales
deductions and higher unit demand.

Aranesp continues to face competition from a long-acting
erythropoiesis-stimulating agent (ESA) and also faces competition from
biosimilar versions of EPOGEN, which will continue to impact sales in the
future.

Neulasta


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

                             Three months ended                             Six months ended
                                  June 30,                                      June 30,
                               2022             2021       Change           2022            2021       Change
     Neulasta - U.S.   $      263              $ 434        (39) %    $     567            $ 855        (34) %
     Neulasta - ROW            47                 52        (10) %           91              113        (19) %
     Total Neulasta    $      310              $ 486        (36) %    $     658            $ 968        (32) %

The decrease in global Neulasta sales for the three and six months ended June
30, 2022
, was primarily driven by lower net selling price and unit demand.


Increased competition as a result of biosimilar versions of Neulasta has had and
will continue to have a significant adverse impact on brand sales, including
accelerating net price erosion and lower unit demand. We also expect other
biosimilar versions, including biosimilars that will use an on-body injector
that would compete with our Onpro injector, to be approved in the future.

For a discussion of ongoing patent litigations related to these and other
biosimilars, see Part IV-Note 19, Contingencies and commitments, to the
consolidated financial statements in our Annual Report on Form 10-K for the year
ended December 31, 2021, and Part I-Note 13, Contingencies and commitments, to
the condensed consolidated financial statements in our Quarterly Report on Form
10-Q for the period ended March 31, 2022.

                                       34

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Repatha


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

                            Three months ended                             Six months ended
                                 June 30,                                      June 30,
                              2022             2021       Change           2022            2021       Change
     Repatha - U.S.   $      154              $ 143          8  %    $     319            $ 282         13  %
     Repatha - ROW           171                143         20  %          335              290         16  %
     Total Repatha    $      325              $ 286         14  %    $     654            $ 572         14  %


The increase in global Repatha sales for the three and six months ended June 30,
2022, was driven by higher unit demand, partially offset by lower net selling
price. Contracting changes to support and expand Medicare Part D and commercial
patient access and the inclusion of Repatha on China's National Reimbursement
Drug List as of January 1, 2022, resulted in the decrease to net selling price
in 2022.

For a discussion of ongoing litigation related to Repatha, see Part IV-Note 19,
Contingencies and commitments, to the consolidated financial statements in our
Annual Report on Form 10-K for the year ended December 31, 2021; Part I-Note 13,
Contingencies and commitments, to the condensed consolidated financial
statements in our Quarterly Report on Form 10-Q for the period ended March 31,
2022; and Part I-Note 13, Contingencies and commitments, to the condensed
consolidated financial statements in this Quarterly Report.

KYPROLIS


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

                             Three months ended                             Six months ended
                                  June 30,                                      June 30,
                               2022             2021       Change           2022            2021       Change
     KYPROLIS - U.S.   $      213              $ 190         12  %    $     409            $ 349         17  %
     KYPROLIS - ROW           104                 90         16  %          195              182          7  %
     Total KYPROLIS    $      317              $ 280         13  %    $     604            $ 531         14  %

The increase in global KYPROLIS sales for the three and six months ended June
30, 2022
, was driven by higher unit demand, partially offset by lower net
selling price.


The FDA has reported that it has granted tentative or final approval of ANDAs
for generic carfilzomib products filed by a number of companies. The date of
approval of those ANDAs for generic carfilzomib products is governed by the
Hatch-Waxman Act and any applicable settlement agreements between us and certain
companies that seek to develop generic carfilzomib products.

Nplate


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

                            Three months ended                             Six months ended
                                 June 30,                                      June 30,
                              2022             2021       Change           2022            2021       Change
      Nplate - U.S.   $      156              $ 136         15  %    $     312            $ 248         26  %
      Nplate - ROW           128                109         17  %          238              224          6  %
      Total Nplate    $      284              $ 245         16  %    $     550            $ 472         17  %

The increase in global Nplate sales for the three and six months ended June 30,
2022
, was primarily driven by higher unit demand and net selling price.

                                       35

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Other products


Other product sales by geographic region were as follows (dollar amounts in
millions):

                                     Three months ended                          Six months ended
                                          June 30,                                   June 30,
                                      2022            2021        Change        2022          2021        Change
  MVASI - U.S.                  $      161          $   206        (22) %    $     329      $   430        (23) %
  MVASI - ROW                           82               88         (7) %          158          158          -  %
  Vectibix - U.S.                       96               92          4  %          181          171          6  %
  Vectibix- ROW                        111              147        (24) %          227          259        (12) %
  EVENITY - U.S.                       130               79         65  %          240          136         76  %
  EVENITY- ROW                          61               52         17  %          121          102         19  %
  BLINCYTO - U.S.                       77               62         24  %          156          127         23  %
  BLINCYTO - ROW                        62               46         35  %          121           88         38  %
  EPOGEN - U.S.                        136              130          5  %          256          255          -  %
  AMGEVITA - ROW                       116              107          8  %          224          213          5  %
  Aimovig - U.S.                        88               82          7  %          186          148         26  %
  Aimovig - ROW                          4                -            NM            7            -            NM
  Parsabiv - U.S.                       71               37         92  %          128           83         54  %
  Parsabiv - ROW                        32               34         (6) %           61           67         (9) %
  KANJINTI - U.S.                       69              132        (48) %          149          262        (43) %
  KANJINTI - ROW                        16               24        (33) %           32           55        (42) %
  LUMAKRAS - U.S.                       51                9             *           99            9             *
  LUMYKRAS - ROW                        26                -            NM           40            -            NM
  NEUPOGEN - U.S.                       21               36        (42) %           44           54        (19) %
  NEUPOGEN - ROW                        16               15          7  %           31           31          -  %
  Sensipar - U.S.                        5                4         25  %            9            4             *
  Sensipar/Mimpara - ROW                15               20        (25) %           31           43        (28) %
  Other - U.S.(1)                       98               38             *          162           80             *
  Other - ROW(1)                        44               30         47  %           72           60         20  %
  Total other products          $    1,588          $ 1,470          8  %    $   3,064      $ 2,835          8  %

Total U.S. – other products $ 1,003 $ 907 11 %

$ 1,939 $ 1,759 10 %

  Total ROW - other products           585              563          4  %        1,125        1,076          5  %
  Total other products          $    1,588          $ 1,470          8  %    $   3,064      $ 2,835          8  %


NM = not meaningful

* Change in excess of 100%

____________

(1) Other products include Corlanor, AVSOLA, TEZSPIRE, IMLYGIC and RIABNI as
well as sales by Gensenta and Bergamo subsidiaries.

                                       36

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Operating expenses

Operating expenses were as follows (dollar amounts in millions):

                                               Three months ended                                     Six months ended
                                                    June 30,                                              June 30,
                                              2022              2021             Change             2022             2021             Change
Operating expenses:
Cost of sales                             $   1,510          $ 1,637                 (8) %       $ 3,071          $ 3,127                 (2) %
% of product sales                             24.0  %          26.8  %                             25.6  %          26.7  %
% of total revenues                            22.9  %          25.1  %                             23.9  %          25.2  %
Research and development                  $   1,039          $ 1,082                 (4) %       $ 1,998          $ 2,049                 (2) %
% of product sales                             16.5  %          17.7  %                             16.6  %          17.5  %
% of total revenues                            15.8  %          16.6  %                             15.6  %          16.5  %
Acquired in-process research and
development                               $       -          $ 1,505                    NM       $     -          $ 1,505                    NM
% of product sales                                -  %          24.6  %                                -  %          12.9  %
% of total revenues                               -  %          23.1  %                                -  %          12.1  %

Selling, general and administrative $ 1,327 $ 1,384

         (4) %       $ 2,555          $ 2,638                 (3) %
% of product sales                             21.1  %          22.6  %                             21.3  %          22.5  %
% of total revenues                            20.1  %          21.2  %                             19.9  %          21.2  %
Other                                     $     542          $    90                     *       $   532          $   151                     *
Total operating expenses                  $   4,418          $ 5,698                (22) %       $ 8,156          $ 9,470                (14) %


NM = not meaningful

* Change in excess of 100%

Cost of sales

Cost of sales decreased to 22.9% and 23.9% of total revenues for the three and
six months ended June 30, 2022, respectively, driven by lower COVID-19 antibody
shipments, lower manufacturing costs and lower amortization expense from
acquisition-related assets, partially offset by unfavorable product mix.

Research and development


The decrease in R&D expense for the three months ended June 30, 2022, was driven
by lower marketed product support and lower expense resulting from
acquisition-related activity, partially offset by higher spend in research and
early pipeline.

The decrease in R&D expense for the six months ended June 30, 2022, was driven
by lower marketed product support and lower expense resulting from
acquisition-related activity, partially offset by higher late-stage development
program spend and research and early pipeline spend.

Acquired in-process research and development


The decrease in Acquired IPR&D expense for the three and six months ended June
30, 2022, was due to the bemarituzumab program, which was acquired as part of
the Five Prime acquisition in 2021. See Note 2, Acquisitions and divestitures.

Selling, general and administrative

The decrease in SG&A expense for the three and six months ended June 30, 2022,
was primarily driven by lower spend for marketed products and lower expense
resulting from acquisition-related activity.

Other

Other operating expenses for the three and six months ended June 30, 2022,
consisted primarily of a loss on a nonstrategic divestiture. See Note 2,
Acquisitions and divestitures. Other operating expenses for the three and six
months ended June 30, 2021, consisted primarily of expenses related to cost
saving initiatives.



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Nonoperating expense/income and income taxes


Nonoperating expense/income and income taxes were as follows (dollar amounts in
millions):

                                           Three months ended            Six months ended
                                                June 30,                     June 30,
                                           2022           2021          2022          2021

Interest expense, net $ (328) $ (281) $ (623) $ (566)

Other (expense) income, net $ (317) $ 11 $ (847) $ 24

         Provision for income taxes    $     214        $   94       $    413       $  305
         Effective tax rate                 14.0   %      16.8  %        12.9  %      12.6  %


Interest expense, net

The increase in Interest expense, net, for the three and six months ended June
30, 2022, was primarily due to higher overall debt outstanding and higher LIBOR
rates on debt for which we effectively pay a variable rate of interest through
the use of interest rate swaps.

Other (expense) income, net


The change in Other (expense) income, net, for the three and six months ended
June 30, 2022, was primarily due to net losses recognized on our strategic
equity investments in the current year compared with net gains recognized in the
prior year and higher current year losses in connection with our BeiGene
investment.

Income taxes


The decrease in our effective tax rate for the three months ended June 30, 2022,
was primarily due to the prior year nondeductible IPR&D expense arising from the
acquisition of Five Prime, partially offset by current year unfavorable items,
including a loss on a nonstrategic divestiture. The increase in our effective
tax rate for the six months ended June 30, 2022, was primarily due to current
year unfavorable items compared to last year including a loss on a nonstrategic
divestiture, partially offset by the prior year nondeductible IPR&D expense
arising from the acquisition of Five Prime and changes in earnings mix. See Note
2, Acquisitions and divestitures.

The Administration proposed and Congress is considering a variety of potentially
significant changes to existing tax law. These changes, or others, could
substantially increase taxes we pay to the U.S. government. Further, the OECD
recently reached an agreement to align countries on a minimum corporate tax rate
and an expansion of the taxing rights of market countries. If enacted, either by
all OECD participants or unilaterally by individual countries, this agreement
could result in tax increases in both the United States and foreign
jurisdictions. The U.S. Treasury recently released final foreign tax credit
regulations that eliminate U.S. creditability of the Puerto Rico Excise Tax
beginning in 2023, which would increase our U.S. tax liability. However, the
U.S. territory of Puerto Rico recently enacted Act 52-2022, which provides for
an alternate fixed tax rate on industrial development income that is expected to
be creditable under U.S. law. As part of this new law, eligible businesses would
be subject to incremental income and withholding taxes in lieu of payment of the
Puerto Rico Excise Tax. In order to qualify for the alternative fixed tax rate,
we must amend our current tax grant with the Puerto Rico government by December
31, 2022. Once we qualify for this alternative fixed tax rate, which we expect
to occur as of January 1, 2023, our tax expense will increase. While we expect
these taxes to be partially offset by U.S. foreign tax credits, the U.S.
Treasury has not yet issued guidance on whether the alternative fixed tax rate
will be creditable under U.S. law.

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 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 by an amount that would result
in additional federal tax of approximately $3.6 billion plus interest. Any
additional tax that could be imposed for the years 2010-2012 would be reduced by
up to approximately $900 million of repatriation tax previously accrued on our
foreign earnings.

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In 2020, we received an RAR and a modified RAR from the IRS for the years
2013-2015, also proposing significant adjustments that primarily relate to the
allocation of profits between certain of our entities in the United States and
the U.S. territory of Puerto Rico similar to those proposed for the years
2010-2012. We disagreed with the proposed adjustments and calculations and
pursued resolution with the IRS appeals office but were unable to reach
resolution. In July 2022, we filed a petition in the U.S. Tax Court to contest a
Notice for the years 2013-2015 that we previously reported receiving in April
2022 that seeks to increase our U.S. taxable income for the years 2013-2015 by
an amount that would result in additional federal tax of approximately
$5.1 billion, plus interest. In addition, the Notice asserts penalties of
approximately $2.0 billion. Any additional tax that could be imposed for the
years 2013-2015 would be reduced by up to approximately $2.2 billion of
repatriation tax previously accrued on our foreign earnings.

We firmly believe that the IRS positions set forth in the 2010-2012 and
2013-2015 Notices are without merit. We are contesting the 2010-2012 and
2013-2015 Notices through the judicial process, and we will seek consolidation
of the two periods into one case in the U.S. Tax Court.

We are currently under examination by the IRS for the years 2016-2018 with
respect to issues similar to those for the 2010 through 2015 period. In
addition, we have examinations by a number of state and foreign tax
jurisdictions.


Final resolution of these complex matters is not likely within the next 12
months. We believe our accrual for income tax liabilities is appropriate based
on past experience, interpretations of tax law, application of the tax law to
our facts and judgments about potential actions by tax authorities; however, due
to the complexity of the provision for income taxes and uncertain resolution of
these matters, the ultimate outcome of any tax matters may result in payments
substantially greater than amounts accrued and could have a material adverse
impact on our condensed consolidated financial statements.

We are no longer subject to U.S. federal income tax examinations for years ended
on or before December 31, 2009.


See Part II, Item 1A, Risk Factors-The adoption and interpretation of new tax
legislation or exposure to additional tax liabilities could affect our
profitability, and Note 4, Income taxes, to the condensed consolidated financial
statements for further discussion.


Financial condition, liquidity and capital resources

Selected financial data were as follows (in millions):


                                                               June 30, 2022           December 31, 2021
Cash, cash equivalents and marketable securities             $        7,183          $            8,037
Total assets                                                 $       59,294          $           61,165
Current portion of long-term debt                            $          817          $               87
Long-term debt                                               $       35,705          $           33,222
Stockholders' equity                                         $        2,419          $            6,700

Cash, cash equivalents and marketable securities


Our balance of cash, cash equivalents and marketable securities was $7.2 billion
as of June 30, 2022. The primary objective of our investment portfolio is to
maintain safety of principal, prudent levels of liquidity and acceptable levels
of risk. Our investment policy limits interest-bearing security investments to
certain types of debt and money market instruments issued by institutions with
primarily investment-grade credit ratings, and it places restrictions on
maturities and concentration by asset class and issuer.

Capital allocation


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

We intend to continue to invest in our business while returning capital to
stockholders through the payment of cash dividends and stock repurchases,
thereby reflecting our confidence in the future cash flows of our business and
our desire to optimize our cost of capital. The timing and amount of future
dividends and stock repurchases will vary based on a number of factors,
including future capital requirements for strategic transactions, availability
of financing on acceptable terms, debt service requirements, our credit rating,
changes to applicable tax laws or corporate laws, changes to our business model
and

                                       39
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periodic determination by our Board of Directors that cash dividends and/or
stock repurchases are in the best interests of stockholders and are in
compliance with applicable laws and the Company's agreements. In addition, the
timing and amount of stock repurchases may also be affected by our overall level
of cash, stock price and blackout periods, during which we are restricted from
repurchasing stock. The manner of stock repurchases may include block purchases,
tender offers, ASRs and market transactions.

In March 2022 and December 2021, the Board of Directors declared a quarterly
cash dividend of $1.94 per share of common stock, which were paid on June 8,
2022 and March 8, 2022, respectively, an increase of 10% over quarterly cash
dividend paid in each quarter in 2021. In August 2022, the Board of Directors
declared a quarterly cash dividend of $1.94 per share of common stock, which
will be paid on September 8, 2022 to all stockholders of record as of the close
of business on August 18, 2022.

We also returned capital to stockholders through our stock repurchase program.
During the six months ended June 30, 2022, we executed trades to repurchase $5.4
billion of common stock, including $5.1 billion of an initial purchase under the
ASR agreements described below. As of June 30, 2022, $4.6 billion of
authorization remained available under our stock repurchase program.

In February 2022, we entered into ASR agreements under which we paid an
aggregate amount of $6.0 billion to the Dealers and retired an initial 23.3
million shares of common stock. Approximately $0.9 billion of stock remains to
be delivered by the Dealers pending final settlement, which will be based on the
daily volume-weighted average stock price of our common stock during the terms
of the ASR agreements, less a discount and subject to adjustments pursuant to
the terms and conditions of the ASR agreements. At settlement, which is
scheduled to occur in the third quarter of 2022, the Dealers may be required to
deliver additional shares of common stock to us, or under certain circumstances,
we may be required to deliver shares of common stock or to make a cash payment,
at our election, to the Dealers.

As a result of stock repurchases and quarterly dividend payments, we have an
accumulated deficit as of June 30, 2022 and December 31, 2021. Our accumulated
deficit is not anticipated to affect our future ability to operate, repurchase
stock, pay dividends or repay our debt given our continuing profitability and
strong financial position.

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, our plans to pay
dividends and repurchase stock and other business initiatives we plan to
strategically pursue, including acquisitions and licensing activities. We
anticipate that our liquidity needs can be met through a variety of sources,
including cash provided by operating activities, sales of marketable securities,
borrowings through commercial paper and/or syndicated credit facilities and
access to other domestic and foreign debt markets and equity markets. See our
Annual Report on Form 10-K for the year ended December 31, 2021, Part I,
Item 1A. Risk Factors-Global economic conditions may negatively affect us and
may magnify certain risks that affect our business.

Certain of our financing arrangements contain nonfinancial covenants. In
addition, our revolving credit agreement includes a financial covenant that
requires us to maintain a specified minimum interest coverage ratio of (i) the
sum of consolidated net income, interest expense, provision for income taxes,
depreciation expense, amortization expense, unusual or nonrecurring charges and
other noncash items (consolidated earnings before interest, taxes, depreciation
and amortization) to (ii) consolidated interest expense, each as defined and
described in the credit agreement. We were in compliance with all applicable
covenants under these arrangements as of June 30, 2022.

Cash flows

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


                                                          Six months ended
                                                              June 30,
                                                         2022          2021
Net cash provided by operating activities             $  4,094      $  

4,035

Net cash (used in) provided by investing activities $ (2,304) $ 890
Net cash used in financing activities

                 $ (4,576)     $ (4,561)


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Operating


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, 2022, increased primarily due to higher net
income, after adjustments for noncash items, partially offset by the impact of
working capital items.

Investing

Cash used in investing activities during the six months ended June 30, 2022, was
primarily due to net cash outflows related to marketable securities activity of
$1.9 billion and capital expenditures of $436 million. Cash provided by
investing activities during the six months ended June 30, 2021, was primarily
due to net cash inflows related to marketable securities activity of $2.9
billion, partially offset by the acquisition of Five Prime for $1.6 billion and
capital expenditures of $351 million. We currently estimate 2022 spending on
capital projects to be approximately $950 million.

Financing


Cash used in financing activities during the six months ended June 30, 2022, was
primarily due to payments to repurchase our common stock of $6.4 billion,
including amounts paid under the ASR agreements discussed above, and the payment
of dividends of $2.1 billion, partially offset by proceeds from the issuance of
debt of $4.0 billion. Cash used in financing activities during the six months
ended June 30, 2021, was primarily due to payments to repurchase our common
stock of $2.5 billion and the payment of dividends of $2.0 billion. See Note 9,
Financing arrangements, and Note 10, Stockholders' equity, to the condensed
consolidated financial statements for further discussion.


Critical Accounting Policies and Estimates


The preparation of our condensed consolidated financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and the notes to the financial
statements. Some of those judgments can be subjective and complex, and
therefore, actual results could differ materially from those estimates under
different assumptions or conditions. A summary of our critical accounting
policies and estimates is presented in Part II, Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations, of our Annual
Report on Form 10-K for the year ended December 31, 2021.

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