A Letter From Amgen's Chairman and Chief Executive Officer

Dear Shareholders,

2012 was an exceptional year for Amgen. We delivered for shareholders, positioned the company for long-term growth, and continued to fulfill our mission to serve patients. Revenues rose 11 percent to $17.3 billion. Adjusted earnings per share increased 22 percent to $6.51.* Total shareholder return in 2012 was 36 percent, outperforming the S&P 500 and our peer group. Our performance in 2012 reflects strength across our product portfolio, effective commercial execution, commitment to operational efficiency, dedication of staff, and sound capital allocation decisions. Building on this success, we entered 2013 with momentum and confidence in our ability to execute our long-term strategy of reaching more patients in more markets around the world.

*"Adjusted" earnings per share is a non-GAAP financial measure. See below for reconciliation to U.S. generally accepted accounting principles (GAAP).

Delivering for Shareholders 

More than a year ago, we made a commitment to return significant capital to shareholders in the form of dividends and share buybacks, and we have delivered on that promise. In early 2013, we completed the $10-billion stock repurchase program announced in October 2011. Since January 2011, we have repurchased more than 20 percent of our outstanding shares. In addition, since the initiation of our first dividend in July 2011, we have raised the dividend twice over the previous quarterly amount by an average of 30 percent.

Continued Product Momentum

Amgen's product sales grew 9 percent in 2012. Sales growth was led by Enbrel® (etanercept), with solid contributions from Prolia® (denosumab), XGEVA® (denosumab), Sensipar® (cinacalcet), Nplate® (romiplostim), and Vectibix® (panitumumab). In 2012, two of our products achieved more than $4 billion in sales; three other products achieved more than $1 billion in sales, as did our recently launched denosumab franchise. We also saw our European business continue to grow in a challenging economic environment.

Our products continue to show strong opportunities for growth. In terms of value, ENBREL remains the leading biologic in the fast-growing rheumatology and dermatology segments, with a proven track record. In addition, by the end of 2013, the profit share we have in place with Pfizer Inc. for ENBREL transitions to a significantly lower royalty. As a result, the contributions to Amgen's profitability from ENBREL will grow substantially starting in 2014.

There are also continued unmet medical needs that can be addressed by Neulasta® (pegfilgrastim)/NEUPOGEN® (Filgrastim), including many breast cancer patients undergoing myelosuppressive therapy associated with a clinically significant risk of febrile neutropenia.

We continue to launch XGEVA® in Europe and expand access for Prolia® in the U.S. We expect that EPOGEN® (epoetin alfa) and Aranesp® (darbepoetin alfa) will remain important therapies due to a long history of use by physicians in the treatment of anemia. Sensipar®/Mimpara®, indicated for the treatment of secondary hyperparathyroidism in patients with chronic kidney disease who are on dialysis, is on track to exceed $1 billion in sales in 2013.

Emerging Late-Stage Pipeline

In 2012, we made clear progress in advancing our pipeline. Our pipeline focuses on innovative, biological targets and molecules that address serious illnesses and areas of high unmet medical need; and this reflects our strategic focus of unlocking the potential of biology for patients. At Amgen, we take a "biology first" approach, which means that we examine the fundamental mechanisms of human biology to unravel the complexities of disease in order to interdict them with our medicines. From 2013 to 2016, we expect to generate pivotal data for eight of our pipeline molecules. As of early 2013, we have six investigational molecules in phase 3 trials and five investigational molecules in phase 2 trials to treat diseases in areas including cardiovascular disease, bone disease, inflammation, nephrology, oncology, and neuroscience.

AMG 145 is one of many therapies in our pipeline that shows great promise. Consistent with Amgen's strategic focus on combating serious illnesses, AMG 145 has tremendous potential to impact the incidence of cardiovascular disease, a leading cause of death in the U.S. and around the world. Although there are medicines on the market today for people with hypercholesterolemia, millions of people are not currently meeting their treatment goals and could benefit from additional reduction of low-density lipoprotein cholesterol (LDL-C), a known contributor to cardiovascular disease. AMG 145 could be one of the first molecules to address this unmet need.

Greater Combined Value through Acquisitions and Partnership

In 2012, we made a number of acquisitions that improved our discovery research capabilities and advanced our global expansion efforts. The acquisition of deCODE Genetics, a global leader in human genetics, headquartered in Reykjavik, Iceland, greatly enhanced our ability to identify and validate human disease targets. We believe that incorporating genetic research into our research and development efforts will enhance our ability to develop meaningful therapies for patients. Using detailed genetic and medical information from hundreds of thousands of individuals, deCODE has discovered key genetic risk factors for dozens of common diseases ranging from cardiovascular disease to cancer. This expanded capability at Amgen to correlate two large sets of data—variations in the sequence of the genome and variations in phenotype (such as a disease or a physical trait)—will enable us to more efficiently pursue development of molecules that combat serious illnesses. Given that two molecules already in our pipeline—AMG 145 and romosozumab (AMG 785)—were identified and validated by human genetics, we are very enthusiastic about what we can achieve as a result of this new addition to Amgen.

Amgen's acquisition of Micromet, announced in early 2012, has already become an important complement to our oncology pipeline. The acquisition included blinatumumab, an innovative oncology molecule in phase 2 clinical development for acute lymphoblastic leukemia (ALL), and a validated technology platform known as BiTE® (bispecific T-cell engager) with broad potential clinical applications. We are excited to see how this antibody technology could be applied to additional cancers.

Adding to our portfolio of therapies to combat kidney disease, Amgen's 2012 acquisition of KAI Pharmaceuticals included the lead product candidate AMG 416. This novel peptide is being studied initially as an intravenous treatment of secondary hyperparathyroidism in patients with chronic kidney disease who are on dialysis.

In support of global expansion, Amgen announced in 2012 the acquisition of Mustafa Nevzat Pharmaceuticals, one of the oldest pharmaceutical companies in Turkey and one of the country's first manufacturers of injectable products. The acquisition significantly expands Amgen's presence in Turkey and the surrounding region, including several fast-growing, priority markets for Amgen.

Amgen also entered into an agreement with AstraZeneca Plc to jointly develop and commercialize five monoclonal antibodies from Amgen's clinical inflammation portfolio including brodalumab (AMG 827), currently in phase 3 clinical studies for the treatment of psoriasis. This collaboration will provide us with additional resources to optimally advance our portfolio.

Transforming Biologics Manufacturing

We have grown to be a leading biotechnology company not just by discovering and developing innovative molecules but also by playing a leading role in manufacturing and delivering them to patients. The manufacturing process for large-molecule biologics is highly complex and contains greater variability compared with the manufacture of small molecule medicines that come in pill form. Continuing to lead the way in biologics manufacturing, we announced in early 2013 plans to construct an innovative new facility in Singapore. The facility will initially focus on expanding Amgen's capability for manufacturing monoclonal antibodies through a new manufacturing process that will require lower capital investment and deliver greater flexibility while maintaining our commitment to reliably deliver our medicines to every patient, every time.

Entering a Growing Biosimilars Market

In early 2013, we announced plans to develop and manufacture six biosimilar molecules: four in the oncology disease area and two in inflammation. With expectations to launch our first biosimilar product in 2017, we will be entering a rapidly growing segment of the biologics market.

Further Differentiation through Patient-Friendly Delivery Devices

Another important initiative under way at Amgen involves combining our innovative medicines with patient-friendly delivery devices. While innovative medicines for patients with serious illnesses will remain a key differentiator for Amgen, we are confident that the increasing use of delivery devices to improve the patient experience will be a further differentiator for physicians and patients in an increasingly competitive global marketplace.

Momentum in Global Expansion

We recently advanced our strategy for global expansion on a number of fronts and will continue to grow internationally. As of 2012, we were selling our products in 56 countries and expect to reach 75 countries by 2015. Plans are under way to enter Japan, the second-largest pharmaceutical market in the world, through partnership; and we are pursuing an entry into China, where we expect to be launching our first product by 2015.

As Amgen grows globally, we expect to reach more patients with the medicines we currently have on the market and with therapies from our late-stage pipeline. A great example of the latter is rilotumumab (AMG 102), a medicine in phase 3 development for the treatment of gastric cancer. Every year, more than half a million people die of this disease in Asia. Bringing this new therapy to this region of the world could represent a very big opportunity to serve a large unmet medical need.

Smooth Leadership Transition

In 2012, Amgen began the execution of a planned leadership transition with the retirement of Kevin Sharer, Amgen's third chairman and chief executive officer. I would like to recognize the extraordinary leadership of my friend and predecessor. Kevin retired from Amgen after a 20-year career with the company, which included 12 years as chief executive officer. Simply put, Amgen would not be the company it is today were it not for Kevin's leadership and determination to make Amgen the world's best human therapeutics company. One of the ways we will honor Kevin's legacy is by building upon his many accomplishments—and by maintaining focus on our mission to serve patients.

In my first year as chief executive officer, I have had the opportunity to speak with hundreds of our staff around the world; and regardless of which facility I visit, my impression is the same: we are strongly aligned with our mission to serve patients. Having also spent time with doctors, other healthcare providers, and patients, I have found that our constituents see the benefits of our approach to unlocking the potential of biology for patients through advancing breakthrough medicines and manufacturing those medicines safely and effectively.

Looking ahead, I am confident that we will deliver for patients and shareholders. Our strategy is sound, our staff members are aligned, and our culture—rooted in science and innovation—is strong, having enabled us to reach more than 25 million patients around the world with our medicines.

Robert A. Bradway
Chairman and Chief Executive Officer

To continue reading the full Amgen Inc. 2012 Annual Report please click here ()

Reconciliation of GAAP Earnings Per Share to "Adjusted" Earnings Per Share (Unaudited)
Results for the years ended December 31,	2012	2011
GAAP earnings per share (diluted)	$5.52	$4.04
Adjustments to GAAP earnings per share(a):
Restructuring/cost-savings initiatives	0.31	0.12
Non-cash amortization of product technology rights acquired in a prior year business combination	0.24	0.20
Acquisition-related expenses	0.18	0.04
Non-cash interest expense associated with our convertible notes	0.11	0.10
Expenses related to various legal proceedings	0.07	0.78
Stock option expense	0.05	0.06
Tax net expense/(benefit)(b)	0.03	(0.01)
"Adjusted" earnings per share (diluted)	$6.51	$5.33

Forward-looking statements: This communication contains forward-looking statements that are based on Amgen management's current expectations and beliefs and are subject to a number of risks, uncertainties, and assumptions that could cause actual results to differ materially from those described. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including plans for the growth of our business and other financial metrics; expected clinical or regulatory results or practices; development of Amgen's product candidates, including anticipated regulatory filings; our manufacturing capabilities; and planned international expansion. Forward-looking statements involve significant risks and uncertainties, including those more fully described in the Risk Factors found in the Form 10-K for the year ended December 31, 2012 (provided with this communication) and in the most recent periodic reports on Form 10-Q and Form 8-K filed by Amgen with the U.S. Securities and Exchange Commission, and actual results may vary materially. Except where otherwise indicated, Amgen is providing this information as of March 19, 2013, and does not undertake any obligation to update any forward-looking statements contained in this Annual Report as a result of new information, future events, or otherwise.