Bausch + Lomb (BLCO)2025-02-19 21:47Patent and Regulatory Environment - As of February 12, 2025, the company owns or exclusively licenses approximately 2,584 granted patents worldwide, with about 465 being U.S. patents[52] - Approximately 78% of the company's issued patents will expire within the next 10 years, with 23 patents set to expire in both 2025 and 2026, and 36 patents in 2027[52] - The company relies on a combination of regulatory and patent rights to protect the value of its investment in product development[51] - The U.S. Hatch-Waxman Act provides non-patent regulatory exclusivity for five years from the first FDA approval of a new drug compound[54] - The company has approximately 127 pending U.S. patent applications, indicating ongoing innovation efforts[52] - The FDA may designate a product as an orphan drug if it treats a disease affecting fewer than 200,000 individuals in the U.S., granting seven years of marketing exclusivity[58] - The company is subject to extensive government regulations regarding the research, development, testing, and marketing of pharmaceutical products and medical devices[63] - Compliance with manufacturing regulations, including good manufacturing practices, is enforced by the FDA and Health Canada[67] - The company faces periodic audits of its facilities by regulatory agencies, ensuring adherence to compliance standards[68] - Price control restrictions on pharmaceutical products are present in many countries where the company operates[69] Workforce and Operations - The company operates in approximately 100 countries with a global commercial team of about 4,300 employees[89] - In the United States, the company has around 1,150 employees dedicated to selling and marketing contact lenses, lens care, consumer eye health, surgical, and prescription pharmaceutical products[90] - The international commercial footprint includes approximately 3,150 employees and a network of distribution partners[90] - As of December 31, 2024, the company had approximately 13,500 employees, with 7,200 in production and 4,300 in sales and marketing[104] - The company launched a new global performance management program in 2024 to enhance employee performance monitoring and alignment[113] Financial Performance and Risks - In 2024, customers accounting for 10% or more of total revenues were McKesson Corporation and Cardinal Health, Inc., each contributing 10%[93] - Approximately 37% of product sales for 2024 are produced in total or in part by third-party manufacturers under manufacturing arrangements[102] - The company’s revenues tend to be weighted toward the second half of the year, with first-quarter sales typically lower due to patient co-pays and deductibles resetting[118] - As of December 31, 2024, the company had 1,400 million in fixed rate debt[578] - A 100 basis-points increase or decrease in interest rates would have an annualized pre-tax effect of approximately 1,449 million[578] - A 1% change in foreign currency exchange rates would impact shareholders' equity by approximately 35 million[578] - If interest rates decrease by 100 basis-points, the fair value of fixed rate debt would increase by approximately $31 million[578] - Changes in interest rates could adversely affect the company's earnings and cash flows due to its variable rate debt[578] Compliance and Governance - The company is subject to extensive U.S. federal and state health care marketing and fraud regulations, including the federal False Claims Act and Anti-Kickback Statute, which impose significant compliance obligations[70] - The company must comply with the Health Insurance Portability and Accountability Act (HIPAA) and various state laws regarding the privacy and security of health-related information, which may require substantial costs for compliance[73] - The General Data Protection Regulation (GDPR) imposes strict obligations on the processing of personal data, with potential fines of up to 4% of global annual revenue or €20 million for violations[76] - The company is subject to the Personal Information Protection Law (PIPL) in China, which regulates the transfer of personal data outside of China, effective from March 1, 2023[79] - The regulatory framework for data privacy and security is rapidly evolving, which may lead to increased compliance costs and risks for the company[82] - The company is developing an integrated ESG program to comply with evolving regulations related to environmental, social, and governance matters[86] Corporate Social Responsibility - The ONE by ONE Recycling program has collected over 94 million used contact lenses and related items since its launch in November 2016[117] - The company’s commitment to corporate social responsibility includes initiatives aimed at disease prevention and improving patient outcomes globally[116] Supply Chain and Manufacturing - The company operates 23 manufacturing facilities across 10 countries, including the U.S., Ireland, and China, focusing on specific product categories[98] - The company’s global supply team is actively managing inflationary and supply-chain challenges due to ongoing macroeconomic conditions[103] - The company faces pressures from government authorities and third-party payors to limit or regulate the price of medical products, which can result in lower average realized prices[83]