• Worldwide AVONEX revenues totaled
2013, representing an increase of 1.6% over the same period in 2012.
• Worldwide TYSABRI revenues totaled
2013, representing an increase of 37.9% over the same period in 2012. The
increase in revenue is primarily due to 100% of net U.S. revenue being
recognized as a result of our acquisition of TYSABRI rights.
• Our share of RITUXAN revenues totaled
of 2013, representing an increase of 1.5% over the same period in 2012. 33
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• Total cost and expenses increased 16.5% in the second quarter of 2013,
compared to the same period in 2012. This increase was primarily the
result of a 65.9% increase in cost of sales, a 57.3% increase in
amortization of acquired intangible assets and a 42.8% increase in
selling, general and administrative costs partially offset by a 100.0%
decrease in collaboration profit sharing over the same period in 2012.
These increases primarily reflect increases in payments due to Elan and
other third parties as well as amortization of acquired intangible assets
based on worldwide net sales of TYSABRI as a result of our acquisition of
TYSABRI rights, costs incurred in connection with our product launch of
TECFIDERA in the U.S. and potential product launches of ELOCTATE
(recombinant factor VIII Fc fusion protein) and ALPROLIX (recombinant
factor IX Fc fusion protein), partially offset by the elimination of
collaboration profit sharing.
$804.2 millionof net cash flows from operations for the six months ended June 30, 2013, which were primarily driven by earnings. Cash, cash equivalents and marketable securities totaled approximately $774.8 millionas of June 30, 2013. Acquisitions On April 2, 2013, we acquired full ownership of, and strategic, commercial and decision-making rights to, TYSABRI from Elan. Upon the closing of the transaction, our collaboration agreement with Elan was terminated. For additional information related to this transaction, please read Note 2, Acquisitions to our condensed consolidated financial statements included within this report. Business Environment We conduct our business within the biotechnology and pharmaceutical industries, which are highly competitive. Many of our competitors are working to develop or have commercialized products similar to those we market or are developing, including oral and other alternative formulations that may compete with AVONEX, TYSABRI, TECFIDERA or other products we are developing. In addition, the commercialization of certain of our own approved products and pipeline product candidates may negatively impact future sales of AVONEX, TYSABRI, TECFIDERA or all three. We may also face increased competitive pressures from the emergence of biosimilars, generic versions of TECFIDERA or related prodrug derivatives. In the U.S., AVONEX, TYSABRI, and RITUXAN are licensed under the Public Health Service Act (PHSA) as biological products. In March 2010, U.S. healthcare reform legislation amended the PHSA to authorize the FDAto approve biological products, known as biosimilars, that are similar to or interchangeable with previously approved biological products based upon potentially abbreviated data packages. Global economic conditions continue to present challenges for our industry. Governments in many international markets where we operate have announced or implemented austerity measures to constrain the overall level of government expenditures. These measures, which include efforts aimed at reforming health care coverage and reducing health care costs, particularly in certain countries in Europe, continue to exert pressure on product pricing, have delayed reimbursement for our products, and have negatively impacted our revenues and results of operations. For additional information about certain risks that could negatively impact our financial position or future results of operations, please read the "Risk Factors" section of this report. The Affordable Care Act On June 28, 2012, the United States Supreme Courtupheld the constitutionality of the 2010 Patient Protection and Affordable Care Act's (Affordable Care Act) mandate to purchase health insurance but rejected specific funding provisions that incentivized states to expand their current Medicaidprograms. As a result of this ruling, we currently expect implementation of most of the major provisions of the Affordable Care Act to continue. Changes to the Affordable Care Act, or other federal legislation regarding health care access, financing, or delivery and other actions taken by individual states concerning the possible expansion of Medicaidcould impact our financial position or results of operations. The American Taxpayer Relief Act of 2012 The American Taxpayer Relief Act of 2012 (ATRA) was passed by the House of Representativesand the Senateon January 1, 2013, and was signed into law by the President on January 2, 2013. The ATRA, among other things, extends through 2013 an array of temporary business and individual tax provisions and temporarily delayed the implementation of certain spending reductions (known as "sequestration") until March 1, 2013. We do not expect that the ATRAwill have a material impact on our financial position or results of operation.