Forward-looking statements

This report and other documents we file with the U.S. 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. Such words as "expect," "anticipate," "outlook," "could," "target," "project," "intend," "plan," "believe," "seek," "estimate," "should," "may," "assume," and "continue," as well as variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and 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, trends and planned dividends and stock repurchases. 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, 2011. Our results of operations discussed in MD&A are presented in conformity with GAAP.

Amgen Inc. (including its subsidiaries, referred to as "Amgen," "the Company," "we," "our" or "us") is the world's largest independent biotechnology medicines company. We discover, develop, manufacture and market medicines for grievous illnesses. We focus solely on human therapeutics and concentrate on innovative 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 therapeutics in supportive cancer care, nephrology and inflammation. Our principal products are Neulasta® (pegfilgrastim); NEUPOGEN® (Filgrastim); ENBREL (etanercept); and Aranesp® (darbepoetin alfa) and EPOGEN® (epoetin alfa), erythropoiesis-stimulating agents (ESAs). Our international product sales consist principally of sales in Europe. For the three months ended March 31, 2012 and 2011, our principal products represented 83% and 89% of worldwide product sales, respectively. Our other marketed products include principally Sensipar®/Mimpara® (cinacalcet), Vectibix® (panitumumab), Nplate® (romiplostim), Prolia®(denosumab) and XGEVA® (denosumab).

Significant developments

The following is a summary of selected significant developments that occurred to date during 2012 affecting our business. For additional developments or for a more comprehensive discussion of certain developments discussed below, see our Annual Report on Form 10-K for the year ended December 31, 2011.

XGEVA ®

• On April 26, 2012, we announced that the FDA issued a Complete Response Letter for the supplemental Biologics License Application for XGEVA ® to treat men with castration-resistant prostate cancer at high risk of developing bone metastases. The Complete Response Letter states that the FDA cannot approve the application in its present form. The FDA determined that the effect on bone metastases-free survival was of insufficient magnitude to outweigh the risks (including osteonecrosis of the jaw) of XGEVA® in the intended population, and requested data from an adequate and well-controlled trial(s) demonstrating a favorable risk-benefit profile for XGEVA® that is generalizable to the U.S. population. We are reviewing the Complete Response Letter and will work with the FDA to determine any next steps.

Sensipar®

• On April 24, 2012, we announced that we expect to see results of the EValuation Of Cinacalcet HCl Therapy to Lower CardioVascular Events (E.V.O.L.V.E™) study, our phase 3 cardiovascular outcomes study of cinacalcet in the treatment for dialysis patients with secondary hyperparathyroidism, in mid 2012.

AMG 785

• On April 4, 2012, we along with our partner UCB announced the start of a two-year phase 3 clinical study in more than 5,000 postmenopausal women with osteoporosis. The primary endpoint will evaluate the incidence of new vertebral fractures at 12 months.

Acquisitions/Collaborations

• On March 7, 2012, we acquired Micromet, a publicly held biotechnology company focused on the discovery, development and commercialization of innovative antibody-based therapies for the treatment of cancer.

• On April 25, 2012, we announced that we had entered into an agreement to acquire no less than 95.6% of Mustafa Nevzat Pharmaceuticals (MN), a privately held Turkish pharmaceutical company. MN is the leading supplier of pharmaceuticals to the hospital sector and a major supplier of injectable medicines in Turkey. Through this acquisition, we will have the opportunity to expand our presence in Turkey and the surrounding region.

• On March 30, 2012, we entered into a collaboration agreement with AstraZeneca to jointly develop and commercialize certain monoclonal antibodies from Amgen's clinical inflammation portfolio including brodalumab (AMG 827), AMG 139, AMG 157, AMG 181 and AMG 557. The agreement covers the worldwide development and commercialization except for certain Asian countries for brodalumab and Japan for AMG 557, which are licensed to other third parties.

Selected financial information

The following provides an overview of our results of operations for the three months ended March 31, 2012, as well as our financial condition as of March 31, 2012 (amounts in millions, except percentages and per-share data):

                                       Three months ended
                                            March 31,
                                        2012          2011         Change
               Product sales:
               U.S.                  $    2,997      $ 2,778            8 %
               International                904          840            8 %

               Total product sales        3,901        3,618            8 %

               Other revenues               147           88           67 %

               Total revenues        $    4,048      $ 3,706            9 %


               Operating expenses    $    2,571      $ 2,413            7 %

               Operating income      $    1,477      $ 1,293           14 %

               Net income            $    1,184      $ 1,125            5 %

               Diluted EPS           $     1.48      $  1.20           23 %

               Diluted shares               800          941          (15)%

The increase in U.S. product sales for the three months ended March 31, 2012, reflects growth for all of our marketed products, except ESAs, which declined 17%. Excluding sales of ESAs, U.S. product sales increased 18%.

The increase in international product sales for the three months ended March 31, 2012, reflects growth for all of our marketed products, except Aranesp® and combined Neulasta ®/ NEUPOGEN® sales, which declined 4%, respectively.

The increase in other revenues for the three months ended March 31, 2012, was due primarily to milestone payments received in connection with entering into a collaboration with AstraZeneca and receipt of marketing approval of AMG 223 in Japan by Astellas Pharma Inc.

The increase in operating expenses for the three months ended March 31, 2012, was driven primarily by higher costs of sales largely attributable to the increase in the Puerto Rico excise tax, discussed below.

The increase in net income for the three months ended March 31, 2012, was due primarily to higher operating income, offset partially by higher interest expense, net, due primarily to a higher average debt balance.

The increase in diluted EPS for the three months ended March 31, 2012, was driven primarily by the favorable impact of our stock repurchase program, which reduced the number of shares used to compute diluted EPS, and, to a lesser degree, an increase in net income.

Commencing January 1, 2011, Puerto Rico imposes a temporary excise tax on the purchase of goods and services from a related manufacturer in Puerto Rico. The excise tax is imposed over a six-year period beginning in 2011 with the excise tax rate declining in each year (4% in 2011, 3.75% in 2012, 2.75% in 2013, 2.5% in 2014, 2.25% in 2015, and 1% in 2016). We account for the excise tax as a manufacturing cost that is capitalized in inventory and expensed in cost of sales when the related products are sold. For U.S. income tax purposes, the excise tax results in foreign tax credits that are generally recognized in our provision for income taxes when the excise tax is incurred. This excise tax has had and will continue to have a significant adverse impact on our cost of sales and a significant favorable impact on our provision for income taxes. In addition, the overall impact of the excise tax will vary from period to period as a result of the timing difference between recognizing the expense and the applicable tax credit. For the three months ended March 31, 2012 and 2011, cost of sales increased by $81 million and $13 million, respectively, and the provision for income taxes decreased by $87 million and $67 million, respectively, as a result of this excise tax.

As of March 31, 2012, our cash, cash equivalents and marketable securities totaled $19.4 billion and total debt outstanding was $21.4 billion. Of our total cash, cash equivalents and marketable securities balances as of March 31, 2012, approximately $16.6 billion was generated from operations in foreign tax jurisdictions and is intended to be invested indefinitely outside the United States. Under current tax laws, 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.

Results of operations

Product sales

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

                                       Three months ended
                                            March 31,
                                        2012          2011         Change
              Neulasta®/NEUPOGEN ®   $    1,344      $ 1,232            9 %
              ENBREL                        938          875            7 %
              Aranesp®                      518          580          (11)%
              EPOGEN®                       446          535          (17)%
              Other products                655          396           65 %

              Total product sales    $    3,901      $ 3,618            8 %

Product sales are influenced by a number of factors, some of which may impact sales of certain of our products more significantly than others. For a list of certain of these factors and their potential impact on sales, see Item 7 - Product Sales in our Annual Report on Form 10-K for the year ended December 31, 2011.

Neulasta®/NEUPOGEN®

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



                                                  Three months ended
                                                       March 31,
                                                   2012          2011         Change
    Neulasta®- U.S.                             $      814      $   710           15 %
    NEUPOGEN®- U.S.                                    239          220            9 %

    U.S. Neulasta®/NEUPOGEN® - Total                 1,053          930           13 %

    Neulasta®- International                           225          226           -
    NEUPOGEN®- International                            66           76          (13)%

    International Neulasta®/NEUPOGEN® - Total          291          302           (4)%

    Total Neulasta®/NEUPOGEN®                   $    1,344      $ 1,232            9 %

The increase in combined U.S. sales of Neulasta ®/NEUPOGEN® for the three months ended March 31, 2012, was driven primarily by an increase in the average net sales price and, to a lesser extent, an increase in Neulasta ® unit demand.

The decrease in combined Neulasta®/NEUPOGEN® international sales for the three months ended March 31, 2012, was due primarily to a decrease in the average net sales price. A mid single-digit percentage point increase in Neulasta® unit demand was offset by a decline in NEUPOGEN® units due primarily to biosimilar competition as well as continued conversion to Neulasta ®.

Future Neulasta®/NEUPOGEN ® sales will depend in part on factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2011.

ENBREL

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



                                     Three months ended
                                          March 31,
                                    2012            2011          Change
                ENBREL - U.S.     $     878       $     821            7 %
                ENBREL - Canada          60              54           11 %

                Total ENBREL      $     938       $     875            7 %

The increase in total ENBREL sales for the three months ended March 31, 2012, was driven primarily by an increase in the average net sales price. ENBREL remains the segment share leader in both the rheumatology and dermatology segments.

Future ENBREL sales will depend in part on factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2011.

Aranesp®

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



                                         Three months ended
                                              March 31,
                                        2012            2011          Change
            Aranesp®- U.S.            $     202       $     250          (19)%
            Aranesp®- International         316             330           (4)%

            Total Aranesp®            $     518       $     580          (11)%

The decrease in U.S. Aranesp ® sales for the three months ended March 31, 2012, was due primarily to a decline in unit demand, offset partially by a mid single-digit percentage point increase in the average net sales price. The unit decline reflects segment contraction resulting from changes to the label and reimbursement environment that occurred during 2011.

The decrease in international Aranesp® sales for the three months ended March 31, 2012, was due primarily to a decrease in the average net sales price.

Future Aranesp® sales will depend in part on factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2011. Certain of these factors may have a material adverse impact on future sales of Aranesp®.

EPOGEN®

Total EPOGEN ® sales were as follows (dollar amounts in millions):

Three months ended March 31, 2012 2011 Change EPOGEN®- U.S. $ 446 $ 535 (17)%

The decrease in EPOGEN ® sales for the three months ended March 31, 2012, was due primarily to the impact of changes to the label and reimbursement that occurred in 2011. The decline was comprised of an approximately 30% decrease in unit demand driven by a reduction in dose utilization, offset partially by reductions in customer discounts as part of new provider contracts that became effective January 1, 2012.

Future EPOGEN ® sales will depend in part on factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2011, and on the recent approval of Affymax, Inc.'s peginesatide by the FDA on March 27, 2012, which results in EPOGEN® facing competition in the U.S. dialysis setting for the first time. Certain of these factors may have a material adverse impact on future sales of EPOGEN ®.

Other products

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

                                               Three months ended
                                                    March 31,
                                              2012            2011          Change
      Sensipar®- U.S.                       $     140       $     116           21 %
      Sensipar®(Mimpara®) - International          79              71           11 %
      Vectibix®- U.S.                              31              30            3 %
      Vectibix®- International                     59              45           31 %
      Nplate®- U.S.                                54              37           46 %
      Nplate®- International                       36              28           29 %
      Prolia®- U.S.                                54              17           -
      Prolia®- International                       34              10           -
      XGEVA®- U.S.                                139              42           -
      XGEVA®- International                        14              -            -
      Other - International                        15              -            -

      Total other products                  $     655       $     396           65 %


      Total U.S.                            $     418       $     242           73 %
      Total International                         237             154           54 %

      Total other products                  $     655       $     396           65 %

Future sales of our other products will depend in part on factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2011.

Selected operating expenses

Selected operating expenses were as follows (dollar amounts in millions):

                                                           Three months ended
                                                               March 31,
                                                           2012           2011          Change
Cost of sales (excludes amortization of certain
acquired intangible assets)                             $      679       $   564            20 %
% of product sales                                           17.4%         15.6%
Research and development                                $      736       $   736            -
% of product sales                                           18.9%         20.3%
Selling, general and administrative                     $    1,076       $ 1,023             5 %
% of product sales                                           27.6%         28.3%
Other                                                   $        6       $    16           (63)%

Cost of sales

Cost of sales increased to 17.4% of product sales for the three months ended March 31, 2012, driven primarily by the Puerto Rico excise tax. Excluding the impact of the Puerto Rico excise tax, cost of sales would have been 15.3% and 15.2% of product sales for the three months ended March 31, 2012 and 2011, respectively.

Research and development

R&D expense for the three months ended March 31, 2012, included higher costs of $46 million associated with supporting our later stage clinical programs, including AMG 145, AMG 785 and talimogene laherparepvec. This increase was offset primarily by reduced expenses of $37 million in Discovery Research and Translational Sciences. The change in expenses related to marketed product support was not material during the three months ended March 31, 2012.

Selling, general and administrative

The increase in selling, general and administrative expense for the three months ended March 31, 2012, was driven principally by higher spending on marketed products of $39 million, related primarily to the launch of ENBREL and Prolia® direct-to-consumer advertising campaigns as well as international expansion, and by increased ENBREL profit share expenses of $25 million. These increases were offset partially by a favorable change to the estimated 2011 U.S. healthcare reform federal excise fee of $42 million.

For the three months ended March 31, 2012 and 2011, expenses associated with the ENBREL profit share were $324 million and $299 million, respectively.

Non-operating expenses/income and provisions for income taxes

Non-operating expenses/income and provisions for income taxes were as follows (dollar amounts in millions):

                                                 Three months ended
                                                      March 31,
                                                 2012            2011
              Interest expense, net            $     235        $  135
              Interest and other income, net   $     124        $  148
              Provisions for income taxes      $     182        $  181
              Effective tax rate                    13.3 %        13.9 %

Interest expense, net

The increase in interest expense, net, for the three months ended March 31, 2012, was due primarily to a higher average debt balance.

Interest and other income, net

The decrease in interest and other income, net, for the three months ended March 31, 2012, was due primarily to lower net realized gains on investments.

Income taxes

Our effective tax rate for the three months ended March 31, 2012 was 13.3% compared with 13.9% for the corresponding period of the prior year. The decrease in our effective tax rate was due primarily to the favorable tax impact of changes in revenue and expense mix, the adjustment to the non-deductible healthcare reform federal excise fee, and higher tax credits in 2012 associated with the Puerto Rico excise tax. These favorable impacts were partially offset by the exclusion of the benefit of the federal R&E tax credit in the three months ended March 31, 2012 (the federal R&E tax credit expired as of December 31, 2011 and was not reinstated as of March 31, 2012). Our effective tax rates for the three months ended March 31, 2012 and 2011 would have been 18.5% and 18.8%, respectively, without the impact of the foreign tax credits associated with the Puerto Rico excise tax.

See Note 3, Income taxes, to the condensed consolidated financial statements for further discussion.

Financial condition, liquidity and capital resources

Selected financial data was as follows (in millions):

                                                      March 31,       December 31,
                                                        2012              2011
  Cash, cash equivalents and marketable securities   $    19,374     $       20,641
  Total assets                                            49,250             48,871
  Current portion of long-term debt                        2,381                 84
  Long-term debt                                          19,028             21,344
  Stockholders' equity                                    18,874             19,029

The Company intends to continue to return capital to stockholders through share repurchases and the payment of cash dividends, reflecting our confidence in the future cash flows of our business. The amount we spend, the number of shares repurchased and the timing of such repurchases will vary based on a number of factors, including the stock price, the availability of financing on acceptable terms, the amount and timing of dividend payments and blackout periods in which we are restricted from repurchasing shares; and the manner of purchases may include private block purchases, tender offers, as well as market transactions. Whether and when we declare dividends or repurchase stock, the size of any dividend and the amount of stock we repurchase could be affected by a number of additional factors. (See our Annual Report on Form 10-K for the year ended December 31, 2011, Item 1A. Risk Factors - There can be no assurance that we will continue to declare cash dividends or repurchase stock). In October 2011, we announced our intent to accelerate our stock repurchase program, reflecting our confidence in the long-term value of the Company and the attractive interest rate environment. During the three months ended March 31, 2012, we repurchased 21 million shares of our common stock at an aggregate cost of $1.4 billion. We expect to repurchase the remaining $3.6 billion of stock under our authorized stock repurchase program through open-market purchases. In December 2011, the Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock, which was paid on March 7, 2012. On March 15, 2012, the Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock, which will be paid on June 7, 2012, to all stockholders of record as of the close of business on May 16, 2012.

We believe existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital; capital expenditure and debt service requirements; our plans to pay dividends and repurchase stock; and other business initiatives we plan to . . .