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and the expansion of the number of hospitals eligible for discounts under Section 340B of the PHSA. These changes
have had and are expected to continue to have a significant impact on our business.
We may face uncertainties as a result of federal and administrative efforts to repeal, substantially modify or
invalidate some or all of the provisions of the PPACA. There is no assurance that the PPACA, as currently enacted or
as amended in the future, will not adversely affect our business and financial results, and we cannot predict how
future federal or state legislative or administrative changes relating to healthcare reform will affect our business.
The administration has also indicated an intent to address prescription drug pricing and recent Congressional
hearings have brought increased public attention to the costs of prescription drugs. These actions and the
uncertainty about the future of the PPACA and healthcare laws may put downward pressure on pharmaceutical
pricing and increase our regulatory burdens and operating costs.
There is also significant economic pressure on state budgets that results in states increasingly seeking to
achieve budget savings through mechanisms that limit coverage or payment for our drugs. In recent years, some
states have considered legislation and ballot initiatives that would
control the prices of drugs, including laws to allow
importation of pharmaceutical products from lower cost jurisdictions outside the U.S. and laws intended to impose
price controls on state drug purchases. State Medicaid programs are increasingly requesting manufacturers to pay
supplemental rebates and requiring prior authorization by the state program for use of any drug for which
supplemental rebates are not being paid. Government efforts to reduce Medicaid expenses may lead to increased
use of managed care organizations by Medicaid programs. This may result in managed care organizations influencing
prescription decisions for a larger segment of the population and a corresponding constraint on prices and
reimbursement for our products.
In the E.U. and some other international markets, the government provides health care at low cost to
consumers and regulates pharmaceutical prices, patient eligibility or reimbursement levels to control costs for the
government-sponsored health care system. Many countries have announced or implemented measures to reduce
health care costs to limit their overall level of government expenditures. These measures vary by country and may
include, among
other things, patient access restrictions, suspensions on price increases, prospective and possibly
retroactive price reductions and other recoupments and increased mandatory discounts or rebates, recoveries of
past price increases and greater importation of drugs from lower-cost countries. These measures have negatively
impacted our revenues, and may continue to adversely affect our revenues and results of operations in the future.
Manufacturing issues could substantially increase our costs, limit supply of our products and/or reduce our
revenues.
The process of manufacturing our products is complex, highly regulated and subject to numerous risks,
including:
• Risk of Product Loss. The manufacturing process for our products is extremely susceptible to product loss due
to contamination, oxidation, equipment failure or improper installation or operation of equipment or vendor or
operator error. Even minor deviations from normal manufacturing processes could
result in reduced production
yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered in
our products or manufacturing facilities, we may need to close our manufacturing facilities for an extended
period of time to investigate and remediate the contaminant.
• Risks of Reliance on Third Parties and Single Source Providers. We rely on third-party suppliers and
manufacturers for many aspects of our manufacturing process for our products and product candidates. In
some cases, due to the unique manner in which our products are manufactured, we rely on single source
providers of raw materials and manufacturing supplies. These third parties are independent entities subject to
their own unique operational and financial risks that are outside of our control. These third parties may not
perform their obligations in a timely and cost-effective manner or in compliance with applicable regulations, and
they may be unable or unwilling to increase production capacity commensurate with demand for our existing or
future products. Finding alternative providers could take a significant amount of time and involve significant
expense due to the specialized nature of the services and the need to obtain regulatory approval of any
significant changes to our suppliers or manufacturing methods. We cannot be
certain that we could reach
agreement with alternative providers or that the FDA or other regulatory authorities would approve our use of
such alternatives.
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• Global Bulk Supply Risks. We rely on our principal manufacturing facilities for the production of drug substance
for our large molecule products and product candidates. Our global bulk supply of these products and product
candidates depends on the uninterrupted and efficient operation of these facilities, which could be adversely
affected by equipment failures, labor shortages, natural disasters, power failures and numerous other factors.
• Risks Relating to Compliance with cGMP. We and our third-party providers are generally required to maintain
compliance with cGMP and other stringent requirements and are subject to inspections by the FDA and
comparable agencies in other jurisdictions to confirm such compliance. Any delay, interruption or other issues
that
arise in the manufacture, fill-finish, packaging or storage of our products as a result of a failure of our
facilities or the facilities or operations of third parties to pass any regulatory agency inspection could
significantly impair our ability to develop and commercialize our products. Significant noncompliance could also
result in the imposition of monetary penalties or other civil or criminal sanctions and damage our reputation.
Any adverse developments affecting our manufacturing operations or the operations of our third-party suppliers
and manufacturers may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or
other interruptions in the commercial supply of our products. We may also have to take inventory write-offs and incur
other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or
seek more costly manufacturing alternatives. Such developments could increase our manufacturing costs, cause us
to lose revenues or market share as patients and physicians turn to competing therapeutics, diminish our
profitability or damage our reputation.
A breakdown or breach of our technology systems could subject us to liability or interrupt
the operation of our
business.
We are increasingly dependent upon technology systems and data. Our computer systems continue to increase
in multitude and complexity due to the growth in our business, making them potentially vulnerable to breakdown,
malicious intrusion and random attack. Likewise, data privacy or security breaches by individuals authorized to
access our technology systems or others may pose a risk that sensitive data, including intellectual property, trade
secrets or personal information belonging to us, our patients, customers or other business partners, may be
exposed to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and
intensity, and are becoming increasingly difficult to detect. They are often carried out by motivated, well-resourced,
skilled and persistent actors including nation states, organized
crime groups, “hacktivists” and employees or
contractors acting with malicious intent. Cyber-attacks could include the deployment of harmful malware and key
loggers, ransomware, a denial-of-service attack, a malicious website, the use of social engineering and other means
to affect the confidentiality, integrity and availability of our technology systems and data. Our key business partners
face similar risks and any security breach of their systems could adversely affect our security posture. While we
continue to build and improve our systems and infrastructure and believe we have taken appropriate security
measures to reduce these risks to our data and information technology systems, there can be no assurance that our
efforts will prevent breakdowns or breaches in our systems that could adversely affect our business and operations
and/or result in the loss of critical or sensitive information, which
could result in financial, legal, business or
reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us
against claims related to security breaches, cyber-attacks and other related breaches.
We depend on relationships with collaborators and other third parties for revenues, and for the development,
regulatory approval, commercialization and marketing of certain of our products and product candidates, which are
outside of our full control.
We rely on a number of significant collaborative and other third-party relationships for revenues, and for the
development, regulatory approval, commercialization and marketing of certain of our products and product
candidates. We also outsource to third parties certain aspects of our regulatory affairs and clinical development
relating to our products and product candidates. Reliance on collaborative and other third-party relationships
subjects
us to a number of risks, including:
• we may be unable to control the resources our collaborators or third parties devote to our programs or
products;
• disputes may arise under the agreement, including with respect to the achievement and payment of milestones
or ownership of rights to technology developed with our collaborators or other third parties, and the underlying
contract with our collaborators or other third parties may fail to provide significant protection or may fail to be
effectively enforced if the collaborators or third parties fail to perform;