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Amgen Finance

To drive financial excellence that supports scientific innovation by enabling strategic investments to deliver transformative medicines globally

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To drive financial excellence that supports scientific innovation by enabling strategic investments to deliver transformative medicines globally

Strengths

  • PORTFOLIO: Diverse, high-margin biologic therapy portfolio across 6 therapeutic areas
  • PIPELINE: Strong R&D with 27+ molecules in Phase 2 and 3 clinical development
  • MANUFACTURING: Advanced biologics production capabilities at global scale
  • CAPITAL: Strong cash position of $12.4B with 31% operating margin
  • ACQUISITION: Strategic integration of Horizon Therapeutics expanding rare disease reach

Weaknesses

  • BIOSIMILARS: Increased competition against core products Enbrel and Neulasta
  • CONCENTRATION: Overreliance on few mature products for 45% of revenue
  • PRODUCTIVITY: R&D investment yield ($5.1B annually) underperforming peers
  • FORECASTING: Historical challenges in long-term growth projection accuracy
  • EXPANSION: Slower penetration in emerging markets vs industry leaders

Opportunities

  • INFLAMMATION: Growing $86B global market with aging population demographics
  • ONCOLOGY: Expanding personalized medicine opportunities with genetic targeting
  • INTERNATIONAL: Major growth potential in China and emerging Asian markets
  • DIGITAL: AI-driven drug discovery acceleration reducing time-to-market
  • RARE DISEASE: Higher-margin $250B specialty pharma market with less competition

Threats

  • PRICING: Increased government pressure on drug pricing in US and globally
  • COMPETITION: Accelerating biosimilar entries eroding core product margins
  • REGULATORY: Tightening approval standards and post-marketing requirements
  • ECONOMIC: Inflationary pressures on manufacturing and operational costs
  • LITIGATION: Patent challenges and product liability risks across portfolio

Key Priorities

  • INNOVATION: Accelerate R&D productivity and rare disease pipeline advancement
  • EFFICIENCY: Optimize portfolio mix and capital allocation for growth areas
  • EXPANSION: Increase strategic investments in high-growth international markets
  • DIGITAL: Scale AI/ML integration across financial planning and operations
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To drive financial excellence that supports scientific innovation by enabling strategic investments to deliver transformative medicines globally

FUEL INNOVATION

Optimize finances to accelerate R&D breakthroughs

  • ALLOCATION: Implement zero-based R&D funding model with 95% alignment to strategic therapeutic areas
  • EFFICIENCY: Reduce development cost per molecule by 12% through process optimization and AI integration
  • METRICS: Deploy enhanced ROI tracking system for R&D investments across 100% of projects by Q4
  • ACCELERATION: Establish $500M innovation fund for promising early-stage pipeline opportunities
OPTIMIZE PORTFOLIO

Maximize value creation across product lifecycle

  • ANALYTICS: Implement AI-powered portfolio optimization tool producing quarterly reallocation insights
  • RESTRUCTURING: Complete strategic review of bottom 20% performing products with actionable plans
  • GROWTH: Increase resource allocation to top 5 growth products by 25% funded through mature product savings
  • DIVESTITURE: Identify $2B in non-core assets for potential divestiture or partnership to fund growth areas
EXPAND GLOBALLY

Drive strategic growth in high-potential markets

  • INVESTMENT: Finalize $1.8B capital plan for expanding manufacturing and commercial capacity in Asia Pacific
  • PARTNERSHIPS: Establish 3 new strategic financial partnerships in emerging markets with $500M commitment
  • EFFICIENCY: Implement localized pricing strategies across 15 key markets increasing access by 25%
  • INFRASTRUCTURE: Develop integrated financial systems supporting 40% faster market entry in new territories
DIGITIZE FINANCE

Transform through AI-powered financial excellence

  • AUTOMATION: Implement AI forecasting platform reducing planning cycle time by 50% across all business units
  • CAPABILITY: Train 100% of finance leadership and 75% of staff on advanced analytics and AI applications
  • INTEGRATION: Connect 90% of financial data sources to centralized ML-ready data lake for real-time insights
  • EFFICIENCY: Automate 65% of transaction processing through intelligent automation reducing costs by $45M
METRICS
  • Operating cash flow: $15B by 2025
  • Free cash flow conversion: 75% of net income
  • R&D ROI: 15% improvement in value creation per $1B invested
VALUES
  • Be science-based
  • Compete intensely and win
  • Create value for patients, staff and stakeholders
  • Be ethical
  • Trust and respect each other
  • Ensure quality
  • Work in teams
  • Collaborate, communicate and be accountable
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Align the learnings

Amgen Finance Retrospective

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To drive financial excellence that supports scientific innovation by enabling strategic investments to deliver transformative medicines globally

What Went Well

  • REVENUE: Q1 2023 revenues increased 3% YoY to $6.1B despite biosimilar pressure
  • MARGINS: Maintained industry-leading operating margin of 31% through optimization
  • PIPELINE: Advanced 5 molecules to next clinical phase with positive interim data
  • INTEGRATION: Horizon acquisition synergies tracking ahead of $500M target by 8%
  • CASH: Generated $2.6B in operating cash flow, enabling continued share repurchases

Not So Well

  • EROSION: Key products Enbrel and Neulasta declined 15% and 24% respectively YoY
  • EXPENSES: R&D expenses increased 8% without corresponding productivity gains
  • GUIDANCE: Missed analyst consensus EPS by $0.14 due to acquisition costs
  • INVENTORY: Higher than anticipated inventory write-offs of $120M in quarter
  • PRICING: Greater than expected pricing pressure in Medicare Part B products

Learnings

  • PORTFOLIO: Need accelerated pivoting from mature to growth products in forecasts
  • ALLOCATION: Require more disciplined capital allocation process with clear metrics
  • INTEGRATION: Must improve acquisition integration timelines and milestone tracking
  • FORECASTING: Need enhanced predictive models accounting for biosimilar impacts
  • REGULATION: Must proactively model government pricing policy impacts earlier

Action Items

  • REVIEW: Conduct zero-based budgeting review across all commercial operations
  • STANDARDIZE: Implement consistent post-acquisition integration framework globally
  • OPTIMIZE: Restructure manufacturing network to reduce COGS by 200 basis points
  • AUTOMATE: Accelerate deployment of AI-powered financial planning tools by Q3
  • DIVEST: Evaluate strategic alternatives for lowest-performing mature products
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To drive financial excellence that supports scientific innovation by enabling strategic investments to deliver transformative medicines globally

Strengths

  • DATA: Extensive proprietary clinical and financial datasets for AI training
  • TALENT: Growing team of 125+ data scientists and ML engineers
  • COMPUTING: Advanced high-performance computing infrastructure established
  • PARTNERSHIPS: Strategic AI alliances with Google Cloud and MIT
  • AUTOMATION: Successfully deployed RPA across 40% of finance processes

Weaknesses

  • INTEGRATION: Limited cross-functional AI data standardization protocols
  • SKILLS: Finance team AI literacy gap requiring significant upskilling
  • LEGACY: Outdated ERP systems limiting advanced predictive capabilities
  • GOVERNANCE: Inconsistent AI ethics and risk management frameworks
  • SILOS: Fragmented AI initiatives lack enterprise-wide coordination

Opportunities

  • FORECASTING: AI-enhanced financial modeling could improve accuracy by 30%
  • OPTIMIZATION: ML-driven portfolio allocation to maximize ROI across pipeline
  • AUTOMATION: 65% of financial close process automatable through AI
  • INSIGHTS: Real-time market intelligence through NLP of regulatory changes
  • EFFICIENCY: Potential $150M annual savings through AI-optimized operations

Threats

  • COMPLIANCE: Evolving AI regulations requiring additional controls
  • SECURITY: Increasing sophistication of cyberattacks targeting pharma data
  • COMPETITION: Competitors investing 2-3x more in financial AI capabilities
  • TALENT: Intensifying war for AI talent with tech sector competitors
  • DISRUPTION: Accelerating pace of AI innovation outpacing adoption capacity

Key Priorities

  • TRANSFORMATION: Implement end-to-end finance AI transformation roadmap
  • CAPABILITY: Develop AI Center of Excellence with finance-specific focus
  • UPSKILLING: Launch comprehensive AI literacy program for finance team
  • FORECASTING: Deploy next-gen predictive analytics for financial planning