UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

Form 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-12477

Amgen Inc.

(Exact name of registrant as specified in its charter)

Delaware		95-3540776
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Amgen Center Drive, Thousand Oaks, California		91320-1799
(Address of principal executive offices)		(Zip Code)

(805) 447-1000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No þ

As of October 29, 2010, the registrant had 944,815,396 shares of common stock, $0.0001 par value, outstanding.

 

 

AMGEN INC.

INDEX

			Page No.
PART I - FINANCIAL INFORMATION				1
Item 1.	FINANCIAL STATEMENTS			1
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME			1
	CONDENSED CONSOLIDATED BALANCE SHEETS			2
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS			3
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			4
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			17
Item 4.	CONTROLS AND PROCEDURES			29
PART II - OTHER INFORMATION				30
Item 1.	LEGAL PROCEEDINGS			30
Item 1A.	RISK FACTORS			30
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			32
Item 6.	EXHIBITS			32
SIGNATURES				33
INDEX TO EXHIBITS				34
EX-10.2
EX-10.15
EX-10.54
EX-10.58
EX-31
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I — FINANCIAL INFORMATION

Item 1.		FINANCIAL STATEMENTS

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)

		Three months ended								Nine months ended
		September 30,								September 30,
		2010				2009				2010				2009
Revenues:
Product sales		$	3,759			$	3,736			$	10,900			$	10,608
Other revenues			57				76				312				225
Total revenues			3,816				3,812				11,212				10,833
Operating expenses:
Cost of sales (excludes amortization of certain acquired intangible assets presented below)			587				545				1,648				1,553
Research and development			719				647				2,040				1,973
Selling, general and administrative			957				932				2,827				2,640
Amortization of certain acquired intangible assets			74				74				221				221
Other			—				9				(1	)			63
Total operating expenses			2,337				2,207				6,735				6,450
Operating income			1,479				1,605				4,477				4,383
Interest expense, net			150				139				442				436
Interest and other income, net			105				74				283				182
Income before income taxes			1,434				1,540				4,318				4,129
Provision for income taxes			198				154				713				455
Net income		$	1,236			$	1,386			$	3,605			$	3,674
Earnings per share:
Basic		$	1.29			$	1.36			$	3.73			$	3.60
Diluted		$	1.28			$	1.36			$	3.71			$	3.58
Shares used in calculation of earnings per share:
Basic			958				1,016				966				1,020
Diluted			962				1,022				971				1,025

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)

		September 30,				December 31,
		2010				2009
ASSETS
Current assets:
Cash and cash equivalents		$	2,951			$	2,884
Marketable securities			14,098				10,558
Trade receivables, net			2,443				2,109
Inventories			2,044				2,220
Other current assets			1,394				1,161
Total current assets			22,930				18,932
Property, plant and equipment, net			5,643				5,738
Intangible assets, net			2,315				2,567
Goodwill			11,334				11,335
Other assets			1,312				1,057
Total assets		$	43,534			$	39,629
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	759			$	574
Accrued liabilities			3,050				3,299
Current portion of convertible notes			2,451				—
Total current liabilities			6,260				3,873
Convertible notes			2,263				4,512
Other long-term debt			8,578				6,089
Other non-current liabilities			2,362				2,488
Contingencies and commitments
Stockholders’ equity:
Common stock and additional paid-in capital; $0.0001 par value; 2,750 shares authorized; outstanding - 952 shares in 2010 and 995 shares in 2009			27,210				26,944
Accumulated deficit			(3,394	)			(4,322	)
Accumulated other comprehensive income			255				45
Total stockholders’ equity			24,071				22,667
Total liabilities and stockholders’ equity		$	43,534			$	39,629

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

		Nine months ended
		September 30,
		2010				2009
Cash flows from operating activities:
Net income		$	3,605			$	3,674
Depreciation and amortization			756				792
Stock-based compensation expense			248				209
Other items, net			119				146
Changes in operating assets and liabilities:
Trade receivables, net			(317	)			(258	)
Inventories			164				(60	)
Other current assets			(90	)			(33	)
Accounts payable			185				43
Accrued income taxes			(802	)			33
Other accrued liabilities			(89	)			(33	)
Net cash provided by operating activities			3,779				4,513
Cash flows from investing activities:
Purchases of property, plant and equipment			(398	)			(386	)
Purchases of marketable securities			(11,620	)			(10,889	)
Proceeds from sales of marketable securities			8,001				7,026
Proceeds from maturities of marketable securities			430				1,340
Other			(74	)			46
Net cash used in investing activities			(3,661	)			(2,863	)
Cash flows from financing activities:
Repurchases of common stock			(2,594	)			(1,997	)
Net proceeds from issuance of debt			2,471				1,980
Net proceeds from issuance of common stock in connection with the Company’s equity award programs			62				146
Other			10				24
Net cash (used in) provided by financing activities			(51	)			153
Increase in cash and cash equivalents			67				1,803
Cash and cash equivalents at beginning of period			2,884				1,774
Cash and cash equivalents at end of period		$	2,951			$	3,577

See accompanying notes.

AMGEN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)

1. Summary of significant accounting policies

Business

Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is a global biotechnology medicines company that discovers, develops, manufactures and markets medicines for grievous illnesses. We concentrate on innovating novel medicines based on advances in cellular and molecular biology and we operate in one business segment, human therapeutics.

Basis of presentation

The financial information for the three and nine months ended September 30, 2010 and 2009 is unaudited but includes all adjustments (consisting of only normal recurring adjustments, unless otherwise indicated), which Amgen considers necessary for a fair presentation of its consolidated results of operations for those periods. Interim results are not necessarily indicative of results for the full fiscal year.

The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2009 and our condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the three months ended March 31, 2010 and for the three months and six months ended June 30, 2010.

Principles of consolidation

The condensed consolidated financial statements include the accounts of Amgen as well as its wholly owned subsidiaries. We do not have any significant interests in any variable interest entities. All material intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.

Property, plant and equipment, net

Property, plant and equipment are recorded at historical cost, net of accumulated depreciation of $5.0 billion and $4.6 billion as of September 30, 2010 and December 31, 2009, respectively.

Fair value measurement

In January 2010, we adopted a newly issued accounting standard which requires additional disclosure about the amounts of and reasons for significant transfers between levels of the fair value hierarchy discussed in Note 8, “Fair value measurement.” This standard also clarifies existing disclosure requirements related to the level of disaggregation of fair value measurements for each class of assets and liabilities and disclosures about inputs and valuation techniques used to measure fair value for both recurring and nonrecurring Level 2 and Level 3 measurements. As this accounting standard only requires enhanced disclosure, the adoption of this standard did not impact our financial position, results of operations or cash flows. In addition, effective for interim and annual periods beginning after December 15, 2010, this standard will require additional disclosure and require an entity to present disaggregated information about activity in Level 3 fair value measurements on a gross basis, rather than a single amount.

2. Income taxes

The effective tax rates for the three and nine months ended September 30, 2010 and September 30, 2009 are different from the statutory rate primarily as a result of indefinitely invested earnings of our foreign operations and the favorable resolution of certain non-routine transfer pricing matters with tax authorities for prior periods. We do not provide for U.S. income taxes on undistributed earnings of our foreign operations that are intended to be invested indefinitely outside the United States.

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

One or more of our legal entities file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions and our income tax returns are routinely audited by the tax authorities in those jurisdictions. Significant disputes can arise with these tax authorities involving the timing and amount of deductions, the use of tax credits and allocations of income among various tax jurisdictions because of differing interpretations of tax laws and regulations. We are no longer subject to U.S. federal income tax examinations for years ending on or before December 31, 2004 or to California state income tax examinations for years ending on or before December 31, 2003.

The Internal Revenue Service (“IRS”) is currently examining our U.S. income tax returns for the years ended December 31, 2007 and 2008. As of September 30, 2010, the Company and the IRS have agreed to certain transfer pricing adjustments for the years ended December 31, 2007 and 2008 and the Company has accordingly adjusted its liability for unrecognized tax benefits (“UTBs”) as discussed below. The remainder of this examination is expected to be completed in 2011.

During the three and nine months ended September 30, 2010, the gross amount of our UTBs increased by approximately $80 million and $225 million, respectively, as a result of tax positions taken during the current year. During the nine months ended September 30, 2010, the gross amount of our UTBs decreased by approximately $375 million due to settlements with tax authorities related to resolution of prior years’ transfer pricing matters. These settlements did not materially impact the effective tax rate. Substantially all of our UTBs as of September 30, 2010, if recognized, would affect our effective tax rate. As of September 30, 2010, the Company believes that it is reasonably possible that our gross liabilities for UTBs may decrease by up to $135 million within the succeeding twelve months due to potential tax settlements.

3. Earnings per share

The computation of basic earnings per share (“EPS”) is based upon the weighted-average number of our common shares outstanding. The computation of diluted EPS is based upon the weighted-average number of our common shares and potential dilutive common shares outstanding. Potential common shares outstanding, determined using the treasury stock method, principally include: stock options, restricted stock units and other equity awards under our employee compensation plans; our 2011 Convertible Notes, 2013 Convertible Notes and 2032 Modified Convertible Notes, as discussed below; and our outstanding warrants (collectively “dilutive securities”). The convertible note hedges purchased in connection with the issuance of our 2011 Convertible Notes and 2013 Convertible Notes are excluded from the calculation of diluted EPS as their impact is always anti-dilutive.

Upon conversion of our 2011 Convertible Notes, 2013 Convertible Notes and 2032 Modified Convertible Notes, the principal amount or accreted value would be settled in cash and the excess of the conversion value, as defined, over the principal amount or accreted value may be settled in cash and/or shares of our common stock. Therefore, only the shares of our common stock potentially issuable with respect to the excess of the notes’ conversion value over their principal amount or accreted value, if any, are considered as dilutive potential common shares for purposes of calculating diluted EPS.

The following table sets forth the computation for basic and diluted EPS (in millions, except per share information):

		Three months ended								Nine months ended
		September 30,								September 30,
		2010				2009				2010				2009
Income (Numerator):
Net income for basic and diluted EPS		$	1,236			$	1,386			$	3,605			$	3,674
Shares (Denominator):
Weighted-average shares for basic EPS			958				1,016				966				1,020
Effect of dilutive securities			4				6				5				5
Weighted-average shares for diluted EPS			962				1,022				971				1,025
Basic EPS		$	1.29			$	1.36			$	3.73			$	3.60
Diluted EPS		$	1.28			$	1.36			$	3.71			$	3.58

For both the three and nine months ended September 30, 2010, there were employee stock options, calculated on a weighted average basis, to purchase 44 million shares of our common stock with exercise prices greater than the average market prices of our

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

common stock for these periods that are not included in the computation of diluted EPS as their impact would have been anti-dilutive. For the three and nine months ended September 30, 2009, there were employee stock options, calculated on a weighted average basis, to purchase 31 million and 43 million shares of our common stock, respectively, with exercise prices greater than the average market prices of our common stock for these periods that are not included in the computation of diluted EPS as their impact would have been anti-dilutive. In addition, shares of our common stock which may be issued upon conversion of our convertible debt or upon exercise of our warrants are not included in the computation of diluted EPS for any of the periods presented above as their impact on diluted EPS would have been anti-dilutive. Shares which may be issued under our 2010 performance award plan were also excluded because conditions under the plan were not met.

4. Available-for-sale investments

The fair values of available-for-sale investments by type of security, contractual maturity and classification in the Condensed Consolidated Balance Sheets are as follows (in millions):

						Gross				Gross				Estimated
		Amortized				unrealized				unrealized				fair
September 30, 2010		cost				gains				losses				value
Type of security:
U.S. Treasury securities		$	4,434			$	101			$	—			$	4,535
Other government related debt securities:
Obligations of U.S. government agencies and FDIC guaranteed bank debt			2,836				79				—				2,915
Foreign and other			895				24				—				919
Corporate debt securities:
Financial			2,014				78				—				2,092
Industrial			2,230				99				—				2,329
Other			288				15				—				303
Mortgage and asset backed securities			792				7				(3	)			796
Money market mutual funds			2,713				—				—				2,713
Other short-term interest bearing securities			318				—				—				318
Total debt securities			16,520				403				(3	)			16,920
Equity securities			45				—				—				45
		$	16,565			$	403			$	(3	)		$	16,965

						Gross				Gross				Estimated
		Amortized				unrealized				unrealized				fair
December 31, 2009		cost				gains				losses				value
Type of security:
U.S. Treasury securities		$	1,929			$	12			$	(6	)		$	1,935
Obligations of U.S. government agencies and FDIC guaranteed bank debt			3,731				62				(1	)			3,792
Corporate debt securities			4,193				96				(4	)			4,285
Mortgage and asset backed securities			489				4				(2	)			491
Money market mutual funds			2,784				—				—				2,784
Other short-term interest bearing securities			55				—				—				55
Total debt securities			13,181				174				(13	)			13,342
Equity securities			63				—				(8	)			55
		$	13,244			$	174			$	(21	)		$	13,397

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

		September 30,				December 31,
Contractual maturity		2010				2009
Maturing in one year or less		$	4,422			$	3,444
Maturing after one year through three years			6,291				6,369
Maturing after three years through five years			5,575				3,207
Maturing after five years			632				322
Total debt securities			16,920				13,342
Equity securities			45				55
		$	16,965			$	13,397

		September 30,				December 31,
Classification in the Condensed Consolidated Balance Sheets		2010				2009
Cash and cash equivalents		$	2,951			$	2,884
Marketable securities			14,098				10,558
Other assets — noncurrent			45				55
			17,094				13,497
Less cash			(129	)			(100	)
		$	16,965			$	13,397

For the three months ended September 30, 2010 and 2009, realized gains totaled $34 million and $17 million, respectively, and realized losses totaled $11 million and $8 million, respectively. For the nine months ended September 30, 2010 and 2009, realized gains totaled $92 million and $77 million, respectively, and realized losses totaled $14 million and $56 million, respectively. The cost of securities sold is based on the specific identification method.

The primary objectives of our investment portfolio are liquidity and safety of principal. Investments are made with the objective of achieving the highest rate of return consistent with these two objectives. Our investment policy limits debt security investments to certain types of debt and money market instruments issued by institutions primarily with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.

We review our available-for-sale investments for other-than-temporary declines in fair value below our cost basis on a quarterly basis and whenever events or changes in circumstances indicate that the cost basis of an asset may not be recoverable. This evaluation is based on a number of factors, including the length of time and extent to which the fair value has been below our cost basis and adverse conditions specifically related to the security, including any changes to the credit rating of the security by a rating agency. As of September 30, 2010 and December 31, 2009, we believe that the cost bases for our available-for-sale investments were recoverable in all material respects.

5. Inventories

Inventories consisted of the following (in millions):

		September 30,				December 31,
		2010				2009
Raw materials		$	117			$	97
Work in process			1,472				1,683
Finished goods			455				440
		$	2,044			$	2,220

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Financing arrangements

The following table reflects the carrying value of our borrowings under our various financing arrangements (dollar amounts in millions):

		September 30,				December 31,
		2010				2009
0.125% convertible notes due February 2011 (2011 Convertible Notes)		$	2,451			$	2,342
0.375% convertible notes due 2013 (2013 Convertible Notes)			2,181				2,088
5.85% notes due 2017 (2017 Notes)			1,099				1,099
4.85% notes due 2014 (2014 Notes)			1,000				1,000
5.70% notes due 2019 (2019 Notes)			998				998
6.40% notes due 2039 (2039 Notes)			996				995
6.375% notes due 2037 (2037 Notes)			899				899
3.45% notes due October 2020 (October 2020 Notes)			897				—
5.75% notes due 2040 (2040 Notes)			696				—
4.95% notes due 2041 (2041 Notes)			595				—
6.15% notes due 2018 (2018 Notes)			499				499
6.90% notes due 2038 (2038 Notes)			499				499
4.50% notes due March 2020 (March 2020 Notes)			300				—
Zero-coupon modified convertible notes due in 2032 (2032 Modified Convertible Notes)			82				82
8.125% notes due 2097 (Other)			100				100
Total borrowings			13,292				10,601
Less current portion (2011 Convertible Notes)			(2,451	)			—
Total non-current debt		$	10,841			$	10,601

Debt issuances

In March 2010, we issued $700 million aggregate principal amount of notes due in 2040 (the “2040 Notes”) and $300 million aggregate principal amount of notes due in 2020 (the “March 2020 Notes”) in a registered offering. In September 2010, we issued $900 million aggregate principal amount of notes due in 2020 (the “October 2020 Notes”) and $600 million aggregate principal amount of notes due in 2041 (the “2041 Notes”) in a registered offering. The 2040 Notes, March 2020 Notes, October 2020 Notes and 2041 Notes pay interest at fixed annual rates of 5.75%, 4.50%, 3.45% and 4.95%, respectively. These notes may be redeemed at any time at our option, in whole or in part, at an amount equal to the outstanding principal amount of the notes being redeemed plus accrued interest and a “make-whole” amount, as defined. Upon the occurrence of a change in control triggering event, as defined, we may be required to purchase all or a portion of these notes at a price equal to 101% of the principal amount of the notes plus accrued interest. Debt issuance costs incurred in connection with the issuance of this debt totaled approximately $17 million and are being amortized over the lives of the notes.

2017 Notes

In March 2010, we entered into interest rate swap agreements that effectively convert a fixed-rate interest coupon to a London Interbank Offered Rate (“LIBOR”)-based floating rate coupon over the remaining life of the 2017 notes.

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Stockholders’ equity

Stock repurchase program

A summary of activity under our stock repurchase program is as follows (in millions):

		2010								2009
		Shares				Dollars				Shares				Dollars
First quarter			29.1			$	1,684				37.5			$	1,997
Second quarter			10.3				616				—				—
Third quarter			6.6				364				—				—
Total			46.0			$	2,664				37.5			$	1,997

In December 2009, the Board of Directors authorized us to repurchase up to an additional $5.0 billion of common stock of which a total of $3.3 billion remains available as of September 30, 2010. The manner of purchases, the amount we spend and the number of shares repurchased will vary based on a variety of factors, including the stock price, blackout periods in which we are restricted from repurchasing shares, and our credit rating and may include private block purchases as well as market transactions.

8. Fair value measurement

We use various valuation approaches in determining the fair value of our financial assets and liabilities within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1		—		Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access
Level 2		—		Valuations for which all significant inputs are observable, either directly or indirectly, other than level 1 inputs
Level 3		—		Valuations based on inputs that are unobservable and significant to the overall fair value measurement

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level of input used that is significant to the overall fair value measurement.

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following fair value hierarchy tables present information about each major class/category of the Company’s financial assets and liabilities measured at fair value on a recurring basis (in millions):

		Fair value measurement at September 30, 2010 using:
		Quoted prices in
		active markets for				Significant other				Significant
		identical assets				observable inputs				unobservable inputs
		(Level 1)				(Level 2)				(Level 3)				Total
Assets:
Available-for-sale securities:
U.S. Treasury securities		$	4,535			$	—			$	—			$	4,535
Other government related debt securities:
Obligations of U.S. government agencies and FDIC guaranteed bank debt			—				2,915				—				2,915
Foreign and other			—				919				—				919
Corporate debt securities:
Financial			—				2,092				—				2,092
Industrial			—				2,329				—				2,329
Other			—				303				—				303
Mortgage and asset backed securities			—				796				—				796
Money market mutual funds			2,713				—				—				2,713
Other short-term interest bearing securities			—				318				—				318
Equity securities			45				—				—				45
Derivatives:
Foreign exchange contracts			—				137				—				137
Interest rate swap contracts			—				290				—				290
Total assets		$	7,293			$	10,099			$	—			$	17,392
Liabilities:
Derivatives:
Foreign exchange contracts		$	—			$	117			$	—			$	117
Total liabilities		$	—			$	117			$	—			$	117
		Fair value measurement at December 31, 2009 using:
		Quoted prices in
		active markets for				Significant other				Significant
		identical assets				observable inputs				unobservable inputs
		(Level 1)				(Level 2)				(Level 3)				Total
Assets:
Available-for-sale securities:
U.S. Treasury securities		$	1,935			$	—			$	—			$	1,935
Obligations of U.S. government agencies and FDIC guaranteed bank debt			—				3,792				—				3,792
Corporate debt securities			—				4,285				—				4,285
Mortgage and asset backed securities			—				491				—				491
Money market mutual funds			2,784				—				—				2,784
Other short-term interest bearing securities			—				55				—				55
Equity securities			55				—				—				55
Derivatives			—				153				—				153
Total assets		$	4,774			$	8,776			$	—			$	13,550
Liabilities:
Derivatives		$	—			$	152			$	—			$	152
Total liabilities		$	—			$	152			$	—			$	152

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our U.S. Treasury securities, money market mutual funds and equity securities are valued using quoted market prices in active markets with no valuation adjustment. We value our U.S. Treasury securities and money market mutual funds taking into consideration valuations obtained from a third-party pricing service.

Substantially all of our other government related and corporate debt securities are investment grade with maturity dates of five years or less. Our government related debt securities portfolio is comprised of securities with a weighted average credit rating of “AAA” or equivalent by Standard and Poor’s (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”), and our corporate debt securities portfolio has a weighted average credit rating of “A” or equivalent by S&P, Moody’s or Fitch. We value these securities taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

Our mortgage and asset backed securities portfolio is comprised entirely of senior tranches, with a credit rating of “AAA” or equivalent by S&P, Moody’s or Fitch. We value these securities taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.

We value our other short-term interest bearing securities at amortized cost which approximates fair value given their near term maturity dates.

Substantially all of our foreign currency forward and option contracts have maturities of three years or less and all are entered into with counterparties that have a minimum credit rating of “A-” or equivalent by S&P, Moody’s or Fitch. We value these securities taking into consideration valuations obtained from a third-party valuation service that utilizes an income-based industry standard valuation model for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include quoted foreign currency spot rates, forward points, LIBOR and swap curves and obligor credit default swap rates. In addition, inputs for our foreign currency option contracts also include implied volatility measures. These inputs, where applicable, are at commonly quoted intervals. As of September 30, 2010 and December 31, 2009, we had open foreign currency forward contracts with notional amounts of $3.2 billion and $3.4 billion, respectively, and open option contracts with notional amounts of $370 million and $376 million, respectively, that were primarily Euro-based and were designated as cash flow hedges. In addition, as of September 30, 2010 and December 31, 2009, we had $609 million and $414 million, respectively, of foreign currency forward contracts to reduce exposure to fluctuations in value of certain assets and liabilities denominated in foreign currencies that were primarily Euro-based and that were not designated as hedges (see Note 9, “Derivative instruments").

Our interest rate swap contracts are entered into with counterparties that have a minimum credit rating of “A-” or equivalent by S&P, Moody’s or Fitch. We value these contracts using an income-based industry standard valuation model for which all significant inputs are observable either directly or indirectly to estimate fair value. These inputs include LIBOR and swap curves and obligor credit default swap rates. We had interest rate swap agreements with an aggregate notional amount of $2.6 billion and $1.5 billion as of September 30, 2010 and December 31, 2009, respectively, that were designated as fair value hedges (see Note 9, “Derivative instruments”).

There have been no transfers of assets or liabilities between the fair value measurement levels and there were no material remeasurements to fair value during the nine months ended September 30, 2010 and 2009 of assets and liabilities that are not measured at fair value on a recurring basis.

Summary of the fair value of other financial instruments

Short-term assets and liabilities

The estimated fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these financial instruments.

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Borrowings

We value our convertible and modified convertible notes using an income-based industry standard valuation model for which all significant inputs are observable either directly or indirectly, including benchmark yields adjusted for our credit risk, to estimate fair value (Level 2). The fair values of our convertible notes and modified convertible notes exclude their equity components and represent only the liability components of these instruments as their equity components are included in “Common stock and additional paid-in capital” in the Condensed Consolidated Balance Sheets. We value our other long-term notes taking into consideration indicative prices obtained from a third party financial institution that utilizes industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and broker/dealer quotes of the same or similar securities, credit spreads, benchmark yields and other observable inputs (Level 2). The following tables present the carrying values and estimated fair values of our borrowings (in millions):

		September 30, 2010								December 31, 2009
		Carrying value				Fair value				Carrying value				Fair value
2011 Convertible Notes		$	2,451			$	2,499			$	2,342			$	2,487
2013 Convertible Notes			2,181				2,480				2,088				2,374
2017 Notes			1,099				1,325				1,099				1,207
2014 Notes			1,000				1,140				1,000				1,075
2019 Notes			998				1,210				998				1,077
2039 Notes			996				1,211				995				1,102
2037 Notes			899				1,081				899				988
October 2020 Notes			897				907				—				—
2040 Notes			696				790				—				—
2041 Notes			595				603				—				—
2018 Notes			499				611				499				551
2038 Notes			499				634				499				582
March 2020 Notes			300				336				—				—
2032 Modified Convertible Notes			82				83				82				81
Other			100				137				100				125
Total		$	13,292			$	15,047			$	10,601			$	11,649

9. Derivative instruments

The Company is exposed to risks related to its business operations, certain of which are managed through derivative instruments. The risks that we manage by using derivative instruments are foreign exchange rate risk and interest rate risk. We use financial instruments including foreign currency forward, foreign currency option, forward interest rate and interest rate swap contracts to reduce our risk to these exposures. We do not use derivatives for speculative trading purposes.

We recognize all of our derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets (see Note 8, “Fair value measurement”). The accounting for changes in the fair value of a derivative instrument depends on whether it has been formally designated and qualifies as part of a hedging relationship under the applicable accounting standards and, further, on the type of hedging relationship. For derivatives formally designated as hedges, we assess both at inception and quarterly thereafter, whether the hedging derivatives are highly effective in offsetting changes in either the fair value or cash flows of the hedged item. Our derivatives that are not designated and do not qualify as hedges are adjusted to fair value through current earnings.

Cash flow hedges

We are exposed to possible changes in values of certain anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates, primarily associated with our international product sales denominated in Euros. Increases or decreases in the cash flows associated with our international product sales due to movements in foreign currency exchange rates are partially offset by the corresponding increases and decreases in our international operating expenses resulting from these foreign currency exchange rate movements. To further reduce our exposure to foreign currency exchange rate fluctuations on our international product sales, we enter into foreign currency forward and option contracts to hedge a portion of our projected international product sales primarily over a three-year time horizon with, at any given point in time, a higher percentage of nearer term projected product sales being hedged than successive periods. As of September 30, 2010 and December 31, 2009, we had open foreign currency forward contracts with notional amounts of $3.2 billion and $3.4 billion,

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

respectively, and open option contracts with notional amounts of $370 million and $376 million, respectively. These foreign currency forward and option contracts, primarily Euro-based, have been designated as cash flow hedges, and accordingly, the effective portion of the unrealized gains and losses on these contracts are reported in Accumulated Other Comprehensive Income (“AOCI”) in the Condensed Consolidated Balance Sheets and reclassified to earnings in the same periods during which the hedged transactions affect earnings.

In connection with the anticipated issuance of long-term fixed-rate debt, we occasionally enter into forward interest rate contracts in order to hedge the variability in cash flows due to changes in the applicable Treasury rate between the time we enter into these contracts and the time the related debt is issued. Gains and losses on such contracts, which are designated as cash flow hedges, are recorded in Other Comprehensive Income (“OCI”) and amortized into earnings over the lives of the associated debt issuances.

The following table reflects the effective portion of the unrealized gain/(loss) recognized in OCI for our cash flow hedge contracts (in millions):

		Three months ended								Nine months ended
		September 30,								September 30,
Derivatives in cash flow hedging relationships		2010				2009				2010				2009
Foreign exchange contracts		$	(238	)		$	(162	)		$	161			$	(239	)
Forward interest rate contracts			(5	)			—				(5	)			(11	)
Total		$	(243	)		$	(162	)		$	156			$	(250	)

The following table reflects the location in the Condensed Consolidated Statements of Income and the effective portion of the gain/(loss) reclassified from AOCI into earnings for our cash flow hedge contracts (in millions):

				Three months ended								Nine months ended
Derivatives in cash flow				September 30,								September 30,
hedging relationships		Statements of income location		2010				2009				2010				2009
Foreign exchange contracts		Product sales		$	31			$	(9	)		$	46			$	20
Forward interest rate contracts		Interest expense, net			(1	)			—				(1	)			—
Total				$	30			$	(9	)		$	45			$	20

No portions of our cash flow hedge contracts are excluded from the assessment of hedge effectiveness and the ineffective portions of these hedging instruments resulted in approximately $1 million of expense recorded in “Interest and other income, net” in the Condensed Consolidated Statements of Income for both the three and nine months ended September 30, 2010. The ineffective portions of these hedging instruments resulted in an aggregate expense of approximately $1 million recorded in “Interest and other income, net” and “Interest expense, net” in the Condensed Consolidated Statements of Income for both the three and nine months ended September 30, 2009. As of September 30, 2010, the amounts expected to be reclassified from AOCI into earnings over the next 12 months are approximately $8 million of losses on foreign currency forward and option contracts and approximately $1 million of losses on forward interest rate contracts.

Fair value hedges

To achieve a desired mix of fixed and floating interest rate debt, we have entered into interest rate swap agreements, which qualify and have been designated as fair value hedges. The terms of these interest rate swap agreements correspond to the related hedged debt instruments and effectively convert a fixed interest rate coupon to a LIBOR-based floating rate coupon over the lives of the respective notes. We had interest rate swap agreements with aggregate notional amounts of $2.6 billion and $1.5 billion as of September 30, 2010 and December 31, 2009, respectively. The interest rate swap agreements as of September 30, 2010 were for our notes due in 2014, 2017 and 2018 and, as of December 31, 2009 for our notes due in 2014 and 2018. For derivative instruments that are designated and qualify as a fair value hedge, the unrealized gain or loss on the derivative resulting from the change in fair value during the period as well as the offsetting unrealized loss or gain of the hedged item resulting from the change in fair value during the period attributable to the hedged risk are recognized in current earnings. For the three and nine months ended September 30, 2010, we included the unrealized losses on the hedged debt of $76 million and $200 million, respectively, in the same line item, “Interest expense, net” in the Condensed Consolidated Statements of Income, as the offsetting unrealized gains of $76 million and $200 million, respectively, on the related interest rate swap agreements. For the three and nine months ended September 30, 2009, we included the unrealized loss on the hedged debt of $22 million and the unrealized gain on the hedged debt of $81 million, respectively, in the same line item, “Interest expense, net” in the Condensed Consolidated Statements of Income, as the offsetting unrealized gain of $22 million and the unrealized loss of $81 million, respectively, on the related interest rate swap agreements.

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Derivatives not designated as hedges

We enter into foreign currency forward contracts to reduce our exposure to foreign currency fluctuations of certain assets and liabilities denominated in foreign currencies which are not designated as hedging transactions. These exposures are hedged on a month-to-month basis. As of September 30, 2010 and December 31, 2009, the total notional amounts of these foreign currency forward contracts, primarily Euro-based, were $609 million and $414 million, respectively.

The following table reflects the location in the Condensed Consolidated Statements of Income and the amount of gain (loss) recognized in earnings for the derivative instruments not designated as hedging instruments (in millions):

				Three months ended								Nine months ended
Derivatives not designated as				September 30,								September 30,
hedging instruments		Statements of income location		2010				2009				2010				2009
Foreign exchange contracts		Interest and other income, net		$	(55	)		$	(34	)		$	21			$	(30	)

Classification in the Condensed Consolidated Balance Sheets

The following tables reflect the fair values of both derivatives designated as hedging instruments and not designated as hedging instruments included in the Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009 (in millions):

		Derivative assets								Derivative liabilities
		Balance Sheet location				Fair value				Balance Sheet location				Fair value
Derivatives designated as hedging instruments as of September 30, 2010:
Interest rate swap contracts		Other current assets/ Other non-current assets				$	290			Accrued liabilities/ Other non-current liabilities				$	—
Foreign exchange contracts		Other current assets/ Other non-current assets					137			Accrued liabilities/ Other non-current liabilities					117
Total derivatives designated as hedging instruments							427								117
Derivatives not designated as hedging instruments as of September 30, 2010:
Foreign exchange contracts		Other current assets					—			Accrued liabilities					—
Total derivatives not designated as hedging instruments							—								—
Total derivatives						$	427							$	117

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

		Derivative assets								Derivative liabilities
		Balance Sheet location				Fair value				Balance Sheet location				Fair value
Derivatives designated as hedging instruments as of December 31, 2009:
Interest rate swap contracts		Other current assets/ Other non-current assets				$	90			Accrued liabilities/ Other non-current liabilities				$	—
Foreign exchange contracts		Other current assets/ Other non-current assets					63			Accrued liabilities/ Other non-current liabilities					152
Total derivatives designated as hedging instruments							153								152
Derivatives not designated as hedging instruments as of December 31, 2009:
Foreign exchange contracts		Other current assets					—			Accrued liabilities					—
Total derivatives not designated as hedging instruments							—								—
Total derivatives						$	153							$	152

Our derivative contracts that were in a liability position as of September 30, 2010 contain certain credit risk related contingent provisions that are triggered if (i) we were to undergo a change in control and (ii) our or the surviving entity’s creditworthiness deteriorates, which is generally defined as having either a credit rating that is below investment grade or a materially weaker creditworthiness after the change in control. If these events were to occur, the counterparties would have the right, but not the obligation, to close the contracts under early termination provisions. In such circumstances, the counterparties could request immediate settlement of these contracts for amounts that approximate the then current fair values of the contracts.

10. Contingencies and commitments

In the ordinary course of business, we are involved in various legal proceedings and other matters, including those discussed in this Note, which are complex in nature and have outcomes that are difficult to predict. We record accruals for such contingencies to the extent that we conclude that it is probable that a liability will be incurred and the amount of the related loss can be reasonably estimated. While it is not possible to accurately predict or determine the eventual outcome of these items, one or more of these items currently pending could have a material adverse effect on our consolidated results of operations, financial position or cash flows.

Certain of our legal proceedings and other matters are discussed below:

Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries Ltd. (“Teva”) Matters

Sensipar^® Abbreviated New Drug Application Litigation

On September 30, 2010, the U.S. District Court for the District of Delaware issued a scheduling order setting a trial date for November 30, 2010.

Teva v. Amgen, the ‘603 Patent Litigation

On August 23, 2010, the parties filed a stipulated scheduling order setting forth certain dates for discovery, expert discovery and a claim construction hearing.

AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Teva v. Amgen, the G-CSF Patent Litigation

Following the August 13, 2010 hearing, on September 10, 2010, the U.S. District Court for the Eastern District of Pennsylvania issued its claim construction ruling. On September 24, 2010, Amgen moved for summary judgment of infringement of certain claims of U.S. Patent Nos. 5,580,755 and 5,582,823 and on September 29, 2010, Teva sought leave to amend its pleadings to re-allege non-infringement of the patents-in-suit. On September 30, 2010, Teva announced that it received its complete response letter from the U.S. Food and Drug Administration (“FDA”) for its granulocyte colony-stimulating factor (“G-CSF”) product Neutroval and stated that no further pre-marketing clinical trials would be necessary. No trial date has been set.

Simonian v. Amgen Inc.

On September 30, 2010, plaintiff filed an amended complaint re-alleging his claim that Amgen violated the false marking statute and Amgen responded by filing a motion to dismiss the amended complaint.

Average Wholesale Price Litigation

Plaintiffs continue to file for extensions for the final approval hearing of the Track II settlement due to continued deficiencies in executing notices, and the final approval hearing will not occur before the end of 2010.

Birch v. Sharer, et al.

On September 29, 2010 Judge Highberger in the Complex Division of Los Angeles Superior Court denied the individual defendants’ demurrers finding that the plaintiff had adequately pled (but not proved) wrongful refusal. Amgen and the individual defendants filed answers on October 29, 2010. A case management conference is scheduled for November 12, 2010.

Third-Party Payers Litigation

On October 8, 2010, oral argument was heard before the U.S. Court of Appeals for the Ninth Circuit (the “9^th Circuit”) and on October 21, 2010, the 9^th Circuit affirmed the U.S. District Court of the Central District of California’s decision dismissing the action with prejudice.

Qui Tam Actions

On September 20, 2010, the U.S. District Court for the District of Massachusetts (the “Massachusetts District Court”) entered the written ruling denying Amgen’s motions to dismiss. On October 22, 2010, the states of New York, Massachusetts, Michigan, California, Illinois and Indiana, on behalf of the states of Georgia and New Mexico, and the relator filed opening briefs with the U.S. Court of Appeals for the First Circuit. The Massachusetts District Court has set a trial date for July 2011.

Warren General Hospital v. Amgen

Amgen’s motion to dismiss was granted by the U.S. District Court for the District of New Jersey on June 7, 2010 and plaintiffs filed their notice of appeal to the motion to dismiss on June 14, 2010 with the U.S. Court of Appeals for the Third Circuit (the “3^rd Circuit”). Plaintiff filed their opening brief on August 23, 2010 and Amgen’s response brief was filed on September 22, 2010. Plaintiff filed its reply brief on October 6, 2010. No hearing date for the appellate argument before the 3^rd Circuit has been set.

Other

On August 20, 2010, Amgen received a stockholder demand on the Board of Directors (“Board”) to take action to remedy alleged breaches of fiduciary duty and related violations by the Board and certain officers of the Company. The stockholder alleged that the directors and certain executive officers caused the Company to issue false or misleading statements regarding the safety of EPOGEN® and Aranesp® and promotional practices regarding these drugs. The Board undertook an investigation into the allegations made by the stockholder and on October 11, 2010, the Board notified the stockholder that it had rejected the stockholder’s demand.

Item 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward looking statements

This report and other documents we file with the Securities and Exchange Commission (“SEC”) contain forward looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business or others on our behalf, our beliefs and our management’s assumptions. In addition, we, or others on our behalf, may make forward looking statements in press releases or written statements, or in our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls. Words such as “expect,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “should,” “may,” “assume,” “continue,” variations of such words and similar expressions are intended to identify such forward looking statements. These statements are not guarantees of future performance and 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. 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 forecast 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 and trends. 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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“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, 2009 and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2010 and June 30, 2010. Our results of operations discussed in MD&A are presented in conformity with GAAP.

We are the largest independent biotechnology medicines company. We discover, develop, manufacture and market medicines for grievous illnesses. We concentrate on innovating novel medicines based on advances in cellular and molecular biology. Our mission is to serve patients. We operate in one business segment: human therapeutics. Therefore, our results of operations are discussed on a consolidated basis.

Currently, we market primarily recombinant protein therapeutic products for supportive cancer care, nephrology and inflammation. Our principal products currently include Aranesp^® (darbepoetin alfa), EPOGEN^® (Epoetin alfa), Neulasta^® (pegfilgrastim), NEUPOGEN^® (Filgrastim) and ENBREL (etanercept), all of which are sold in the United States. ENBREL is marketed under a co-promotion agreement with Pfizer Inc. (“Pfizer”) in the United States and Canada. Our international product sales consist principally of European sales of Aranesp^®, Neulasta^® and NEUPOGEN^®. For both the three and nine months ended September 30, 2010, our principal products represented 92% of worldwide product sales; for both the three and nine months ended September 30, 2009, our principal products represented 93% of worldwide product sales.

During the three months ended June 30, 2010, we also began selling Prolia^™ (denosumab). We are jointly commercializing Prolia^™ with GlaxoSmithKline plc (“GSK”) for postmenopausal osteoporosis (“PMO”) in Europe in accordance with a collaboration agreement entered into in July 2009. In addition, our other marketed products include: Sensipar^®/Mimpara^® (cinacalcet); Vectibix^® (panitumumab); and Nplate^® (romiplostim). For additional information about our products, their approved indications and where they are marketed, see “Item 1. Business – Marketed Products and Selected Product Candidates” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2009 and the discussion below with respect to Prolia^™.

Key developments

The following is a list of selected key developments that occurred during 2010 affecting our business. For additional 2010 developments and a more comprehensive discussion of certain developments discussed below, see our Quarterly Reports on Form 10-Q for the periods ended March 31, 2010 and June 30, 2010.

Prolia^™ Developments

On May 28, 2010, the European Commission (“EC”) granted marketing authorization for Prolia^™ for the treatment of osteoporosis in postmenopausal women at increased risk of fractures and for the treatment of bone loss associated with hormone ablation in men with prostate cancer at increased risk of fractures. The timing of reimbursement authority approval of pricing in individual European Union countries will vary by country, which could follow the EC approval by many months. For example, on July 1, 2010, Prolia^™ received reimbursement authority in Germany, and on October 27, 2010, the National Institute for Health and Clinical Excellence in the United Kingdom recommended Prolia^™ for reimbursement as a treatment option for certain postmenopausal women who are at increased risk of primary and secondary osteoporotic fractures if other treatments available on the publicly-funded National Health Service are unsuitable.

On June 1, 2010, the FDA approved Prolia^™ for the treatment of postmenopausal women with osteoporosis at high risk for fracture, defined as a history of osteoporotic fracture, or multiple risk factors for fracture, or patients who have failed or are intolerant to other available osteoporosis therapy.

We estimate that the majority of potential U.S. Prolia^™ patients are covered under Medicare and the remaining under commercial plans. Prolia^™ is currently being reimbursed under Medicare Part B through a “buy and bill” process. The buy and bill reimbursement process for Prolia^™ may require time to establish as it involves physicians purchasing Prolia^™ with the intent to submit a claim to a payer for reimbursement after the injection has been administered. As of September 30, 2010, all 15 Medicare Administration Contractors have confirmed medical coverage for Prolia^™ and have issued paid claims. Future U.S. product sales for Prolia^™ will be in part dependent upon physicians’ willingness to use a buy and bill approach, in particular primary care physicians who most frequently administer Prolia^™ to patients but are less accustomed to this reimbursement process. In addition, U.S. product sales for Prolia^™ will be supported by Medicare Part D coverage, which we expect will be obtained in 2011, and by the expansion of commercial coverage.

Worldwide sales of Prolia^™ for the three and nine months ended September 30, 2010 totaled approximately $10 million and $13 million, respectively.

Please refer to our Quarterly Report on Form 10-Q for the period ended June 30, 2010 for additional details on the Prolia^™ risk evaluation and mitigation strategy (“REMS”) program and the post-marketing surveillance program for PMO patients.

Other Denosumab Developments

On May 14, 2010, we submitted a Biologics License Application (“BLA”) to the FDA for denosumab for the reduction of skeletal related events (“SREs”) in cancer patients. On July 16, 2010, we announced that the FDA granted priority review designation to our denosumab BLA. Consistent with priority review guidelines, the FDA will target an Agency action within six months of the application submission date, resulting in a Prescription Drug User Fee Act action date of November 18, 2010. We also submitted a marketing authorization application to the European Medicines Agency (“EMA”) on June 4, 2010 for denosumab for the reduction of SREs in cancer patients.

ESA Developments

On February 16, 2010, Amgen and Centocor Ortho Biotech Products, L.P., a subsidiary of Johnson & Johnson (“J&J”), announced that the FDA approved a REMS for erythropoiesis-stimulating agents (“ESAs”) which includes Aranesp^®, EPOGEN^® and Procrit^® (Epoetin alfa). In order to ensure continued access to ESAs for healthcare providers who prescribe, or prescribe and dispense, ESAs to patients with cancer, healthcare providers and hospitals are required to train and enroll in the ESA APPRISE (Assisting Providers and cancer Patients with Risk Information for the Safe use of ESAs) Oncology Program by February 15, 2011. Enrolled prescribers are required to document that a discussion about the risks of ESAs took place with each patient prior to the initiation of each new course of ESA therapy. Direct patient registration or approval prior to ESA administration is not required through the ESA APPRISE Oncology Program.

On July 26, 2010, the Centers for Medicare & Medicaid Services (“CMS”) released the Final Rule on Bundling in Dialysis, effective January 1, 2011. Under the final rule, end stage renal disease (“ESRD”) facilities were required to elect, by November 1, 2010, whether they would implement the rule in its entirety beginning in 2011 or ratably over a four-year period beginning in 2011. On November 2 and November 4, 2010, Fresenius Medical Care and DaVita Inc., the two largest dialysis organizations in the United States, separately announced that they intend to implement the final bundling rule in its entirety beginning in 2011 for all of their clinics. In preparation of implementing the final rule, ESRD facilities may transition their treatment protocols in the later part of 2010, which could also impact the dose/utilization of EPOGEN^®.

On October 18, 2010, the FDA held a Cardiovascular and Renal Drugs Advisory Committee (“CRDAC”) meeting to review results from the Trial to Reduce Cardiovascular Events with Aranesp^® Therapy (“TREAT”) study conducted in patients not on dialysis, and how those results inform the appropriate use of ESAs in patients with chronic kidney disease (“CKD”). Prior to the CRDAC meeting, we submitted proposed labeling changes to the FDA regarding the use of ESAs in chronic renal failure patients not on dialysis that would limit treatment to patients who are most likely to benefit, specifically those with significant anemia (<10 grams per deciliter (“g/dL”)), and who are at high risk for transfusion and for whom transfusion avoidance is considered clinically important, including those in whom it is important to preserve kidney transplant eligibility. In addition to

narrowing the patient population, we are proposing a more conservative dosing algorithm in these patients. The Company will continue working with the FDA to develop information that will optimize the use of ESAs in CKD patients. In addition, on October 26, 2010, the CMS announced a January 19, 2011 meeting of the Medicare Evidence Development & Coverage Advisory Committee (“MEDCAC”) to further examine currently available evidence on the use of ESAs to manage anemia in patients who have CKD.

Certain of these ESA developments could have material adverse impacts on our business and results of operations.

Please refer to our Quarterly Reports on Form 10-Q for the periods ended March 31, 2010 and June 30, 2010 for additional details on ESA developments.

U.S. Healthcare Reform

In March 2010, the Patient Protection and Affordable Care Act and the companion Healthcare and Education Reconciliation Act were signed into law. We refer to these two laws collectively as the “new healthcare reform law.” The new healthcare reform law imposes additional costs on and reduces the revenues of companies in the biotechnology and pharmaceutical industries. The following table summarizes certain provisions of the new healthcare reform law and the adverse impacts of these provisions on our U.S. product sales to date.

						Nine months ended
						September 30, 2010
Healthcare Reform Provision		Effective Date				(in millions)
•    Medicaid base rebate rate payable on our products increased from 15.1% to 23.1% of the Average Manufacturer’s Price (“AMP”)		January 1, 2010				$	46
•    Public Health Service (“PHS”) (340B) program eligibility expanded
–   Discounts comparable to the Medicaid rebate extended to entities receiving PHS grants and to hospitals serving a disproportionate number of Medicare and Medicaid patients		January 1, 2010					17
•    Medicaid rebates applied to managed care organizations		March 23, 2010					70
•    AMP Definition changed which may result in higher discounts for certain of our products		October 1, 2010					—
•    Prescription Drug Manufacturers’ Annual Fee
–   Aggregate annual fee to be paid by manufacturers and importers of branded prescription drugs totaling $28 billion over 10 years, of which $2.5 billion is payable in 2011
–   Fee to be apportioned among participating companies based on each company’s sales of qualifying products. The fee is not deductible for U.S. federal income tax purposes		January 1, 2011					—
•    Part D mandatory discount (referred to as the “doughnut hole”)
–   50% discount to Medicare Part D patients whose prescription expenses exceed the Part D limit, but have not reached the catastrophic coverage threshold		January 1, 2011					—
•    Medicaid coverage eligibility expanded from 100% to 133% of the federal poverty level		January 1, 2014					—
		Total				$	133

Total U.S. product sales for the three months ended September 30, 2010 were adversely impacted by $64 million by the new healthcare reform law provisions that were in effect during this period.

We anticipate that the impact of the above provisions for the full year 2010 will be slightly below $200 million and that the full year impact for 2011 will be approximately two to two-and-a-half times the amount currently estimated for 2010. Estimation of the aggregate financial impact resulting from the new healthcare reform law is highly complex and depends on a number of factors. Therefore, our estimates are subject to change.

The new healthcare reform law authorizes the FDA to approve biosimilar products. With the resulting likely introduction of biosimilars in the United States, we may face greater competition from biosimilar products,

including from biosimilar manufacturers with approved products in Europe that may seek to quickly obtain U.S. approval now that biosimilar legislation has been enacted, subject to our ability to enforce our patents.

Please refer to our Quarterly Reports on Form 10-Q for the periods ended March 31, 2010 and June 30, 2010 for additional details on the new healthcare reform law.

Vectibix^® Developments

On April 16, 2010, our application for marketing authorization for the use of Vectibix^® in first- and second-line treatment of metastatic colorectal cancer (“mCRC”) in patients whose tumors contain wild type KRAS genes was submitted to the EMA. We filed supplemental BLA submissions for first- and second-line mCRC with the FDA on October 29 and November 4, 2010.

On August 11, 2010, we announced top-line results from a 658-patient randomized phase 3 trial evaluating Vectibix^® as a first-line treatment in patients with recurrent and/or metastatic squamous cell head and neck cancer. The data showed the addition of Vectibix^® to platinum-based chemotherapy did not result in a statistically significant improvement in overall survival, the primary endpoint, compared to chemotherapy alone [median 11.1 months versus 9.0 months, hazard ratio (“HR”) 0.87 (95% confidence interval (“CI”): 0.73, 1.05)]. Therefore, the study did not meet its primary endpoint. Secondary endpoints of progression-free survival (“PFS”) [median 5.8 months versus 4.6 months, HR 0.78 (95% CI: 0.66, 0.92)] and objective response rate (36% versus 25%) were numerically improved but were not tested for statistical significance. The secondary endpoints included PFS, objective response rate, duration of response, time to progression, time to response, patient reported outcomes and safety. The most frequently reported adverse events in the Vectibix^® plus chemotherapy arm included nausea, rash, neutropenia and vomiting, as anticipated, for this combination therapy.

Puerto Rico Tax Legislation

On October 25, 2010, the government of Puerto Rico passed legislation that established a new tax on the sale of products manufactured in Puerto Rico, effective January 1, 2011. We are currently evaluating the new legislation and its potential impact on Amgen.

Selected Financial Data

The following table presents selected financial data (amounts in millions, except percentages and per share data):

		Three months ended September 30,												Nine months ended September 30,
		2010				2009				Change				2010				2009				Change
Product sales:
U.S.		$	2,921			$	2,918				—			$	8,385			$	8,253				2	%
International			838				818				2	%			2,515				2,355				7	%
Total product sales			3,759				3,736				1	%			10,900				10,608				3	%
Other revenues			57				76				(25	)%			312				225				39	%
Total revenues		$	3,816			$	3,812				—			$	11,212			$	10,833				3	%
Operating expenses		$	2,337			$	2,207				6	%		$	6,735			$	6,450				4	%
Operating income		$	1,479			$	1,605				(8	)%		$	4,477			$	4,383				2	%
Net income		$	1,236			$	1,386				(11	)%		$	3,605			$	3,674				(2	)%
Diluted EPS		$	1.28			$	1.36				(6	)%		$	3.71			$	3.58				4	%
Diluted shares			962				1,022				(6	)%			971				1,025				(5	)%

The following discusses certain key changes in our results of operations for the three and nine months ended September 30, 2010 as well as our financial condition as of September 30, 2010.

The increase in total revenues for the nine months ended September 30, 2010 was primarily due to increases in worldwide product sales, discussed below, and, to a lesser extent, other revenues resulting from certain milestone payments earned in 2010.

U.S. product sales for the three months ended September 30, 2010 were largely unchanged as the decline in Aranesp^® sales was substantially offset by an increase in Neulasta^®/NEUPOGEN^® sales. The increase in U.S. product sales for the nine months ended September 30, 2010 was primarily due to favorable changes in wholesaler inventories.

Excluding a $16 million unfavorable and a $34 million favorable foreign exchange impact, international product sales increased 4% and 5% for the three and nine months ended September 30, 2010, respectively, primarily due to increases in demand for Sensipar^®, Vectibix^®, Nplate^® and Prolia^™.

The increase in operating expenses for the three months ended September 30, 2010 was primarily driven by lower research and development (“R&D”) costs principally due to higher cost recoveries in 2009. The increase in operating expenses for the nine months ended September 30, 2010 was primarily due to increased selling, general and administrative (“SG&A”) expenses in part due to increased spending activities for Prolia^™.

The decrease in net income for the three months ended September 30, 2010 was primarily due to lower operating income and a higher effective income tax rate as a result of favorable tax settlements in 2009. The decrease in net income for the nine months ended September 30, 2010 was primarily due to a higher effective income tax rate as a result of favorable tax settlements in 2009, partially offset by higher operating income.

The decrease in diluted EPS for the three months ended September 30, 2010 was due to the reduction in net income, partially offset by a reduction in the number of shares used in the calculation of diluted EPS. The increase in diluted EPS for the nine months ended September 30, 2010 was due to the reduction in the number of shares used in the calculation of diluted EPS, partially offset by the reduction in net income. The decreases in the number of shares used in the computations of diluted EPS reflect the impact of our stock repurchase program, including approximately 6.6 million and 46 million shares that were repurchased in the three and nine months ended September 30, 2010 at total costs of $364 million and $2.7 billion, respectively.

As of September 30, 2010, our cash, cash equivalents and marketable securities totaled $17.0 billion and total debt outstanding was $13.3 billion, including $2.5 billion which is due in February 2011. Of our total cash, cash equivalents and

marketable securities balances as of September 30, 2010, approximately $14.0 billion was generated from operations in foreign tax jurisdictions and is intended for permanent use in our foreign operations. If these funds were repatriated for use in our U.S. operations, we would be required to pay additional U.S. federal and state income taxes at the applicable marginal tax rates.

Product sales

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

		Three months ended September 30,												Nine months ended September 30,
		2010				2009				Change				2010				2009				Change
Aranesp®		$	623			$	685				(9	)%		$	1,853			$	2,004				(8	)%
EPOGEN®			653				663				(2	)%			1,933				1,866				4	%
Neulasta®/NEUPOGEN®			1,254				1,210				4	%			3,607				3,441				5	%
ENBREL			914				924				(1	)%			2,595				2,581				1	%
Sensipar®			175				165				6	%			526				480				10	%
Vectibix®			70				58				21	%			209				167				25	%
Nplate®			60				31				94	%			164				69				—
Prolia™			10				—				—				13				—				—
Total product sales		$	3,759			$	3,736				1	%		$	10,900			$	10,608				3	%

Product sales are influenced by a number of factors, some of which may impact sales of certain products more significantly than others. For a list of certain of these factors, see “Results of Operations – Product Sales” in our Quarterly Report on Form 10-Q for the period ended June 30, 2010.

Aranesp^®

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

		Three months ended September 30,												Nine months ended September 30,
		2010				2009				Change				2010				2009				Change
Aranesp® — U.S.		$	283			$	333				(15	)%		$	818			$	963				(15	)%
Aranesp® — International			340				352				(3	)%			1,035				1,041				(1	)%
Total Aranesp®		$	623			$	685				(9	)%		$	1,853			$	2,004				(8	)%