With billions of dollars in taxes due to the Internal Revenue Service (IRS) and certain investors circling, Amgen has its hands full.
A group of shareholders has sued the California biotech giant, alleging the company concealed its massive tax bill and therefore artificially inflated its stock price from July 2020 to April 2022.
Amgen, along with CEO Robert Bradway and chief financial officer Peter Griffith, are named in the new lawsuit from a union pension fund based in Michigan. The fund alleges Amgen concealed a $10.7 billion tax bill due to the IRS from the public, allowing its shares to be traded at artificially high levels.
The proposed class-action lawsuit is filed on behalf of anyone who purchased Amgen shares between July 29, 2020, and April 27, 2022. The two executives are included because of their ability to control company filings and press releases that the plaintiffs argue were false and misleading.
Amgen's tax fight with the IRS stems with a disagreement over costs and profits related to its Puerto Rico manufacturing outfit. The IRS contends Amgen shifted tens of billions of dollars in profits to its Puerto Rico subsidiary over the years, avoiding billions in taxes.
Amgen, for its part, has said the company's tax setup is a result of the "contributions made, the risks taken and the significant equity value of our Puerto Rico subsidiary."
In response to the shareholder lawsuit, an Amgen spokesperson said the company believes the allegations are without merit. Amgen plans to defend itself against the case.
Last August, the Senate Finance Committee’s chair, Senator Ron Wyden, sent a letter to Bradway, asking for details on the company’s tax tactics as part of a larger investigation into the 2017 Republican tax law that allows income from Puerto Rico to be treated as foreign with a lower tax rate. Wyden noted that Amgen paid an average tax rate of just 12% from 2018 to 2021, far below the U.S. cooperate tax rate of 21%.
In 2022, Amgen generated revenues of more than $26 billion. Approximately 70% of that number came from U.S. product sales and the rest is from sales in around 100 other countries.