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1	The patents covering these drugs include patents listed in the U.S. Orange Book. The date provided reflects the last-to-expire key patent as listed in the U.S. Orange Book, which may not be the last date on which all relevant patents (e.g., polymorph and manufacturing patents) expire.

2

In December 2015, we announced the settlement of litigations with Natco Pharma Ltd. and its partners and affiliates, relating to certain patents for REVLIMID®. As part of the settlement, we agreed to provide Natco with a volume-limited license to sell generic lenalidomide in the U.S. commencing in March 2022. Natco’s ability to market generic lenalidomide in the U.S. will be contingent on its obtaining approval of an Abbreviated New Drug Application. See Note 18 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K for more information.

3	Subject of ongoing EPO opposition proceedings. See Note 18 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K for more information.

4	Patent Term Extension granted in October 2017. Exclusivity extended through 2025.

5	Based on ten years regulatory exclusivity.

6	Application for Patent Term Extension pending, receipt of which would extend exclusivity through 2028.

8	Subject of ongoing supplementary protection certificate (SPC) appeal proceedings in the UK and the Court of Justice for the European Union that may result in patent extension until 2022. See Note 18 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K for more information.

9	We contracted with Sandoz to sell azacitidine for injection, which they launched after the introduction of a generic version of VIDAZA® in the United States by a competitor in September 2013.

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•	strategy;

•	new product discovery and development;

•	current or pending clinical trials;

•	our products' ability to demonstrate efficacy or an acceptable safety profile;

•	actions by the FDA and other regulatory authorities;

•	product manufacturing, including our arrangements with third-party suppliers;

•	product introduction and sales;

•	royalties and contract revenues;

•	expenses and net income;

•	credit and foreign exchange risk management;

•	liquidity;

•	asset and liability risk management;

•	the outcome of litigation and other proceedings;

•	intellectual property rights and protections;

•	economic factors;

•	competition; and

•	operational and legal risks.

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•	In general, preclinical tests and clinical trials can take many years and require the expenditure of substantial resources, and the data obtained from these tests and trials may not lead to regulatory approval;

•	Delays or rejections may be encountered during any stage of the regulatory process if the clinical or other data fails to demonstrate compliance with a regulatory agency’s requirements for safety, efficacy and quality;

•	Requirements for approval may become more stringent due to changes in regulatory agency policy or the adoption of new regulations or legislation;

•	Even if a product is approved, the scope of the approval may significantly limit the indicated uses or the patient population for which the product may be marketed and may impose significant limitations in the nature of warnings, precautions and contra-indications that could materially affect the sales and profitability of the product;

•	After a product is approved, the FDA or similar bodies in other countries may withdraw or modify an approval in a significant manner or request that we perform additional clinical trials or change the labeling of the product due to a number of reasons, including safety concerns, adverse events and side effects;

•	Products, such as REVLIMID® and POMALYST®/IMNOVID®, that receive accelerated approval can be subject to an expedited withdrawal if post-marketing restrictions are not adhered to or are shown to be inadequate to assure safe use, or if the drug is shown to be unsafe or ineffective under its conditions of use;

•	Guidelines and recommendations published by various governmental and non-governmental organizations can reduce the use of our approved products;

•	Approved products, as well as their manufacturers, are subject to continuing and ongoing review by regulatory agencies, and the discovery of previously unknown problems with these products or the failure to comply with manufacturing or quality control requirements may result in restrictions on the manufacture, sale or use of a product or its withdrawal from the market; and

•	Changes in regulatory agency policy or the adoption of new regulations or legislation could impose restrictions on the sale or marketing of our approved products.

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•	protection of the environment, privacy, healthcare reimbursement programs, and competition;

•	parallel importation of prescription drugs from outside the United States at prices that are regulated by the governments of various foreign countries; and

•	mandated disclosures of clinical trial or other data, such as the EMA’s policy on publication of clinical data.

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•	Hematology and Oncology: AbbVie, Amgen, AstraZeneca, Bristol-Myers-Squibb, Eisai, Gilead, Johnson & Johnson, Merck, Novartis, Roche/Genentech, Sanofi and Takeda; and

•	Inflammation and Immunology: AbbVie, Amgen, Biogen, Eisai, Eli Lilly, Johnson & Johnson, Merck, Novartis, Pfizer and UCB S.A.

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•	significant damage awards, fines, penalties or other payments, and administrative remedies, such as exclusion and/or debarment from government programs, or other rulings that preclude us from operating our business in a certain manner;

•	changes and additional costs to our business operations to avoid risks associated with such litigation or investigations;

•	product recalls;

•	reputational damage and decreased demand for our products; and

•	expenditure of significant time and resources that would otherwise be available for operating our business.

•	the failure of the product candidate in preclinical or clinical studies;

•	adverse patient reactions to the product candidate or indications of other safety concerns;

•	insufficient clinical trial data to support the effectiveness or superiority of the product candidate;

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•	our inability to manufacture sufficient quantities of the product candidate for development or commercialization activities in a timely and cost-efficient manner;

•	our failure to obtain, or delays in obtaining, the required regulatory approvals for the product candidate, the facilities or the process used to manufacture the product candidate;

•	changes in the regulatory environment, including pricing and reimbursement, that make development of a new product or of an existing product for a new indication no longer attractive;

•	the failure to obtain or maintain satisfactory drug reimbursement rates by governmental or third-party payers; and

•	the development of a competitive product or therapy.

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•	increased management, travel, infrastructure and legal compliance costs;

•	longer payment and reimbursement cycles;

•	difficulties in enforcing contracts and collecting accounts receivable;

•	local marketing and promotional challenges;

•	lack of consistency, and unexpected changes, in foreign regulatory requirements and practices;

•	increased risk of governmental and regulatory scrutiny and investigations;

•	increased exposure to fluctuations in currency exchange rates;

•	the burdens of complying with a wide variety of foreign laws and legal standards;

•	operating in locations with a higher incidence of corruption and fraudulent business practices;

•	difficulties in staffing and managing foreign sales and development operations;

•	import and export requirements, tariffs, taxes and other trade barriers;

•	weak or no protection of intellectual property rights;

•	possible enactment of laws regarding the management of and access to data and public networks and websites;

•	possible future limitations on foreign-owned businesses;

•	increased financial accounting and reporting burdens and complexities; and

•	other factors beyond our control, including political, social and economic instability, popular uprisings, war, terrorist attacks and security concerns in general.

•	demands on management related to the increase in our size after an acquisition;

•	the diversion of management’s attention from daily operations to the integration of acquired businesses and personnel;

•	higher than anticipated integration costs;

•	failure to achieve expected synergies and costs savings;

•	difficulties in the assimilation and retention of employees;

•	difficulties in the assimilation of different cultures and practices, as well as in the assimilation of broad and geographically

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•	difficulties in the integration of departments, systems, including accounting systems, technologies, books and records and procedures, as well as in maintaining uniform standards and controls, including internal control over financial reporting, and related procedures and policies.

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•	results of our clinical trials or adverse events associated with our marketed products;

•	fluctuations in our commercial and operating results;

•	announcements of technical or product developments by us or our competitors;

•	market conditions for pharmaceutical and biotechnology stocks in particular;

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•	changes or anticipated changes in laws and governmental regulations, including changes in tax, healthcare, environmental, competition and patent laws;

•	new accounting pronouncements or regulatory rulings;

•	public announcements regarding medical advances in the treatment of the disease states that we are targeting;

•	patent or proprietary rights developments;

•	changes in pricing and third-party reimbursement policies for our products;

•	the outcome of litigation involving our products, processes or intellectual property;

•	the existence and outcome of governmental investigations and proceedings;

•	regulatory actions that may impact our products or potential products;

•	disruptions in our manufacturing processes or supply chain;

•	failure of our collaboration partners to successfully develop potential drug candidates;

•	competition; and

•	investor reaction to announcements regarding business or product acquisitions.

•	restructuring or refinancing our debt;

•	seeking additional debt or equity capital;

•	reducing or delaying our business activities, acquisitions, investments or capital expenditures, including research and development expenditures; or

•	selling assets, businesses, products or other potential revenue streams.

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•	an active public market for the CVRs may not continue to exist or the CVRs may trade at low volumes, both of which could have an adverse effect on the market price of the CVRs;

•	if the net sales targets specified in the CVR Agreement are not achieved within the time periods specified, no payment will be made and the CVRs will expire valueless;

•	since the U.S. federal income tax treatment of the CVRs is unclear, any part of a CVR payment could be treated as ordinary income and the tax thereon may be required to be paid prior to the receipt of the CVR payment;

•	any payments in respect of the CVRs are subordinated to the right of payment of certain of our other indebtedness;

•	we may under certain circumstances redeem the CVRs; and

•	upon expiration of our obligations under the CVR Agreement to continue to commercialize ABRAXANE® or any of the other Abraxis pipeline products, we may discontinue such efforts, which would have an adverse effect on the value of the CVRs.

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•	A one-time tax on the mandatory deemed repatriation of post-1986 untaxed foreign earnings and profits (E&P), referred to as the toll charge;

•	Reduction in the Corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017;

•	Introduction of a new U.S. tax on certain off-shore earnings referred to as Global Intangible Low-Taxed Income (GILTI) at an effective tax rate of 10.5% for tax years beginning after December 31, 2017 (increasing to 13.125% for tax years beginning after December 31, 2025) with a partial offset by foreign tax credits; and

•	Introduction of a territorial tax system beginning in 2018 by providing a 100% dividends received deduction on certain qualified dividends from foreign subsidiaries.

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•	An income tax expense of approximately $1,890 million for the one-time deemed repatriation of E&P. In accordance with the 2017 Tax Act, the toll charge liability may be paid over eight years. As such, we have recorded $1,732 million and $150 million in non-current and current income tax liability on an undiscounted basis, respectively, as of December 31, 2017; and

•	An income tax benefit of $621 million, primarily for the remeasurement of our deferred tax assets and liabilities at the enacted tax rate of 21%.

•	An impairment charge relating to the entire GED-0301 IPR&D asset of approximately $1,620 million. See Note 10 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K for further details on the impairment of the GED-0301 IPR&D asset;

•	Other one-time charges of approximately $188 million that will require cash payments primarily related to wind-down costs associated with discontinuing the Trials and certain development activities; and

•	A reduction in contingent consideration liabilities of approximately $1,397 million related to GED-0301. See Note 4 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K for further details on contingent consideration liabilities.

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1	Includes Cash and cash equivalents, Marketable securities available-for-sale, Accounts receivable, net of allowances, Inventory and Other current assets, less Short-term borrowings and current portion of long-term debt, Accounts payable, Accrued expenses and other current liabilities, and the current portion of Income taxes payable.

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•	cash flow hedges included in the assessment of hedge effectiveness in Other comprehensive income (loss). The amounts recorded in Other comprehensive income (loss) will subsequently be reclassified to earnings in the same line item in the Consolidated Statements of Income as impacted by the hedged item when the hedged item affects earnings; and

•	fair value hedges included in the assessment of hedge effectiveness in the same line item in the Consolidated Statements of Income that is used to present the earnings effect of the hedged item.

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•	projecting regulatory approvals;

•	estimating future cash flows from product sales resulting from completed products and in-process projects or estimating future cash flows expected to be collected; and

•	developing appropriate discount rates and probability rates.

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•	cash flow hedges included in the assessment of hedge effectiveness in Other comprehensive income (loss). The amounts recorded in Other comprehensive income (loss) will subsequently be reclassified to earnings in the same line item in the Consolidated Statements of Income as impacted by the hedged item when the hedged item affects earnings; and

•	fair value hedges included in the assessment of hedge effectiveness in the same line item in the Consolidated Statements of Income that is used to present the earnings effect of the hedged item.

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•	Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Our level 1 assets consist of marketable equity securities. Our level 1 liability relates to our publicly traded CVRs. See Note 18 for a description of the CVRs.

•

Level 2 inputs utilize observable quoted prices for similar assets and liabilities in active markets and observable quoted prices for identical or similar assets in markets that are not very active. Our level 2 assets consist primarily of U.S. Treasury securities, U.S. government-sponsored agency securities, U.S. government-sponsored agency MBS, global corporate debt securities, asset backed securities, ultra short income fund investments, time deposits and repurchase agreements with original maturities of greater than three months, foreign currency forward contracts, purchased foreign currency options and interest rate swap contracts. Our level 2 liabilities relate to written foreign currency options, foreign currency forward contracts and interest rate swap contracts.

•

Level 3 inputs utilize unobservable inputs and include valuations of assets or liabilities for which there is little, if any, market activity. We do not have any level 3 assets. Our level 3 liabilities consist of contingent consideration related to undeveloped product rights and technology platforms resulting from the acquisitions of Gloucester Pharmaceuticals, Inc. (Gloucester), Nogra Pharma Limited (Nogra), Avila Therapeutics, Inc. (Avila) and Quanticel.

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•	An impairment charge relating to the entire GED-0301 IPR&D asset of approximately $1,620 million;

•	Other one-time charges of approximately $188 million that will require cash payments primarily related to wind-down costs associated with discontinuing the Trials and certain development activities; and

•	A reduction in contingent consideration liabilities of approximately $1,397 million related to GED-0301.

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1	Net losses of $76 million are expected to be reclassified from Accumulated OCI into income in the next 12 months.

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2

For the year ended December 31, 2017, the straight-line amortization of the initial value of the amount excluded from the assessment of hedge effectiveness for our foreign exchange contracts recognized in OCI was a loss of $15 million of which $18 million related to the cumulative effect adjustment related to the adoption of ASU 2017-12. There were no excluded components for out treasury rate lock and interest rate swap agreements.

1	The amount of net gains recognized in income represents $17 million of gains related to amounts excluded from the assessment of hedge effectiveness (fair value adjustments of forward point amounts) and $2 million in gains related to the ineffective portion of the hedging relationships.

1	The amounts include a benefit of $35 million and $20 million relating to the amortization of the cumulative amount of fair value hedging adjustments included in the carrying amount of the hedged liability for discontinued hedging relationships for the years ending December 31, 2017 and December 31, 2016, respectively.

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•	A one-time tax on the mandatory deemed repatriation of post-1986 untaxed foreign earnings and profits (E&P), referred to as the toll charge;

•	Reduction in the Corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017;

•	Introduction of a new U.S. tax on certain off-shore earnings referred to as Global Intangible Low-Taxed Income (GILTI) at an effective tax rate of 10.5% for tax years beginning after December 31, 2017 (increasing to 13.125% for tax years beginning after December 31, 2025) with a partial offset by foreign tax credits; and

•	Introduction of a territorial tax system beginning in 2018 by providing a 100% dividends received deduction on certain qualified dividends from foreign subsidiaries.

•	An income tax expense of $1,890 million for the one-time deemed repatriation of E&P. In accordance with the 2017 Tax Act, the toll charge liability may be paid over eight years. As such, we have recorded $1,732 million and $150 million in non-current and current income tax liability on an undiscounted basis, respectively, as of December 31, 2017; and

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•	An income tax benefit of $621 million, primarily for the remeasurement of our deferred tax assets and liabilities at the enacted tax rate of 21%.

•	Analyzing our accumulated untaxed foreign E&P since 1986 including historical practices and assertions made in determining such;

•	Determining the composition, including intercompany receivables and payables of specified foreign corporations, of our post-1986 untaxed foreign E&P that is held in cash or liquid assets and other assets at several measurement dates, as a different tax rate is applied to each when determining the toll charge liability; and

•	Assessing the potential impact of existing uncertain tax positions in determining our accumulated undistributed E&P.

•	Finalize our analysis of our post-1986 untaxed foreign E&P;

•	Finalize our analysis as to the amounts and nature of, among other items, our intercompany transactions and balances as of December 31, 2017, 2016 and 2015 to determine the appropriate composition of our post-1986 untaxed E&P as either cash / liquid assets or other assets; and

•	Finalize our analysis of the impacts of the Tax Act on our accounting for the GILTI provisions.

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•	2.5% of the net sales of ABRAXANE® and the Abraxis pipeline products that exceed $1.0 billion but are less than or equal to $2.0 billion for such period, plus

•	an additional amount equal to 5% of the net sales of ABRAXANE® and the Abraxis pipeline products that exceed $2.0 billion but are less than or equal to $3.0 billion for such period, plus

•	an additional amount equal to 10% of the net sales of ABRAXANE® and the Abraxis pipeline products that exceed $3.0 billion for such period.

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1	Long-lived assets consist of net property, plant and equipment.

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1	Gross profit is computed by subtracting cost of goods sold (excluding amortization of acquired intangible assets) from net product sales.

2	The sum of the quarters may not equal the full year due to rounding. In addition, quarterly and full year basic and diluted earnings per share are calculated separately.

3

During the third quarter of 2017, we adopted ASU 2017-12 with an initial application date of January 1, 2017. Prior to the adoption of ASU 2017-12, we recognized all changes in the fair value of the excluded component of a hedge in Other income (expense), net in the Consolidated Statements of Income under a mark-to-market approach. Pursuant to the provisions of ASU 2017-12, we no longer recognize the adjustments to the fair value of the excluded component in Other income (expense), net but we instead recognize the initial value of the excluded component using an amortization approach over the life of the hedging instrument. In accordance with ASU 2017-12, certain provisions were required to be applied on a modified retrospective basis, which requires a cumulative effect adjustment to accumulated other comprehensive income with a corresponding adjustment to retained earnings as of the beginning of the fiscal year of adoption, or January 1, 2017. See Note 1 for additional information related to the adoption of ASU-2017-12. As such, the unaudited quarterly results of operations for the first and second quarter of 2017 have been recast for retrospective application of ASU 2017-12 as follows:

4	The Income tax provision in the fourth quarter of 2017 includes income tax expense of approximately $1,269 million as a result of U.S. tax reform legislation, formerly known as the Tax Cuts and Jobs Act (2017 Tax Act), which was enacted on December 22, 2017. See Note 16 contained in this Annual Report on Form 10-K for additional details related to the

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5	The decrease in Net income in the third quarter of 2016 was primarily due to a $623 million research and development asset acquisition expense associated with the purchase of EngMab.

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