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(Fortune Magazine) — These are momentous times for Amgen, the world’s largest biotech company. The health-care revolution brewing in Washington could be dramatically good news or bad for a business whose drugs tend to be life-changing — and highly expensive. Also on deck this year is a critical FDA decision on Amgen’s denosumab, a possible blockbuster treatment for osteoporosis and bone cancer on which Amgen is betting heavily. If it’s approved, analysts expect annual sales of at least $1 billion — maybe double or triple that. Overseeing it all is CEO Kevin Sharer, 61, who joined the company 17 years ago as a newcomer to biotech after a career with the U.S. Navy, McKinsey, General Electric, among others. Amgen (AMGN, Fortune 500) stock has been up and down during his nine years as chief, but right now Wall Street likes its prospects: 19 analysts rate it a buy or a strong buy, based on denosumab’s prospects and further operating efficiencies, while five say it’s a hold in light of the recession and strengthening competition. Fortune’s Geoff Colvin talked with Sharer recently about health-care reform, cancer treatments, advice for new CEOs and aspiring CEOs, and much else. Edited excerpts:

Health care looks like the big issue of the summer, and President Obama’s major theme is cost reduction. Many Amgen drugs are very expensive. Does that make them especially vulnerable?

To give a little context, the biopharmaceutical industry, including pharmaceuticals and biotechnology, is about 8% of the total health-care bill, and it’s projected that, due to generic drugs and a few other things, that expenditure line is going to be flat for a few years. So the biopharmaceutical part of the system is sort of self-correcting.

As for individual biotechnology drugs, I think we have to look to value. For example, one of our drugs, Enbrel, is profoundly important to people with rheumatoid arthritis. It lets people who in many cases couldn’t even get out of bed have a full life. It’s an expensive drug [costing typically $20,000 to $24,000 a year], but the value it delivers is there. Sixty percent of the potential medicines for cancer are in the biotechnology pipeline, and if we can have a cancer drug that has profound benefit, generally that’s seen as really good value. But we do have to be able to defend the value of the drug.

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