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Item 1A. Risk Factors

2021-02-24 compared with 2020-02-19 · 248 added, 152 removed, 578 unchanged (41% of the section changed)

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Under these circumstances, the market value of our common shares and/or debt securities could decline, and you could lose all or part of your investment in our common shares and/or debt securities.

Summary of Risk Factors

The following is a summary of the risk factors our business faces.

The list below is not exhaustive, and investors should read this “Risk Factors” section in full.

Some of the risks we face include:

• the effect of the COVID-19 pandemic on our business, financial condition, cash flows, and results of operations;

• the impact on our business from the separation of our eye-health business into an independent publicly traded entity;

• the ongoing legal proceedings, investigations, and inquiries respecting certain of our historical distribution, marketing, pricing, disclosure and accounting practices;

• the impact of changes to our pricing practices, whether imposed, legislated or voluntary;

• the potential adverse impact of legal proceedings, litigation, and government investigations;

• our dependence on third parties to meet their contractual, legal, regulatory, and other obligations;

• the impact of product recalls and related product liability claims;

• our ability to comply with extensive regulation concerning marketing, promotional and business practices;

• our ability to comply with restrictive covenants in our debt agreements;

• our ability to generate cash in order to service our debt;

• the impact on our business of restrictions imposed by our significant indebtedness;

• the effect of interest rate changes, including the potential discontinuation of LIBOR;

• our ability to recruit and retain executives and key personnel;

• the potential increase of our effective tax rates;

• our ability to compete with generic competitors in products that represent a significant amount of our revenue;

• our ability to obtain, maintain, enforce or defend the intellectual property rights required to conduct our business;

• our ability to develop or acquire more effective or less costly pharmaceutical or OTC products or medical devices than our competitors;

• the effect of our commitment to the cessation of or limitation on pricing increases for certain of our products;

• the impact of divestitures of certain of our assets and business;

• the potential adverse effect of acquisitions of assets, products and businesses;

• our ability to maintain and provide appropriate training in our products to our health care providers;

• our ability to achieve or maintain expected levels of market acceptance for our new products;

• our dependence on reimbursements from governmental and other third-party payors;

• the impact of a failure to be included in formularies developed by managed care organizations and third-party payors;

• the failure of our fulfillment arrangements with Walgreens and our dermatology cash-pay prescription program;

• risks associated with the international scope of our operations;

• foreign currency exposure on the translation into U.S.

dollars of the financial results of our international operations;

• our ability to successfully commercialize our pipeline products;

• our ability to comply with ongoing regulatory review of our marketed drugs;

• the effect that the United Kingdom’s exit from the European Union may have on the development, regulatory approval and review of our products;

• the impact on our business of interruptions in our manufacturing processes;

• our dependence on a limited number of sources for certain of our finished products and raw materials;

• the effect of changes in inventory levels or fluctuations in buying patterns by our large distributor and retail customers;

• our ability to comply with applicable laws and regulations and prevail in any litigation related to noncompliance;

• the impact that reforms of the health care system may have on our ability to sell our products profitably;

• our ability to comply with environmental laws and regulations and environmental remediation obligations;

• the potential adverse effect of shareholder activism;

• the impact on our profitability from the potential impairment of goodwill and other intangible assets;

• the breakdown, interruption, breach or other compromise of our information technology systems;

• our ability to effectively monitor and respond to expectations regarding environmental, social and governance matters;

• the restatement of our previously issued financial statements and potential exposure to additional risks therefrom;

• the decline in pricing and/or volume of our products in our distribution agreements with other companies;

• the illegal distribution and sale of counterfeit versions of our products;

• the reduction of profits due to imports from countries where our products are available at lower prices;

• the reduction of revenues in future fiscal periods due to our policies regarding returns, allowances, and chargebacks;

• the decline in sales volumes or prices of our products as the result of the concentration of sales to wholesalers;

• our potential obligations under our indemnity agreements and arrangements;

• the fluctuation of our operating results and financial condition from quarter to quarter.

Risk Relating to COVID-19

The ongoing COVID-19 pandemic, the rapidly evolving reaction of governments, private sector participants and the public to that pandemic and/or the associated economic impact of the pandemic and the reactions to it, could adversely and materially impact our business, financial condition, cash flows and results of operations.

In December 2019, a novel strain of the coronavirus disease, COVID-19, was identified in Wuhan, China.

Since then, COVID-19 has spread to other parts of the world, including the United States, Canada and Europe, and was declared a global pandemic by the World Health Organization on March 11, 2020.

The pandemic and the rapidly evolving reaction of governments, private sector participants and the public in an effort to contain the spread of COVID-19 and/or address its impacts have intensified and have had significant direct and indirect effects on businesses and commerce generally, including disruption to supply chains, employee base and transactional activity, facilities closures and production suspensions, and significantly increased demand for certain goods and services, such as pandemic-related medical services and supplies, alongside decreased demand for others, such as retail, hospitality, travel and elective surgery.

As a result of the impact of COVID-19, we have experienced delays in and postponement of our clinical trial programs and reduced demand for certain of our products due to the deferral of elective medical procedures and of doctor and dentist

We expect to continue to experience those effects as a result of the pandemic, the reactions of governments, private sector participants and the public to the pandemic and the associated disruption to business and commerce generally.

In addition, as a result of these factors, we may experience additional disruptions that could materially impact our business, financial condition, cash flows and results of operations.

For example, we may experience:

• material closures or disruptions to our manufacturing sites (for example, we experienced closures at our Milan, Bothell, Washington USA sites and our two sites in China in 2020);

• lack of availability of active pharmaceutical ingredients ("API"), and intermediates, or other supply chain disruptions, including for some of our key products;

• alternative working arrangements, including personnel working remotely and additional cleaning or sterilization protocols at our production facilities, which could negatively impact our business should such arrangements remain for an extended period of time;

• interruption or delays in the operations of the FDA, the EMA and other regulatory authorities, which may impact review and approval timelines for our planned trials and launches;

• delays or difficulties in enrolling patients in our clinical trials;

• delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

• diversion of health care resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

• interruption or postponement of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;

• limitations on employee resources that would otherwise be focused on our business and operations, such as the conduct of our preclinical studies and clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;

• delays in or postponements of our clinical trial programs as a result of “stay at home” orders affecting our research facilities or the closure of such research facilities, which may impact the timing, approval and launch of the affected clinical trial programs;

• deferral of elective medical procedures and of doctor and dentist visits, and reduced usage of contact lens, which may reduce demand for certain of the Company’s products, including our contact lens products and certain branded pharmaceutical products in our eye-care, dermatology, GI and dentistry businesses;

• adverse effects on the regional economies in which we operate which could reduce demand for certain of the Company’s products.

The extent and duration of the pandemic, the reactions of governments, private sector participants and the public to that pandemic and the associated disruption to business and commerce generally, and the extent to which these may impact our business, financial condition, cash flows and results of operations in particular, will depend on future developments which are highly uncertain and many of which are outside our control and cannot be predicted with confidence.

Such developments include the ultimate geographic spread and duration of the pandemic, the availability and effectiveness of vaccines for COVID-19, new information which may emerge concerning the severity of COVID-19, the effectiveness and intensity of measures to contain COVID-19 and/or address its impacts, and the economic impact of the pandemic and the reactions to it.

Such developments, among others, depending on their nature, duration and intensity, could have a significant adverse effect on our business, financial condition, cash flows and results of operations and may exacerbate other risk factors disclosed in this Item 1A.

“Risk Factors.”

Developments such as those described above, among others, depending on their nature, duration and intensity, could have a significant adverse effect on the Company's business, financial condition, cash flows and results of operations.

Risk Relating to the Separation

Our plan to separate our eye-health business into an independent publicly traded entity from the remainder of the Company is subject to various risks and uncertainties and may not be completed in accordance with the expected plans or anticipated

timeline, or at all, and will involve significant time, expense, and distraction, which could disrupt or have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

On August 6, 2020, we announced that we intend to separate our eye-health business into an independent publicly traded entity from the remainder of Bausch Health Companies Inc.

(the “Separation”).

The Separation will establish two separate companies that include:

(i) a fully integrated eye-health company which will consist of our Bausch + Lomb Global Vision Care, Global Surgical, Global Consumer and Global Ophthalmology Rx businesses and (ii) a diversified pharmaceutical company which will include our Salix, International Rx, Solta, neurology and medical dermatology pharmaceutical businesses.

The anticipated Separation is subject to regulatory approvals and certain conditions, including final approval by the Company’s Board of Directors, any shareholder vote requirements that may be applicable, compliance with (including completion of all necessary filings required by) U.S.

and Canadian securities laws and stock exchange rules, receipt of any applicable opinions and/or rulings with respect to the Canadian and U.S.

federal income tax treatment of the Separation and determination of the pro forma capitalizations of the two separate companies.

The failure to satisfy all of the required conditions could delay the completion of the Separation for a significant period of time or prevent it from occurring at all.

Unanticipated developments, including disruptions to business and commerce induced by the COVID-19 pandemic, changes in market conditions, possible delays in obtaining any necessary shareholder, stock exchange, regulatory or other approval or the failure to obtain any such approvals, possible delays in obtaining any required tax opinions or rulings or the failure to obtain any such tax opinions or rulings, negotiating challenges, the uncertainty of the financial markets, changes in the law, and other challenges in executing the Separation, could delay or prevent the completion of the Separation, or cause the Separation to occur on terms or conditions that are different or less favorable than expected.

While we anticipate that we will be able to complete the internal organizational design and structure of the Bausch + Lomb entity by the end of 2021, we will need to complete a number of additional steps that will depend on the ultimate structure of the transaction (in addition to obtaining the regulatory approvals and satisfying the conditions described above) before we can complete the Separation.

Any changes to the Separation or delay in completing the Separation could cause us not to realize some or all of the expected benefits, or realize them on a different timeline than expected.

Further, our Board of Directors could decide, either because of a failure to satisfy conditions or because of market or other factors, to abandon the Separation.

No assurance can be given as to whether and when the Separation will occur or whether the Separation will achieve the benefits we expect.

As a result, there can be no assurance as to the timing of the completion of the Separation or its terms, and, the information in this Form 10-K relating to the Separation is preliminary and may change as the transaction progresses and any such change may be material.

Executing the Separation will require significant resources, time and attention from our senior management and employees, which could cause distractions and divert attention and resources away from other projects and the day-to-day operation of our business.

We may also experience increased difficulties in attracting, retaining, and motivating management and employees during the pendency of the Separation and following its completion.

The Separation, whether or not completed, may also have an adverse impact on our relationships with our customers, suppliers and other business counterparties.

We have already incurred expenses in connection with the Separation, and expect that the process of completing the Separation will be time-consuming and involve significant additional costs and expenses, which may not yield a discernible benefit if the Separation is not completed.

In addition, if the Separation is not completed, we will still be required to pay certain costs and expenses incurred in connection therewith, such as legal, accounting, and other professional and advisory fees.

Furthermore, the Separation, if completed, may result in potential dyssynergy costs, which may be greater than we anticipate and/or may be significant.

Any of the above factors could cause the Separation (or the failure to consummate the Separation) to have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

Legal and Reputational Risks

We are the subject of a number of ongoing legal proceedings, investigations and inquiries respecting certain of our historical distribution, marketing, pricing, disclosure and accounting practices, including our former relationship with Philidor, which have had and could continue to have a material adverse effect on our reputation, business, financial condition, cash flows and results of operations, could result in additional claims and material liabilities, and could cause the market value of our common shares and/or debt securities to decline.

We have been or are currently the subject of a number of ongoing legal proceedings and investigations and inquiries by governmental agencies, including, but not limited to, the following:

(i) investigations by the U.S.

Attorney’s Offices for the District of Massachusetts and the Southern District of New York relating to certain matters, including our patient assistance programs (including financial support provided to patients), our former relationship with Philidor and other pharmacies, our accounting treatment for sales by specialty pharmacies, information provided to the Centers for Medicare and Medicaid Services, our pricing (including discounts and rebates), marketing and distribution of our products, our compliance program, and employee compensation;

(ii) the investigation by the SEC of the Company relating to certain matters, including our former relationship with Philidor, our accounting practices and policies and our public disclosures;

(iii) an investigation order from the Autorité des marches financiers (the “AMF”) (our principal securities regulator in Canada) relating to certain matters, including with respect to our former relationship with Philidor and our accounting practices and policies;

(iv) a number of pending securities litigations, including certain opt-out actions in the U.S.

While we have successfully settled or otherwise resolved a number of legacy legal proceedings, investigations and inquiries relating to, among other things, our disclosure and accounting practices and our former relationship with Philidor, including the securities class action litigation matters in both the U.S.

and Canada, the investigation by the SEC and the investigation order from the Autorité des marches financiers (the “AMF”) (our principal securities regulator in Canada), we are

currently still the subject of a number of other ongoing legal proceedings and investigations and inquiries by governmental agencies, including, but not limited to, the following:

(i) a number of pending securities litigations, including certain opt-out actions in the U.S.

(related to the U.S.

Securities class action which is settled, subject to final court approval), and the pending securities class action litigation in Canada and related opt-out actions, have been instituted, the allegations of which relate to, among other things, allegedly false and misleading statements by the Company and/or failures to disclose information about our business and prospects, including relating to drug pricing, our policies and accounting practices, our use of specialty pharmacies, and our former relationship with Philidor and (v) purported class actions under the federal RICO statute on behalf of third-party payors arising out of our pricing and use of specialty pharmacies, and our former relationship with Philidor.

Securities class action which has been settled, but remains subject to an objector's appeal of the final court approval), and in Canada (related to the securities class action litigation in Canada which has been settled), have been instituted, the allegations of which relate to, among other things, allegedly false and misleading statements by the Company and/or failures to disclose information about our business and prospects, including relating to drug pricing, our policies and accounting practices, our use of specialty pharmacies, and our former relationship with Philidor and (ii) purported class actions under the federal RICO statute on behalf of third-party payors arising out of our pricing and use of specialty pharmacies, and our former relationship with Philidor.

In addition, we could, in the future, face additional legal proceedings and investigations and inquiries by governmental agencies relating to these or similar matters.

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We are unable to predict how long such proceedings, investigations and inquiries will continue, but we anticipate that we will continue to incur significant costs in connection with some or all of these matters and that some or all of these proceedings, investigations and inquiries will result in a substantial distraction of management’s time, regardless of the outcome.

Some or all of these proceedings, investigations and inquiries will likely result in damages, settlement payments (such as the $1,210 million payment to be made by the Company in connection with the recently settled U.S.

Securities class action (subject to final court approval)), fines, penalties, consent orders or other administrative sanctions (including exclusion from federal programs) against the Company and/or certain of our directors and officers, any of which could be material, or in changes to our business practices, which, in turn, may result in or may contribute to an inability by us to meet the financial covenant contained in our Restated Credit Agreement.

Securities class action (subject to an objector's appeal of the final court approval)), fines, penalties, consent orders or other administrative sanctions (including exclusion from federal programs) against the Company and/or certain of our directors and officers, any of which could be material, or in changes to our business practices, which, in turn, may result in or may contribute to an inability by us to meet the financial covenant contained in our Restated Credit Agreement.

Furthermore, publicity surrounding these proceedings, investigations and inquiries or any enforcement action as a result thereof, even if ultimately resolved favorably for us could result in additional investigations and legal proceedings.

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Any changes to our practices relating to pricing or the current prices of products, whether imposed, legislated or voluntary, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We are under scrutiny with respect to our business historical practices (including with respect to past pricing practices), including investigations by the U.S.

Attorney’s Offices for the District of Massachusetts and the Southern District of New York, various securities litigations, including certain opt-out actions in the U.S., (related to the recently settled securities class action

(subject to final court approval)) and a purported securities class action in Canada, including related opt-out actions, and purported class actions under the federal RICO statute on behalf of third-party payors.

We are under scrutiny with respect to our historical business practices (including with respect to past pricing practices), including various securities litigations, including certain opt-out actions in the U.S.

(related to the previously settled securities class action (subject to an objector's appeal of the final court approval)) and in Canada (related to the recently settled securities class action), and purported class actions under the federal RICO statute on behalf of third-party payors.

We are unable to predict how such proceedings, investigations and inquiries will impact our current business practices, including with respect to pricing, or the prices of our products, including whether we will be required to impose pricing freezes or controls, pricing reductions (including on a retroactive basis) or other price regulation for some or all of our products.

In addition, in recent years, in the U.S., state and federal governments have considered implementing legislation that would control or regulate the prices of drugs, and the new administration has expressed support for lowering the cost of drug prices.

In addition, in recent years, in the U.S., state and federal governments have considered implementing legislation that would control or regulate the prices of drugs.

Other countries have announced or implemented measures on pricing, including suspensions on price increases, prospective and possibly retroactive price reductions and other recoupments.

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We depend on third parties to meet their contractual, legal, regulatory, and other obligations.

We rely on distributors, suppliers, contract research organizations, vendors, service providers, business partners and other third parties to research, develop, manufacture, distribute, market and sell our products, as well as perform other services relating to our business.

We rely on distributors, suppliers, contract research organizations, vendors, service providers, business partners and other third parties to research, develop, manufacture, distribute, market and sell many of our products, as well as perform other services relating to our business.

We rely on these third parties to meet their contractual, legal, regulatory and other obligations.

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For more information regarding legal proceedings, see Note 20, "LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements.

If our products cause, or are alleged to cause, serious or widespread personal injury, we may have to withdraw those products from the market and/or incur significant costs, including payment of substantial sums in damages, and we may be subject to exposure relating to product liability claims.

subject to exposure relating to product liability claims.

In addition, our product liability self-insurance program may not be adequate to cover future losses.

We face an inherent business risk of exposure to significant product liability and other claims in the event that the use of our products caused, or is alleged to have caused, adverse effects.

For example, we have been named as a defendant (along with other entities) in certain lawsuits in the United States and Canada in which the plaintiffs have made certain product liability claims respecting Shower to Shower ® (a product we acquired in 2012).

For more information regarding legal proceedings, see Note 21, "LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements.

These and other product liability proceedings may be costly to prosecute and defend and may involve substantial awards or damages payable by us if not found in our favor.

These product liability proceedings may be costly to prosecute and defend and may involve substantial awards or damages payable by us if not found in our favor.

Furthermore, our products may cause, or may appear to have caused, adverse side effects (including death) or potentially dangerous drug interactions that we may not learn about or understand fully until the drug has been administered to patients for some time.

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Companies may not promote drugs for “off-label” uses-that is, uses that are not described in the product’s labeling and that differ from those approved by the FDA, Health Canada, EMA or other applicable regulatory agencies.

A company that is found to have

improperly promoted off-label uses may be subject to significant liability, including civil and administrative remedies (such as entering into corporate integrity agreements with the U.S.

A company that is found to have improperly promoted off-label uses may be subject to significant liability, including civil and administrative remedies (such as entering into corporate integrity agreements with the U.S.

government), as well as criminal sanctions.

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Our Restated Credit Agreement and the various indentures governing our senior notes contain covenants that restrict the way we conduct business and require us to satisfy certain financial tests in order to incur debt or take other actions.

Additionally, our Restated Credit Agreement contains a financial covenant that, for example, requires us to maintain a certain financial ratio at fiscal quarter end.

For example, our Restated Credit Agreement contains a financial covenant that requires us to maintain a certain financial ratio at fiscal quarter end.

The Company’s Restated Credit Agreement contains a specified quarterly financial maintenance covenant (consisting of a first lien leverage ratio).

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In the event that we perform below our forecasted levels, we may also implement certain additional cost-efficiency initiatives, such as rationalization of selling, general and administrative expenses ("SG&A") and R&D spend, which would allow us to continue to comply with the financial maintenance covenant.

The Company may consider taking other actions, including divesting other businesses, refinancing debt, issuing equity or equity-linked securities as deemed appropriate, to provide additional coverage in complying with the financial maintenance covenant and meeting its debt service obligations, or may negotiate with the applicable lenders for an amendment or modification to such covenant, as deemed appropriate.

The Company may consider taking other

actions, including divesting other businesses, refinancing debt, issuing equity or equity-linked securities as deemed appropriate, to provide additional coverage in complying with the financial maintenance covenant and meeting its debt service obligations, or may negotiate with the applicable lenders for an amendment or modification to such covenant, as deemed appropriate.

However, we cannot guarantee that any of the above-noted actions would be achieved.

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In that instance, we would be in default, and our lenders would be permitted to accelerate our debt unless we could obtain an amendment.

If our debt was accelerated, we would not have sufficient funds to repay our debt absent a refinancing, and we cannot provide assurance that we will be able to obtain a refinancing.

If our debt was accelerated, we would not have sufficient funds to repay our debt absent a refinancing, and we cannot provide assurance that we would be able to obtain a refinancing.

Our inability to comply with the covenants in our debt instruments could lead to a default or an event of default under the terms thereof, for which we may need to seek relief from our lenders and noteholders in order to waive the associated default or event of default and avoid a potential acceleration of the related indebtedness or cross-default or cross-acceleration to other debt.

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As a result, prevailing economic conditions and financial, business and other factors, many of which are beyond our control, may affect our ability to make payments on our debt.

If we do not generate sufficient cash flow to satisfy our debt obligations, we may have to undertake alternative financing plans, such as refinancing or

restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital.

If we do not generate sufficient cash flow to satisfy our debt obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital.

Alternatively, as we have done in the past, we may also elect to refinance certain of our debt, for example, to extend maturities.

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Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries.

Certain non-guarantor subsidiaries include non-U.S.

Certain subsidiaries include non-U.S.

subsidiaries that may be prohibited by law or other regulations from distributing funds to us and/or we may be subject to payment of taxes and withholdings on such distributions.

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We can provide no assurance of the amount by which we will reduce our debt, if at all.

In addition, servicing our debt will result in a reduction in the amount of our cash flow available for other purposes, including operating costs and capital expenditures that could improve our competitive position and results of operations.

In addition, servicing our debt will result in a reduction in the amount of our cash flow available for other

purposes, including operating costs and capital expenditures that could improve our competitive position and results of operations.

We have incurred significant indebtedness, which restricts the manner in which we conduct business.

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This additional debt may be substantial and some of this indebtedness may be secured.

The agreements governing our indebtedness contain restrictive covenants which impose certain limitations on the way we conduct our business, including limitations on the amount of additional debt we are able to incur, prohibitions on incurring additional debt if a certain financial covenant is not met and restrictions on our ability to make certain investments and other restricted payments.

The agreements governing our indebtedness contain restrictive covenants which impose certain limitations on the way we conduct our business, including limitations on the amount of additional debt we are able to incur, prohibitions on incurring additional debt if certain financial covenants are not met and restrictions on our ability to make certain investments and other restricted payments.

Any additional debt, to the extent we are able to incur it, may further restrict the manner in which we conduct business.

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In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the use of LIBOR by the end of 2021.

In November 2020, ICE Benchmark Administration Limited, the administrator of LIBOR, announced that it will consult on its intention to cease the publication of the one week and two month USD LIBOR settings immediately following the LIBOR publication on December 31, 2021 and the remaining USD LIBOR settings immediately following the LIBOR publication on June 30, 2023.

If LIBOR ceases to exist, we will need to endeavor, with the administrative agent thereunder, to amend the credit facilities to substitute LIBOR with an alternative rate of interest that gives due consideration to the then-prevailing market convention for syndicated loans in the U.S., subject to notice to all lenders and the absence of objection by the “required lenders,” or pay interest based on the "base rate" until we can otherwise renegotiate our Senior Secured Credit Facilities to include a LIBOR replacement.

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As such, the potential effect of any such event on our business, financial condition, cash flows and results of operations cannot yet be determined.

However, any such event could have a material adverse effect on our business, financial condition, cash flows and results from operations and could cause the market value of our common shares and/or debt securities to decline.

Employment-related Risks

The loss of the services of, or our inability to recruit, retain, motivate, our executives and other key employees could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

The loss of the services of, or our inability to recruit, retain or motivate, our executives and other key employees could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We must continue to retain and motivate our executives and other key employees, and to recruit other executives and employees, in order to strengthen our management team and workforce.

Our ability to retain or recruit executive and other key employees may be hindered or delayed by, among other things, competition from other employers who may be able to offer more attractive compensation packages or the reputational challenges the Company faces as a result of historical issues and may in the future continue to face.

in the future continue to face.

A failure by us to retain, motivate and recruit executives and other key employees or the unanticipated loss of the services of any of these executives or key employees for any reason, whether temporary or permanent, could create disruptions in our business, could cause concerns and instability for management and employees, current and potential customers, credit rating agencies and other third parties with whom we do business and our shareholders and debt holders and could cause concern regarding our ability to execute our business strategy or to manage operations in the manner previously conducted and, as a result, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

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Finally, as a result of changes in our executives and key employees, there may be changes in the way we conduct our business, as well as changes to our business strategy.

We cannot predict what these changes may involve or the timing of any such changes and how they will impact our product sales, revenue, business, financial condition, cash flows or results of operation, but any such changes could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We cannot predict what these changes may involve or the timing of any such changes and how they will impact our product sales, revenue, business, financial condition, cash flows or results of operations, but any such changes could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

Any of these factors could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

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Such changes could result in a substantial increase in the effective tax rate on all or a portion of our income.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) significantly revised U.S.

federal corporate income tax law by, among other things, reducing the U.S.

federal corporate income tax rate to 21%, limiting the tax deduction for interest expense to 30% of adjusted earnings, allowing immediate expensing for certain new investments, implementing a modified territorial tax system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries, imposing an additional U.S.

tax on certain non-U.S.

subsidiaries’ earnings which are considered to be Global Intangible Low Taxed Income

(referred to as “GILTI”) and imposing an alternative “base erosion and anti-abuse tax” (“BEAT”) on domestic corporations that make deductible payments to foreign related persons in excess of specified amounts, and, effective for net operating losses (“NOLs”) arising in taxable years beginning after December 31, 2017, eliminating net operating loss carrybacks, permitting indefinite net operating loss carryforwards, and limiting the use of net operating loss carryforwards to 80% of current year taxable income.

There are a number of uncertainties and ambiguities as to the interpretation and application of many of the provisions in the Tax Act, including the provisions relating to the modified territorial tax system, the one-time transition tax and the BEAT.

While the U.S.

Treasury Department and the Internal Revenue Service have issued proposed and final regulations and other guidance on many provisions in the Tax Act that address some of these uncertainties and ambiguities, there are still no final regulations or other definitive guidance addressing other uncertainties and ambiguities in the Tax Act.

In the absence of guidance on these issues, we will use what we believe are reasonable interpretations and assumptions in interpreting and applying the Tax Act for purposes of determining our cash tax liabilities and results of operations, which may change as we receive additional clarification and implementation guidance and as the interpretation of the Tax Act evolves over time.

It is possible that the Internal Revenue Service could issue subsequent guidance or take positions on audit that differ from the interpretations and assumptions that we previously made, which could have a material adverse effect on our cash tax liabilities, results of operations and financial condition.

Our provision for income taxes is based on certain estimates and assumptions made by management.

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(i) have no meaningful exclusivity protection via patent or marketing or data exclusivity rights or (ii) are protected by patents or regulatory exclusivity periods that will be expiring in the near future.

These products represent a significant amount of our revenues (See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Generic Competition and Loss of Exclusivity” in this Form 10-K for a list of some of these products).

Without exclusivity protection, competitors (including generics and biosimilars) face fewer barriers in introducing competing products.

Upon the expiration or loss of patent exclusivity or regulatory exclusivity for our products or otherwise upon the introduction of generic, biosimilar or other competitors (which may be sold at significantly lower prices than our products), we could lose a significant portion of sales and market share of that product in a very short period and, as a result, our revenues could be lower.

These products represent a significant amount of our revenues (See Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Trends — Generic Competition and Loss of Exclusivity” in this Form 10-K for a list of some of these products).

Without exclusivity protection, competitors and other third parties (including generics and biosimilars) face fewer barriers in introducing competing products.

Upon the expiration or loss of patent exclusivity or regulatory exclusivity for our products or otherwise upon the introduction of generic, biosimilar or other competitors (which may be sold at significantly lower prices than our products), we could lose a significant portion of sales and market share of the applicable products in a very short period and, as a result, our revenues could be lower.

In addition, the introduction of generic and biosimilar competitors may have a significant downward pressure on the pricing of our branded products which compete with such generics and biosimilars.

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The introduction of competing products (including generic products and biosimilars) could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We may fail to obtain, maintain, license, enforce or defend the intellectual property rights required to conduct our business, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We strive to acquire, maintain and defend patent, trademark and other intellectual property protections over our products and the processes used to manufacture these products.

However, we may not be successful in obtaining such protections, or the patent, trademark and intellectual property rights we do obtain may not be sufficient in breadth and scope to fully protect our products or prevent competing products, or such patent and intellectual property rights may be susceptible to third-party challenges, which could result in the loss of such intellectual property rights or the narrowing of scope of protection afforded by such rights.

Our intellectual property rights may also be circumvented by third parties.

The failure to obtain, maintain, enforce or defend such intellectual property rights, for any reason, could allow third parties to manufacture and sell products that compete with our products or may impact our ability to develop, manufacture and market our own products, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

For certain of our products and manufacturing processes, we rely on trade secrets and other proprietary information, which we seek to protect, in part, by confidentiality and nondisclosure agreements with our employees, consultants, advisors and partners.

We also attempt to enter into agreements whereby such employees, consultants, advisors and partners assign to us the rights in any intellectual property they develop.

These agreements may not effectively prevent disclosure or misappropriation of such information and disputes may still arise with respect to the ownership of intellectual property.

We may fail to obtain, maintain, license, enforce or defend the intellectual property and proprietary rights required to conduct our business, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We strive to acquire, maintain, enforce and defend patent, trademark and other intellectual property and proprietary protections over our products and the processes used to manufacture these products.

However, we may not be successful in obtaining such protections, or the patent, trademark and other intellectual property and proprietary rights we do obtain may not be sufficient in breadth and scope to fully protect our products or prevent competing products, or such rights may be susceptible to third-party challenges, which could result in the loss of such intellectual property rights or the narrowing of scope of protection afforded by such rights.

Our intellectual property and proprietary rights may also be circumvented by third parties.

The failure to obtain, maintain, enforce or defend such intellectual property and proprietary rights, for any reason, could allow third parties to manufacture and sell products that compete with our products or may impact our ability to develop, manufacture and market our own products, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We also seek to enter into agreements whereby such employees, contractors, consultants, advisors and partners assign to us the rights in any intellectual property they develop.

We may not enter into such agreements with all applicable parties, such agreements may be breached or otherwise may not effectively prevent disclosure or misappropriation of such information, and disputes may still arise with respect to the ownership of intellectual property.

In addition, third parties may independently develop the same or similar proprietary information.

The disclosure of such proprietary information or the loss of such intellectual property rights may impact our ability to develop, manufacture and market our own products or may assist competitors in the development, manufacture and sale of competing products, which could have a material adverse effect on our revenues, financial condition, cash flows or results of operations and could cause the market value of our common shares and/or debt securities to decline.

For a number of our commercialized products and pipeline products, including Xifaxan ® , Siliq ® , Lumify ® , Plenvu ® , Vyzulta ® , Relistor ® and Jublia ® , we rely on licenses to patents and other technologies, know-how and proprietary rights held by third parties.

Any loss, expiration, termination or suspension of our rights to such licensed intellectual property would result in our inability to continue to develop, manufacture and market our products or product candidates and, as a result, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

In the future, we may also need to obtain such licenses from third parties to develop, manufacture, market or continue to manufacture or market our products.

If we are unable to timely obtain these licenses on commercially reasonable terms, our ability to develop, manufacture and market our products may be inhibited or prevented, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

The disclosure of such proprietary information or the loss of such intellectual property and proprietary rights may impact our ability to develop, manufacture and market our own products or may assist competitors or other third parties in the development, manufacture and sale of competing products, which could have a material adverse effect on our revenues, financial condition, cash flows or results of operations and could cause the market value of our common shares and/or debt securities to decline.

For a number of our commercialized products and pipeline products, including Xifaxan ® , Siliq ® , Lumify ® , Plenvu ® , Vyzulta ® , Relistor ® , Jublia ® and the pipeline products that are the subject of our recently announced licenses with Eyenovia, Inc., Novaliq GmbH, BHVI and Clearside Biomedical, Inc., we rely on licenses to patents and other technologies, know-how and intellectual property and proprietary rights held by third parties.

Any loss, expiration, termination or suspension of our rights to such licensed intellectual property would result in our inability to continue to develop, manufacture and market the applicable products or product candidates and, as a result, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

In the future, we may also need to obtain additional licenses from third parties to develop, manufacture, market or continue to manufacture or market our products.

If we are unable to timely obtain these licenses on commercially reasonable terms or at all, our ability to develop, manufacture and market our products may be inhibited or prevented, which could have a

material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

Competitive Risks

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As a result, to the extent we reduce the WAC price for any of our products, we may owe a payment to such customers (or such customers may earn a credit to be offset against any amounts owing to us) equal to the amount of such inventory multiplied by the difference between the price at which they acquired the product inventory and the new reduced price.

In prior years, we have undertaken a number of divestitures or certain of our assets and business.

In prior years, we have undertaken a number of divestitures of certain of our assets and business.

We may, in the future, seek to divest additional asset and/or businesses, some of which may be material and/or transformative, which could adversely affect our business, prospects and opportunities for growth.

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In addition, our ability to identify, enter into and/or consummate divestitures may be limited by competition we face from other companies in pursuing similar transactions in the pharmaceutical industry.

Any divestiture or other disposition we pursue, whether we are able to complete it or not, may be complex, time consuming and expensive, may divert the management’s attention, have a negative impact on our customer relationships, cause us to incur costs associated with maintaining the business of the targeted divestiture during the disposition

process and also to incur costs of closing and disposing the affected business or transferring the operations of the business to other facilities.

The divestiture process may also further expose us to operational inefficiencies.

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maintaining the business relationships the acquired company has established, including with health care providers;

and managing inefficiencies associated with integrating the operations of the Company.

and managing inefficiencies associated with integrating the operations of the Company and the acquired business, product or other assets.

Furthermore, we may incur restructuring and integration costs and a number of non-recurring transaction costs associated with these acquisitions, combining the operations of the Company and the acquired company and achieving desired synergies.

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As a result, the success of certain of our products, particularly our vision care products, is impacted by a physician's initial recommendation of such products and a consumer's initial choice to use such products.

support of the end-users and the distributors and retailers to whom we sell such products, could have a material adverse effect on our sales and profitability.

As a result, the failure of certain of our products, particularly in our vision care business, to retain the support of pharmaceutical professionals, hospitals or group purchasing organizations and to retain the support of the end-users and the distributors and retailers to whom we sell such products, could have a material adverse effect on our sales and profitability.

Commercialization Risks

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Changes in government regulations or private third-party payors’ reimbursement policies may reduce reimbursement for our products.

In addition, such third-party

payors may otherwise make the decision to reduce reimbursement of some or all our products or fail to cover some or all our products in such programs or assert that reimbursements were not in accordance with applicable requirements.

In addition, such third-party payors may otherwise make the decision to reduce reimbursement of some or all our products or fail to cover some or all our products in such programs or assert that reimbursements were not in accordance with applicable requirements.

For example, these decisions may be based on the price of our products or our current or former pricing practices and decisions.

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If our products are not included within an adequate number of formularies or adequate reimbursement levels are not provided, or if those policies increasingly favor generic products, this could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

Our fulfillment arrangements with Walgreens and our Dermatology.com cash-pay prescription program may not be successful.

Our fulfillment arrangements with Walgreens and our dermatology cash-pay prescription program may not be successful.

At the beginning of 2016, we launched a brand fulfillment arrangement with Walgreen Co.

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We cannot guarantee this arrangement will continue to be successful in the future, nor can we guarantee that additional operational issues will not be encountered, nor can we guarantee that we will be able to successfully negotiate with Walgreens any improvements or amendments to this arrangement we identify as necessary or desired.

In addition, we cannot predict how the market, including customers, doctors, patients, pharmacy benefit managers and third-party payors, or governmental agencies, will continue to react to these arrangements and programs.

In addition, we cannot predict how the market, including customers, doctors,

patients, pharmacy benefit managers and third-party payors, or governmental agencies, will continue to react to these arrangements and programs.

If this arrangement or program fails, if they do not achieve sufficient success and market acceptance, if we face retaliation from third parties as a result of this arrangement and program (for example, in the form of limitations on or exclusions from the reimbursement of our products) or if any part of this arrangement is found to be non-compliant with applicable law or regulations, this could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

In addition, in February 2019, we launched Dermatology.com, a cash-pay product acquisition program offering certain branded Ortho Dermatologics products directly to patients.

In March 2020, the name Dermatology.com was removed as the cash-pay product program name, with the name Dermatology.com limited to only online usage, including future digital teledermatology and e-commerce offerings.

This program is designed to address the affordability and availability of certain branded dermatology products, when insurers and pharmacy benefit managers are no longer offering those branded prescription pharmaceutical products under their designated pharmacy benefit offerings.

We currently have 15 Ortho Dermatologics branded prescription pharmaceutical products in the Dermatology.com program and anticipate adding additional products in the future.

We cannot guarantee that this program will be successful or that we will continue to add new products to the program.

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policy, there may be changes to existing trade agreements and greater restrictions on trade generally.

On November 30, 2018, the United States, Canada and Mexico signed the United States-Mexico-Canada Agreement (“USMCA”) as an overhaul and update to the North American Free Trade Agreement.

The USMCA is subject to ratifications by the legislative bodies of all three signatory countries.

On November 30, 2018, the United States, Canada and Mexico signed the United States-Mexico-Canada Agreement

(“USMCA”) as an overhaul and update to the North American Free Trade Agreement.

It is difficult to anticipate the full impact of this agreement on our business, financial condition, cash flows and results of operations.

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Any failure to attain our projected revenues and operating results as a result of adverse economic or market conditions could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China.

At the time of this filing, the outbreak has been largely concentrated in China, although cases have been confirmed in other countries.

In China, reactions to, or efforts to contain the spread of, this coronavirus have led to, among other things, closure of stores, reduction in or cessation of certain surgeries and a general reduction in consumer activity.

While these effects are expected to be temporary, the duration of the business disruption in China and related financial impact cannot be reasonably estimated at this time.

Similarly, we cannot estimate whether this impact may extend to other countries outside of China.

At this point, the extent to which the coronavirus may impact our results is uncertain.

However, it is possible that our B&L/International segment and consolidated results in 2020 will likely be negatively impacted by this event and this impact may be material.

Due to the large portion of our business conducted in currency other than U.S.

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Any foreign exchange gain will result in a corresponding reduction in our available Canadian tax attributes.

In addition, in November 2016, as a result of the Egyptian government’s decision to float the Egyptian pound and un-peg it to the U.S.

Dollar, the Egyptian pound was significantly devalued.

Our exposure to the Egyptian pound is primarily with respect to Amoun Pharmaceutical Company S.A.E., which we acquired in October 2015, and which represented approximately 3% and 2% of our total 2019 and 2018 revenues, respectively.

Further strengthening of the U.S.

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In addition, FDA and Health Canada approval must be obtained in the U.S.

and Canada, respectively, EMA approval (drugs) and CE Marking (devices) must be obtained in countries in the EU and similar approvals must be obtained from comparable agencies in other countries, prior to marketing or manufacturing new pharmaceutical and medical device products for use by humans.

and Canada, respectively, EMA approval (drugs) and CE Marking (devices) must be obtained in countries in the EU and similar approvals must be obtained from

comparable agencies in other countries, prior to marketing or manufacturing new pharmaceutical and medical device products for use by humans.

Obtaining such regulatory approvals for new products and devices and manufacturing processes can take a number of years and involves the expenditure of substantial resources.

Furthermore, the Trump administration took several executive actions, including the issuance of Executive Orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities such as issuance of guidance and review and approval of marketing applications.

It is unclear how these executive actions will be implemented or whether they will be rescinded or replaced under the Biden administration, and therefore their effects on the FDA approval process cannot be determined at this time.

Even if such products appear promising in development stages, regulatory approval may not be achieved and no assurance can be given that we will obtain approval in those countries where we wish to commercialize such products.

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On January 31, 2020 (“Exit Day”), the United Kingdom ceased to be a member state of the European Union.

EU law applicable to the United Kingdom continues to apply to and in the United Kingdom for the duration of a transition period which is presently scheduled to expire on December 31, 2020 (the “Transition Period”).

During the Transition Period, the European Union and the United Kingdom will negotiate the terms of their future relationship.

There is no assurance that such negotiations will be successful or certainty that EU law will continue to apply in and to the United Kingdom following the expiration of the Transition Period.

Since a significant proportion of the United Kingdom’s regulatory framework is derived from European Union directives and regulations, EU law ceasing to apply in and to the United Kingdom following the expiration of the Transition Period could materially impact the regulatory regime with respect to the approval of our products in the United Kingdom.

EU law applicable to

the United Kingdom continued to apply to and in the United Kingdom for the duration of a transition period which expired on December 31, 2020 (the “Transition Period”).

During the Transition Period, the European Union and the United Kingdom negotiated the terms of their future relationship and on December 31, 2020 entered into a Trade and Cooperation Agreement, an Agreement on Nuclear Cooperation and an Agreement on Security Procedures for Exchanging and Protecting Classified Information.

Subject to certain exceptions, domestic law derived from EU law, EU law directly applicable in the UK and EU rights, powers, liabilities and obligations recognized and available in the UK in each case immediately before the expiration of the Transition Period was retained by the UK, but in the future UK law may diverge from EU law.

Following the Brexit vote, the European Union moved the European Medicines Agency’s headquarters from the United Kingdom to the Netherlands, which could result in disruptions and delays in new drug approvals in the European Union.

In addition, we could face new regulatory costs and challenges that could have a material adverse effect on our business, financial condition, cash flows and results of operations.

Until expiration of the Transition Period and the future relationship between the European Union and the United Kingdom is established, it is difficult to anticipate Brexit’s potential impact.

Manufacturing and Supply Risks

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Compliance with CGMP regulations requires the dedication of substantial resources and requires significant expenditures.

In addition, while we attempt to build in certain contractual obligations on our third party manufacturers, we may not be able to ensure that such third-parties

comply with these obligations.

In addition, while we attempt to build in certain contractual obligations on our third-party manufacturers, we may not be able to ensure that such third-parties comply with these obligations.

Our failure or that of our contract manufacturers to comply with CGMP regulations, quality system management requirements or similar regulations outside of the U.S.

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For some of our finished products and raw materials, we obtain supply from one or a limited number of sources.

If we are unable to obtain components or raw materials, or products supplied by third parties, our ability to manufacture and deliver our products to the market would be impeded, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

Some components and raw materials used in our manufactured products, and some finished products sold by us, are currently available only from one or a limited number of domestic or foreign suppliers.

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Conversely, if we underestimate demand and produce insufficient quantities of a product, we could be forced to produce that product at a higher price and forego profitability in order to meet customer demand.

For example, if a competitor initiates a recall and there is an unexpected increase in the demand for our products, we may not be able to meet such increased demand.

For example, if a competitor initiates a recall and there is an unexpected increase in the demand for our products, we may not be

able to meet such increased demand.

Insufficient inventory levels may lead to shortages that result in loss of sales opportunities altogether as potential end-customers turn to competitors' products that are readily available.

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For example, the CCPA imposes stringent data privacy and security requirements and obligations with respect to the personal information of California residents and provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal data that may increase the likelihood of, and risks associated with, data breach litigation.

The effects on our business of the CCPA and other similar state laws are potentially significant, and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.

The effects on our business of the CCPA and other similar state laws are potentially significant, and may require us to

modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.

State laws are changing rapidly and there is discussion in Congress of a new federal data protection and privacy law to which we may be subject.

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Guidance on implementation and compliance practices is often updated or otherwise revised.

We are also subject to Canada's federal Personal Information Protection and Electronic Documents Act (“PIPEDA”) and substantially similar equivalents at the provincial level with respect to the collection, use and disclosure of personal information in Canada.

We are also subject to Canada's federal Personal Information Protection and Electronic Documents Act and substantially similar equivalents at the provincial level with respect to the collection, use and disclosure of personal information in Canada.

Such federal and provincial legislation impose data privacy and security obligations on our processing of personal information of Canadian residents.

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Complying with all of these laws and regulations involves costs to our business, and failure to comply with these laws and regulations can result in the imposition of significant civil and criminal penalties, as well as litigation, all of which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

For more information regarding applicable data privacy and security laws and regulations, see Item 1 “Business - Government Regulations” of this Form 10-K.

For more information regarding applicable data privacy and security laws and regulations, see Item 1.

“Business — Government Regulations” of this Form 10-K.

We are also subject to U.S.

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In addition, in April 2018, the Centers for Medicare & Medicaid Services published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the Patient Protection and Affordable Care Act for plans sold through such marketplaces.

A lthough efforts at replacing the Health Care Reform Act have stalled in Congress, there could still be changes to this legislation in the near term.

We cannot predict what those changes will be or when they will take effect, and we could face additional risks arising from such changes or changed interpretations of our obligations under the legislation.

Because of this continued uncertainty, including the potential for further legal challenges or repeal of that legislation, we cannot quantify or predict with any certainty the likely impact of the Health Care Reform Act or its repeal on our business model, prospects, financial condition or results of operations, in particular on the pricing, coverage or reimbursement of any of our product candidates that may receive marketing approval.

Although efforts at replacing the Health Care Reform Act have stalled in Congress, there are a number of proposals that we expect to be introduced to Congress and put forth by the Biden administration, including proposals relating to drug pricing and drug delivery reforms, that may result in further changes to the health care system that could materially impact the Company.

We cannot predict what those changes will be or when they will take effect, and we could face additional risks arising from such changes.

Because of this continued uncertainty, the number of proposals and the indeterminable position that

the Biden administration may take with regard to the Health Care Reform Act, we cannot quantify or predict with any certainty the likely impact of these proposals on our business model, prospects, financial condition or results of operations, in particular on the pricing, coverage or reimbursement of any of our product candidates that may receive marketing approval.

Additionally, policy efforts designed specifically to reduce patient out-of-pocket costs for medicines could result in new mandatory rebates and discounts or other pricing restrictions.

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federal and state level.

At the federal level, the administration's budget proposal for fiscal year 2019 contained further drug price control measures that could be enacted in future legislation, including, for example, measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under Medicaid and to eliminate cost sharing for generic drugs for low-income patients.

While any proposed measures will require authorization through additional legislation to become effective, Congress and the administration have each indicated an intent to continue to seek new legislative or administrative measures to control drug costs.

While some of these proposed measures will require authorization through additional legislation to become effective, Congress and the administration have each indicated an intent to continue to seek new legislative or administrative measures to control drug costs.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

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The preliminary plan relies on individual states to develop proposals for safe importation of those drugs from Canada and submit those proposals to the federal government for approval.

Although the preliminary plan has some support from the current administration, at this time, studies to evaluate the related costs and benefits, evaluate the reasonableness of the logistics, and measure the public reaction of such a plan have not been performed.

While we do not believe this will have a significant impact on our future cash flows, we cannot provide assurance as to the ultimate content, timing, effect or impact of such a plan.

At this time, studies to evaluate the related costs and benefits, evaluate the reasonableness of the logistics, and measure the public reaction of such a plan have not been performed.

We cannot provide assurance as to the ultimate content, timing, effect or impact of such a plan.

In 2019, the Government of Canada (Health Canada) published in the Canadian Gazette the new pricing regulation for patented drugs.

These regulations will become effective on July 1, 2021.

The draft application guidelines are available with the final guidelines to be published in February 2020.

The new regulations will change the mechanics of establishing the pricing for products

submitted for approval after August 21, 2019;

The new regulations will change the mechanics of establishing the pricing for products submitted for approval after August 21, 2019;

they will also require full transparency of discounts agreed with provincial bodies;

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The cost of such additional compliance or remediation obligations or responding to such social expectations or concerns may be significant and could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

Our business and operations could be negatively affected by shareholder activism, which could cause us to incur significant expenses, hinder execution of our business strategy and impact our share price.

In recent years, shareholder activism involving corporate governance, fiduciary duties of directors and officers, strategic direction and operations has become increasingly prevalent.

One of our investors, which owns approximately 7.8% of our outstanding common shares, filed a Schedule 13D with the SEC in February 2021, in which it was indicated that the investor intended to engage in discussions with our management and board regarding ways to enhance shareholder value, including our ongoing strategic review and that it may also seek board representation.

Another of our investors, which owns approximately 6% of our outstanding common shares, filed a Schedule 13D with the SEC in July 2020, in which it indicated that it intended to consider, explore and/or develop plans and/or make proposals respecting, among other things, our businesses, assets, operations, and strategy, and to explore ways to strengthen the company and enhance shareholder value.

In February 2021, this investor also sent the Company a public letter, in which it stated that the proposed Separation should be completed by the end of 2021 and recommended, among other things, the divestiture of certain of our businesses and assets.

In the event such investors continue to pursue such proposals or we become the subject of additional shareholder activism, this may create a significant distraction for our management and employees.

This could negatively impact our ability to execute our business plans (including the Separation) and may require our management to expend significant time, resources and costs, including legal fees and other expenses incurred in connection with any proxy contest that may result from any such shareholder activism.

Furthermore, if individuals are elected to our Board with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create additional value for our shareholders and could lead us to adopt other plans that we cannot predict and which could focus on short-term benefits with longer-term costs.

Such shareholder activism may also create uncertainties with respect to our financial position and operations, may adversely affect our ability to attract and retain key employees and may result in loss of potential business opportunities with our current and potential customers and business partners, any of which could have a material adverse effect on our business, financial condition, cash flows and results of operations.

In addition, such shareholder activism may cause significant fluctuations in our share price based on temporary or speculative market perceptions, uncertainties or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business, and could cause the market value of our common shares to decline.

While we will remain responsive to shareholder demands, there is no assurance that we will achieve their objectives, or that doing so will decrease the likelihood of activist shareholder engagement in the future.

We have significant goodwill and other intangible assets and potential impairment of goodwill and other intangibles may have a significant adverse impact on our profitability.

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If impairment exists, we would be required to take an impairment charge with respect to the impaired asset.

For example, in 2019, 2018 and 2017, we recognized impairments to finite-lived and indefinite-lived intangible assets of $75 million , $568 million and $714 million , respectively.

For example, in 2020, 2019 and 2018, we recognized impairments, including a loss on assets held for sale, to finite-lived and indefinite-lived intangible assets of $114 million, $75 million and $568 million, respectively.

These asset impairments were primarily attributable to:

(i) assets being classified as held for sale and (ii) revisions in sales forecasts associated with discontinuances, generic competition and other market forces.

In addition to impairments to finite-lived and indefinite-lived intangible assets, in 2019, 2018 and 2017, we recognized goodwill impairments of $0 , $2,322 million and $312 million , respectively.

In addition to impairments to finite-lived and indefinite-lived intangible assets, in 2018, we recognized goodwill impairments of $2,322 million.

These impairments to goodwill were primarily the result of:

(i) the adoption of new accounting guidance in 2018, (ii) revisions to forecasts to certain reporting units, as a result of changing business dynamics and market conditions and (iii) realignments to our reporting units.

(i) the adoption of new accounting guidance in 2018 and (ii) revisions to forecasts to certain reporting units, as a result of changing business dynamics and market conditions.

There were no goodwill impairments in 2020 and 2019.

The Company conducted its annual goodwill impairment test as of October 1, 2020.

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Events giving rise to impairment are difficult to predict, including the uncertainties associated with the launch of new products, and are an inherent risk in the pharmaceutical and medical device industries.

As a result of the significance of goodwill and

intangible assets, our financial condition and results of operations in a future period could be negatively impacted should such an impairment of goodwill or intangible assets occur, which could cause the market value of our common shares and/or debt securities to decline.

As a result of the significance of goodwill and intangible assets, our financial condition and results of operations in a future period could be negatively impacted should such an impairment of goodwill or intangible assets occur, which could cause the market value of our common shares and/or debt securities to decline.

We may be required to take additional impairment charges in the future and such impairment charges may be material.

We have become increasingly dependent on information technology systems and infrastructure and any breakdown, interruption, breach or other compromise of our information technology systems could subject us to liability or interrupt the operation of our business, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We have become increasingly dependent on information technology systems and infrastructure and any breakdown, interruption, breach or other compromise of our or our third-party vendors' information technology systems could subject us to liability or interrupt the operation of our business, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We are increasingly dependent upon our information technology systems and infrastructure, as well as those of third parties with whom we interact, and internal and public internet sites, data hosting and processing facilities, cloud-based services and hardware, social media sites and mobile technology, in connection with the conduct of our business.

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Furthermore, modification, upgrade or replacement of such systems and infrastructure may be costly or out of our control.

Any failure to so modify, upgrade or replace such systems and infrastructure, any disruptions that occur during the process of such modification, upgrade or replacement and/or any breakdown, interruption or corruption of our information technology systems and infrastructure could create system disruptions, shutdowns, delays in generating or the corruption of data and information or other disruptions that could result in negative financial, operational, business or reputational consequences for us.

The size and complexity of the information technology systems and infrastructure on which we rely makes such systems and infrastructure potentially vulnerable to internal or external inadvertent or intentional security breaches, including as a result of private or state-sponsored cybercrimes, terrorism, war, malware, ransomware, human error, system malfunction, telecommunication and electrical failures, natural disaster, misplaced or lost data, socially engineered breaches or other similar events.

In addition, during the normal course of our business operations, including through the use of information technology systems and infrastructure, we are involved in the collection, processing, transmission, use and retention of sensitive, confidential, non-public or personal data and information in Canada, the United States and abroad.

Any failure to so modify, upgrade or replace such systems and infrastructure, any disruptions that occur during the process of such modification, upgrade or replacement and/or any breakdown, interruption or corruption of the information technology systems and infrastructure on which we rely could create system disruptions, shutdowns, delays in generating or the corruption of data and information or other disruptions that could result in negative financial, operational, business or reputational consequences for us.

The size and complexity of the information technology systems and infrastructure on which we rely makes such systems and infrastructure potentially vulnerable to internal or external inadvertent or intentional security breaches, including as a result of private or state-sponsored cybercrimes, terrorism, war, malware, ransomware, human error, system malfunction, telecommunication and electrical failures, natural disaster, fire, misplaced or lost data, socially engineered breaches or other similar events.

In addition, during the normal course of our business operations, including through the use of information technology systems and infrastructure, we are involved in the collection, transmission, use, retention and other processing of sensitive, confidential, non-public or personal data and information in Canada, the United States and abroad.

Cyber-attacks are increasing in frequency, sophistication and intensity and are made by groups and individuals with a wide range of motives and expertise.

Cyber-attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, worms, social engineering, improper modification of information, fraudulent “phishing” e-mails and other means to affect service reliability or threaten data confidentiality, integrity or availability.

Techniques used in these attacks are often highly sophisticated, change frequently and may be difficult to detect for periods of time.

We have established:

(i) physical, electronic and organizational measures to safeguard and secure our systems to prevent a compromise and (ii) policies and procedures designed to provide for the timely investigation of cybersecurity incidents and the timely disclosure of cybersecurity incidents consistent with our legal and contractual obligations.

Techniques used in these attacks are often highly sophisticated, change frequently and may be difficult to detect for long periods of time.

We have established physical, electronic and organizational measures intended to safeguard and secure our systems to prevent a compromise and policies and procedures designed to provide for the timely investigation of cybersecurity incidents and the timely disclosure of cybersecurity incidents consistent with our legal and contractual obligations.

We also rely on commercially available systems, software, tools and monitoring to provide security for the processing, transmission and storage of digital information.

While we attempt to take appropriate security and cybersecurity measures to protect our information technology systems and infrastructure (including any confidential or other sensitive information) and to prevent and detect breakdowns, unauthorized breaches and cyber-attacks, we cannot guarantee that these measures will be successful and that breakdowns and breaches of, or attacks on, our systems and data, or those of third parties upon which we rely, will be prevented.

Such breakdowns and breaches of, or attacks on, our systems and infrastructure, or the public perception that we or any third party upon which we rely have suffered a cybersecurity incident or breakdown, may cause business interruption and could have a material adverse effect on our business, financial condition, cash flows and results of operations, damage our reputation with customers, employees and third parties with whom we do business and cause the market value of our common shares and/or debt securities to decline, and we may suffer financial damage or other loss, including fines or criminal penalties because of lost or misappropriated information.

While we maintain insurance against some of these risks, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from a breakdown, breach, cyber-attack or other compromise of or interruption to our information technology systems and infrastructure or confidential and other sensitive information.

While we attempt to take appropriate security and cybersecurity measures to protect our information technology systems and infrastructure (including any confidential or other sensitive information) and to prevent and detect breakdowns, unauthorized breaches and cyber-attacks, we cannot guarantee that such measures will be successful and that breakdowns and breaches of, or attacks on, our systems and data, or those of third parties upon which we rely, will be prevented.

Any such incidents, or the public perception that we or any third party upon which we rely have suffered such an incident, may cause business interruption and damage our reputation with customers, employees and third parties with whom we do business, and we may suffer litigation, financial damage, regulatory investigations, enforcement, orders and other actions, which could result in injunctions, fines and penalties, as well as costs relating to investigation of an incident, corrective actions, required notification, credit monitoring services and other expenses, and could have a material adverse effect on our business, financial condition, cash flows and results of operations.

In addition, we provide confidential and other sensitive information to third parties when necessary to pursue our business objectives.

While we obtain assurances that these third parties will protect this information and, where appropriate, monitor the

protections employed by these third parties, there is a risk that the confidentiality of information held by third parties, including trade secrets and sensitive personal information, may be compromised.

While we obtain assurances that these third parties will protect this information and, where appropriate, monitor the protections employed by these third parties, there is a risk that the confidentiality of information held by third parties, including trade secrets and sensitive personal information, may be compromised, including as a result of cybersecurity breaches, breakdowns or other incidents.

If personal information of our customers or employees is misappropriated, our reputation with our customers and employees may be injured, resulting in loss of business and/or morale.

Any such incidents could require us to incur costs to remediate possible injury to our customers and employees, to further improve our protective measures or to pay fines or take other action with respect to litigation, judicial or regulatory actions arising out of such incidents which may be significant.

Any such incidents could require us to incur costs to remediate possible injury to our customers and employees, to further improve our protective

measures or to pay fines or take other action with respect to litigation, judicial or regulatory actions arising out of such incidents, which may be significant.

We also cannot ensure that any limitation of liability or indemnity provisions in our contracts, including with vendors and service providers, for a security lapse or breach or other security incident would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim.

Any of the foregoing could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

Our operating results and financial condition may fluctuate.

Our operating results and financial condition may fluctuate from quarter to quarter for a number of reasons.

In addition, our stock price can be volatile.

The following events or occurrences, among others, could cause fluctuations in our financial performance and/or stock price from period to period:

development and launch of new competitive products;

the timing and receipt of FDA approvals or lack of approvals;

costs related to business development transactions;

changes in the amount we spend to promote our products;

delays between our expenditures to acquire new products, technologies or businesses and the generation of revenues from those acquired products, technologies or businesses;

changes in treatment practices of physicians that currently prescribe certain of our products;

increases in the cost of raw materials used to manufacture our products;

FDA regulatory actions relating to our manufacturers;

manufacturing and supply interruptions;

our responses to price competition;

new legislation that would control or regulate the prices of drugs;

a protracted and wide-ranging trade conflict between the United States and China;

expenditures as a result of legal actions (and settlements thereof), including the defense of our patents and other intellectual property;

market acceptance of our products;

the timing of wholesaler and distributor purchases and success of our wholesaler and distributor arrangements;

general economic and industry conditions, including potential fluctuations in interest rates;

changes in seasonality of demand for certain of our products;

foreign currency exchange rate fluctuations;

changes to, or the confidence in, our business strategy;

changes to, or the confidence in, our management;

expectations for future growth.

As a result, quarter-to-quarter comparisons of results from operations, or any other similar period-to-period comparisons, may not be reliable indicators of our future performance.

In any quarterly period, our results may be below the expectations of market analysts and investors, which could cause the market value of our common shares and/or debt securities to decline.

The Company’s ability to effectively monitor and respond to the rapid and ongoing developments and expectations relating to environmental, social and governance (“ESG”) matters, including related social expectations and concerns, may impose unexpected costs on the Company or result in reputational or other harm to the Company that could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

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If the pricing or volume of such products declines, our revenues would be adversely impacted which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

The illegal distribution and sale of counterfeit versions of our products may reduce demand for our products or have a negative impact on the reputation of our products, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

Third parties may illegally distribute and sell counterfeit versions of our products, which do not meet or adhere to the rigorous quality, safety, manufacturing, storage and handling standards and regulations that apply to our products.

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In addition, we also implement and maintain returns policies, pursuant to which our customers may return product to us in certain circumstances in return for a credit.

and chargebacks will not exceed our estimates, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

Although we establish reserves based on our prior experience, wholesaler data, then-current on-hand inventory, our best estimates of the impact that these policies may have in subsequent periods and certain other considerations, we cannot ensure that our reserves are adequate or that actual product returns, rebates, allowances and chargebacks will not exceed our estimates, which could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

We may experience declines in sales volumes or prices of certain of our products as the result of the concentration of sales to wholesalers and the continuing trend towards consolidation of such wholesalers and other customer groups and this could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.

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We, whenever possible, try to limit this potential liability within the particular agreement or contract, but due to the unpredictability of future events the maximum amount of any potential reimbursement cannot be reasonably estimated, but could have a material adverse effect on the Company.

General Risk Factors

Our operating results and financial condition may fluctuate.

Our operating results and financial condition may fluctuate from quarter to quarter for a number of reasons.

In addition, our stock price can be volatile.

The following events or occurrences, among others, could cause fluctuations in our financial performance and/or stock price from period to period:

• development and launch of new competitive products;

• the timing and receipt of FDA and other regulatory approvals or lack of approvals;

• costs related to business development transactions;

• changes in the amount we spend to promote our products;

• delays between our expenditures to acquire new products, technologies or businesses and the generation of revenues from those acquired products, technologies or businesses;

• changes in treatment practices of physicians that currently prescribe certain of our products;

• increases in the cost of raw materials used to manufacture our products;

• FDA or other regulatory actions relating to our manufacturers or suppliers;

• manufacturing and supply interruptions;

• our responses to price competition;

• new legislation that would control or regulate the prices of drugs;

• a protracted and wide-ranging trade conflict between the United States and China;

• expenditures as a result of legal actions (and settlements thereof), including the defense of our patents and other intellectual property;

• market acceptance of our products;

• the timing of wholesaler and distributor purchases and success of our wholesaler and distributor arrangements;

• general economic and industry conditions, including potential fluctuations in interest rates;

• changes in seasonality of demand for certain of our products;

• foreign currency exchange rate fluctuations;

• changes to, or the confidence in, our business strategy;

• changes to, or the confidence in, our management;

• expectations for future growth.

As a result, quarter-to-quarter comparisons of results from operations, or any other similar period-to-period comparisons, may not be reliable indicators of our future performance.

In any quarterly period, our results may be below the expectations of market analysts and investors, which could cause the market value of our common shares and/or debt securities to decline.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors