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The strategy at Amgen is clear—to develop innovative medicines that meet important unmet medical needs. This focus guided us when we developed our first medicine three decades ago for patients suffering from kidney disease. The same unwavering focus inspired us as we have launched new and innovative products, including our novel medicine for certain patients at risk for heart disease, the most significant unmet medical need facing society today. Indeed, the common denominator for products we develop in all six focused therapeutic areas—oncology/hematology, cardiovascular disease, inflammation, bone health, nephrology and neuroscience—is the innovative contribution they make to addressing serious illness.

Our Strategy

Amgen's strategy is multifaceted, allowing us to drive long-term growth, while also delivering on our shortand medium-term goals. Our strategy also enables multiple approaches to creating shareholder value. We've made a commitment to our shareholders to launch our biosimilars portfolio and deliver on target revenue, adjusted operating margin, earnings per share and return of adjusted net income by 2018.


Innovative Biologic Medicines

We are at an exhilarating moment in the history of biotechnology, with a growing number of opportunities to address serious illness in important new ways. Our approach to research and development focuses on innovative medicines to address unmet needs in patients with serious illnesses. We employ state-of-the-art science to drive internal innovation. We are also encouraged by the wellspring of innovation occurring globally and maintain an active licensing and acquisition effort to access external opportunities. Amgen maintains a balanced approach to sourcing innovation internally and externally. Roughly half of our marketed products came from outside Amgen, and maintaining this balance requires intense focus on business development and partnership activities.

There is much discussion about the cost of innovation in healthcare today. Against this backdrop, we recognize that new medicines must help alleviate the social and economic burden of disease. This calls for truly innovative medicines that provide large beneficial effects, not just marginal improvements over existing therapies.

Our medicines utilize human genetic validation whenever possible in the discovery and development process. Additionally, Amgen pursues a "biology-first" approach to drug discovery—striving to select drug targets based on a deep understanding of disease biology and then selecting a drug modality, or structural template, best suited to the target. We maintain the industry's leading toolkit of modalities in order to have the right tool for any target we pursue. Together, these approaches aim to enhance the likelihood of success, reduce development timelines and lower the cost of delivering new medicines to patients.

Our focus on developing innovative, breakaway medicines to address important unmet needs guides how we allocate resources across the best of the internal and external programs available to us within our six core therapeutic areas. This generates a productive balance of internal development and external programs and collaborations, the outcome of which is reflected in our current product portfolio and pipeline.

In 2015 alone, we launched an unprecedented four innovative products in oncology and two in cardiovascular disease—including Repatha® (evolocumab), the first PCSK9 inhibitor in the world approved for the treatment of certain patients requiring additional LDL cholesterol lowering. Following behind our six product launches are a number of additional exciting innovative pipeline opportunities progressing in our focused therapeutic areas.

Branded Biosimilars

Biotechnology-based medicines serve an increasingly critical role in fighting serious diseases around the world. With advances in the science of biotechnology, these therapies are being utilized for an increasing number of ailments. As newer biologic medicines come to market, the first wave of biologics is beginning to face competition as patents expire. Global regulatory authorities are adopting pathways for approval of competitors to these off-patent biologics, known as biosimilars, and there is a clear pathway for approval of biosimilars in the United States.

At Amgen, we believe our deep experience in biologics development and unparalleled capabilities in biotechnology manufacturing make entry into the emerging biosimilars market attractive and position us for leadership. Amgen is investing over $1 billion to create a biosimilars program, with nine products currently in development, the first of which is undergoing regulatory reviews in the U.S., Europe and Canada. Originator sales for these nine products—which target complex, highly prevalent diseases such as breast cancer and rheumatoid arthritis—exceeded $50 billion globally in 2015.


Global Geographic Reach

Demand for innovative medicines that address serious illness continues to grow across the globe, especially with aging populations in many countries. Amgen is working to tap the global potential for our medicines, bringing treatments to the patients who could benefit from them across the world.

Earlier this decade, Amgen set a target of operating in 75 countries by 2015, which we have well exceeded. Amgen medicines are now available to patients in approximately 100 countries worldwide. We've been working actively to expand our presence by opening new affiliates and locations around the world, pursuing smart acquisitions and acquiring global rights to market our products.

Recently, we obtained expanded rights for our marketing of Prolia® (denosumab), XGEVA® (denosumab) and Vectibix® (panitumumab) to 48 countries throughout Asia, South America, Europe, Australia and other regions. In addition, we have gained footholds in key expansion markets for Amgen, including Brazil, China, Colombia, Hong Kong, Israel, Singapore, South Korea, Taiwan and Thailand. Early in 2016, we also achieved approval of Repatha® in Japan, the world's second largest pharmaceuticals market. This represented the first product approved through our Japanese partnership with Astellas.

Next-Generation Biomanufacturing

Manufacturing biologic medicines involves working with living cells—making it a complex and difficult task. We have long held that Amgen's biomanufacturing capabilities are a source of competitive advantage, delivering a reliable supply of high-quality medicines with continuously improving efficiency. Through investment in next-generation biomanufacturing, we believe we are significantly extending our advantage.

A traditional biomanufacturing facility can take four years to build at a cost of $1 billion or more, and the floor space of just one of these facilities can cover more than a dozen football fields. Our first next-generation biomanufacturing facility in Singapore has been constructed in less than half the time and at a quarter of the cost of a traditional facility. This plant produces approximately the same output as a traditional one, but does so using 80% less space. It also means having a much smaller impact on the environment, while helping to extend the reach of vital medicines to more patients worldwide.

Improved Drug Delivery Systems

Biologic medicines are, for the most part, injected subcutaneously or administered intravenously, which often means that patients need to visit a doctor's office or hospital to receive treatment. Innovations that make the delivery of our medicines easier and less costly offer important opportunities for differentiation. We believe improved drug delivery systems are good for patients and also have positive economic benefits to the healthcare system overall. Recognizing this, we have invested in new ways to formulate and deliver our medicines.

In 2015, for example, we launched the Neulasta® (pegfilgrastim) Onpro kit, which provides patients the opportunity to administer the recommended dose of Neulasta® at home the day after chemotherapy—saving a trip back to the doctor. Similarly, we have developed a single-injection, once-a-month dosing option for Repatha® that is currently under review by the U.S. Food and Drug Administration (FDA). In the future, we plan to continue to develop proprietary patientand provider-friendly delivery systems for our biologic medicines.


Capital Allocation and Investing for Long-Term Growth

We recognize that investing in developing innovative medicines is risky. And we also recognize that shareholders who support this investment require an appropriate return on the capital they commit to Amgen. We believe we have a long track record of delivering these returns, and it is one we aim to maintain.

Our long-term growth is fueled by innovation. In 2015, we supported research and development spending of nearly $4 billion on an adjusted basis,1 or approximately 19 percent of sales, and an additional $600 million in capital expenditures to support efforts like next-generation manufacturing. At the same time, we increased our quarterly 2015 dividend per share by 30 percent versus 2014 and announced a 27 percent dividend increase effective in the first quarter of 2016. Since we introduced our dividend in 2011, we have increased it by a total of 257 percent. In addition, since 2014, we have repurchased more than $2 billion of shares.

These actions are all consistent with our commitment to return, on average, approximately 60 percent of our adjusted net income1 to shareholders from 2014 through 2018. We are meeting this commitment while working to maintain a balance sheet with an investment-grade rating and sustaining our investment in long-term growth.

Transforming Amgen for the Future

As we bring more medicines to more people in more places than ever before and continue to invest in innovation, we must maintain tight control of our business. This is essential in order to deliver important, innovative medicines while generating satisfactory investor returns.

Over the past three years, we have focused our business and operating model through significant transformation and process improvement efforts. We have initiated programs to, among other things, reduce the time it takes to bring new medicines to market, reengineer internal processes to make them as efficient as possible, explore new technologies with the potential to further enhance the value we deliver to patients and make working at Amgen an attractive and dynamic long-term proposition. We are making these changes from a position of strength and are pleased with the results we've achieved to date.

Our efforts have enabled us, in 2015, to drive our adjusted operating margin1 to 48 percent, a four percentage point improvement over 2014 and 10 percentage point improvement from 2013. Through our transformation work, we expect to make continued progress in 2016.

1 This is a non-GAAP financial measure. See reconciliations to U.S. generally accepted accounting principles (GAAP) at the end of this document.