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A. [Reserved]
B. Capitalization and Indebtedness
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
D. Risk Factors
Summary
Our company, our business and our securities are subject to a number of risks which are described more comprehensively elsewhere in this item D. We present below a summary of our key risk factors.
Risks Relating to Our Structure:
● Our substantial level of indebtedness could adversely affect our financial condition, restrict our ability to react to changes to our business, and prevent us from fulfilling our debt obligations;
● Despite our substantial indebtedness, we may still incur significantly more debt. This could exacerbate the risks associated with our substantial leverage;
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● To service our indebtedness and other obligations, we will require a significant amount of cash. Our ability to generate cash depends on many factors, some of which may be beyond our control;
● Covenants in our debt agreements restrict our business in many ways;
● Our ability to meet our financial obligations depends in part on our ability to receive dividends and other distributions from our subsidiaries;
● We engage in transactions with related parties and such transactions may present the appearance of a possible conflict of interest that can have an adverse effect on us;
● We are a foreign private issuer under the rules and regulations of the Securities and Exchange Commission and, thus, are exempt from a number of rules under the Securities Exchange Act of 1934 and are permitted to file less information with the Securities and Exchange Commission than a company incorporated in the United States;
● Military conflicts around the world, and the global response thereto, may adversely affect our business and results of operations; and
● The ability to enforce civil liabilities under U.S. securities laws may be limited.
● We are a multinational business that operates in numerous tax jurisdictions.
● The unforeseen results of potential trade disputes and reciprocal tariffs around the world, including the United States, the European Union and/or China, may cause an impact on our business.
● Changes in immigration laws in the countries in which we operate, including Canada and the United States, could affect our ability to send employees with specified expertise in manufacturing and IT into foreign regions for purposes of building or upgrading certain infrastructure.
Risks Relating to the Company and Our Business:
● Our manufacturing processes are complex and involve biological intermediates that may be susceptible to contamination and variations in yield. Plasma and plasma derivative products are fragile, and improper handling of the plasma or plasma derivative products could adversely affect our operations;
● Once our products are approved and marketed, we must continually monitor them for signs that their use may result in serious and unexpected side effects, which could jeopardize our reputation and our ability to continue marketing our products. We may also be required to conduct post-approval clinical trials as a condition to licensing a product. Moreover, we may not be able to commercialize products in development;
● Our ability to continue manufacturing and distributing our products depends on our continued adherence to cGMP regulations at our facilities;
● A significant disruption in our supply of plasma, including as a result of macroeconomic conditions, pandemics or changes in immigration policies and enforcement could have a material adverse effect on our business and our growth plans;
● Disruption of the operations of our plasma collection centers would cause us to become supply-constrained and our financial performance would suffer;
● A significant portion of our net revenue has historically been derived from sales of our immunoglobulin (“IG”) products and we expect that they will continue to comprise a significant portion of our sales. Any adverse market event with respect to these products could have a material adverse effect on us;
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● We face significant competition, including from companies with greater financial resources;
● Technological changes in the production of our products may require substantial investments in innovation, digital transformation and new technologies, which could render our production process uneconomical and diminish our competitiveness in the industries in which we operate;
● We utilize artificial intelligence, which could expose us to liability or adversely affect our business;
● The discovery of new pathogens could slow our growth and adversely affect profit margins;
● Product liability claims or product recalls and/or voluntary withdrawals involving products we produce or distribute could have a material adverse effect on our business;
● Our ability to continue to produce safe and effective plasma derivative products depends on a plasma supply free of transmittable diseases;
● Ineffective IT governance, as well as a lack of related compliance, operational safeguards, and implementation of appropriate cybersecurity measures poses significant risks in today’s data-driven world, including data breaches, regulatory non-compliance, operational inefficiencies, financial losses and hindered innovation;
● Our future success depends on our ability to retain members of our senior management and to attract, retain and motivate qualified personnel;
● Our business requires substantial capital to operate and grow and to achieve our strategy of realizing increased operating leverage, including the completion of several large capital projects;
● We may not be able to develop some of our international operations successfully;
● Uncertainties regarding the general regulatory and legal environment, particularly in China, could adversely affect our business;
● We are susceptible to interest rate variations;
● Our results of operations and financial condition may be affected by adverse changes in foreign currency exchange rates, especially a significant shift in the value of the euro as compared to the U.S. dollar;
● If our main facilities were to suffer a crippling accident, or if a force majeure event materially affected our ability to operate and produce saleable products, a substantial part of our manufacturing capacity could be shut down for an extended period;
● If we experience equipment difficulties or if the suppliers of our equipment or disposable goods fail to deliver key product components or supplies in a timely manner, our manufacturing ability would be impaired and our product sales could suffer;
● If our shipping or distribution channels were to become inaccessible due to a crippling accident, a pandemic, an act of terrorism, a strike, earthquake, major fire, armed conflict or storm, or any other force majeure event, our supply, production and distribution processes could be disrupted;
● We rely in large part on the services of third parties for the sale, distribution and delivery of our products;
● We rely on the services of third parties for the manufacture of certain products;
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● We may not be able to commercialize products in development;
● Complex and evolving U.S. and international laws and regulations regarding privacy and data security and increased risk of cybersecurity incidents to our information technology systems could result in increased costs of operations and a significant disruption to our business;
● Cyber-attacks or other privacy and data security incidents (for example involving the personal information of our plasma or blood donors) could disrupt our business and expose us to significant losses, liability and reputational damage;
● Our success depends in large part on our ability to obtain and maintain protection in the United States and other countries of the intellectual property relating to or incorporated into our technology and products;
● In addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes and know-how;
● We may infringe or be alleged to infringe intellectual property rights of third parties;
● We have in-licensed certain patent rights and co-own certain patent rights with third parties;
● We may not realize the expected benefits from the entry into new or amended contracts, cost-savings and business improvement initiatives;
● Climate change and increased risk of major natural disasters may adversely affect our business; and
● Changes, enactment, and/or enforcement of biometric information, consumer health data, biometric information, information and other privacy laws of different jurisdictions, including federal and state laws in the United States, could expose us to potential liability.
Risks Relating to the Healthcare Industry:
● United States Healthcare Reform may adversely affect our business;
● Government pressures and constraints on reimbursement may adversely affect our business;
● Impact of government regulations relating to product development and regulatory approvals, as well as government pressures and constraints on reimbursement may adversely affect our business;
● Failure to comply with laws and regulations governing the sales and marketing of our products or an adverse decision in lawsuits may result in adverse consequences for us;
● We could be adversely affected if other government or private third-party payors decrease or otherwise limit the amount, price, scope or other eligibility requirements for reimbursement for the purchasers of our products;
● We are subject to extensive government regulatory compliance and ethics oversight;
● Failure to comply with changing regulatory requirements could materially adversely affect our business;
● We are subject to extensive environmental, health and safety laws and regulations; and
● Unsuccessful management of sustainability (environmental, social and governance) matters could adversely affect our reputation, and we may experience difficulties meeting the expectations of our stakeholders.
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Risks Relating to Our Shares and American Depositary Shares:
● If we discover material weaknesses or significant deficiencies in our internal control over financial reporting, it may adversely affect our ability to provide timely and reliable financial information and satisfy our reporting obligations under U.S. federal securities laws, which also could affect the market price of our American Depositary Shares or our ability to remain listed on NASDAQ;
● The Grifols Family may exercise significant influence over the conduct of our business;
● The market price of our Class B ADSs on NASDAQ, as well as the market price of our Class A ADSs traded in over the counter markets, may be volatile;
● Techniques employed by short sellers or other market disruptors may drive down the market price of our shares, negatively impact our business operations and/or generate non-meritorious litigation;
● Fluctuations in the exchange rate between the U.S. dollar and the euro may increase the risk of holding our ADSs or shares;
● Subscription (or preemptive) rights may be unavailable to U.S. holders of our shares or ADSs; and
● ADS holders may be subject to limitations on the transfer of their ADSs.
Risks Relating to Our Structure
Our substantial level of indebtedness could adversely affect our financial condition, restrict our ability to react to changes to our business, and prevent us from fulfilling our debt obligations.
We have a significant amount of indebtedness. As of December 31, 2025, our current and non-current financial liabilities were €9.6 billion, of which a substantial majority (€9.1 billion) was long-term debt.
Our high level of indebtedness could have significant adverse effects on our business, such as:
● making it more difficult for us to satisfy our obligations with respect to our outstanding debt;
● making us more vulnerable to economic downturns and adverse developments in our business;
● impairing our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes;
● reducing the funds available to us for operations and other purposes due to the substantial portion of our cash flow that we use to pay interest on our indebtedness;
● placing a prior ranking claim on the underlying assets of all of the indebtedness outstanding under our purchase money indebtedness, equipment financing and real estate mortgages;
● limiting our ability to fund a change of control offer;
● placing us at a competitive disadvantage compared to our competitors that may have proportionately less debt;
● limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
● restricting us from making strategic acquisitions or exploiting other business opportunities.
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We expect to use cash flow from operations to pay our expenses and amounts due under our outstanding indebtedness. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic and other factors, many of which could be beyond our control. Our business may not generate sufficient cash flow from operations in the future and our anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness or to fund other liquidity needs. If we do not have enough liquidity, we may be required to refinance all or part of our then existing debt, sell assets or incur more debt. We may not be able to accomplish any of these alternatives on terms acceptable to us, or at all. In addition, the terms of existing or future debt agreements may restrict us from adopting any of these alternatives. The failure to generate sufficient cash flow or to achieve any of these alternatives could materially and adversely affect our business, results of operations and financial condition.
Despite our substantial indebtedness, we may still incur significantly more debt. This could exacerbate the risks associated with our substantial leverage.
We may be able to incur substantial additional indebtedness, including additional secured indebtedness, in the future. Our business is capital intensive, and we regularly seek additional capital. Although each of the indentures governing the 2021 Notes (as defined herein), the April 2024 Notes (as defined herein), December 2024 Notes (as defined herein) and the New Credit Facilities (as defined herein) contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances, debt incurred in compliance with these restrictions, including secured debt, could be substantial. Incurring additional debt to current debt levels could exacerbate the leverage-related risks described above. For more information on our indebtedness, see Item 5 of this Part I, “Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Sources of Credit.”
To service our indebtedness and other obligations, we will require a significant amount of cash. Our ability to generate cash depends on many factors, some of which may be beyond our control.
Our ability to make payments on and to refinance our indebtedness and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future. A significant reduction in our operating cash flows resulting from changes in economic conditions, increased competition or other events beyond our control could increase the need for additional or alternative sources of liquidity and could have a material adverse effect on our business, financial condition, results of operations, prospects and our ability to service our debt and other obligations. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as reducing capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital. We cannot assure you that any of these alternative strategies could be effected on satisfactory terms, if at all, or that they would yield sufficient funds to make required payments on our indebtedness.
In addition, our borrowings under the New Credit Facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease.
We cannot assure you that our business will generate sufficient cash flows from operations or that future borrowings will be available to us under the New Credit Facilities or otherwise in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before the maturity of such indebtedness. We cannot assure you that we will be able to refinance any of our indebtedness, including the New Credit Facilities, the 2021 Notes, the April 2024 Notes and the December 2024 Notes, on commercially reasonable terms or at all. For more information on our indebtedness, see Item 5 of this Part I, “Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Sources of Credit.”
Covenants in our debt agreements restrict our business in many ways.
The agreements governing our indebtedness and other financial obligations applicable to us contain various covenants, with customary caveats, that limit our ability and/or our restricted subsidiaries’ ability to, among other things:
● incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons;
● issue redeemable stock and preferred equity;
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● pay dividends or make distributions to the shareholders of Grifols or redeem or repurchase capital stock;
● prepay, redeem or repurchase debt;
● make loans, investments and capital expenditures;
● enter into agreements that restrict distributions from our restricted subsidiaries;
● sell assets and capital stock of our subsidiaries;
● enter into certain transactions with affiliates; and
● consolidate or merge with or into, or sell substantially all of our assets to, another person.
A breach of any of these covenants could result in a default under our debt agreements. Upon the occurrence of an event of default, the respective creditors could elect to declare all amounts outstanding under the debt agreements to be immediately due and payable and, in the case of the New Credit Facilities, December 2024 Notes, April 2024 Notes and 2021 Notes, terminate all commitments to extend further credit. If we were unable to repay those amounts, the respective creditors could proceed against the collateral granted to them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under the New Credit Facilities, the April 2024 Notes and the December 2024 Notes. If the respective creditors under our existing indebtedness accelerate the repayment of borrowings, we may not have sufficient assets to repay our indebtedness.
Our ability to meet our financial obligations depends in part on our ability to receive dividends and other distributions from our subsidiaries.
Our principal assets are the equity interests that we hold in our operating subsidiaries. As a result, we are dependent on dividends and other distributions from our subsidiaries to generate the funds necessary to meet our financial obligations, including the payment of principal and interest on our outstanding debt. Our subsidiaries may not generate sufficient cash from operations to enable us to make principal and interest payments on our indebtedness or may have preferential dividends which are required to be paid prior to any dividends to us. For example, in the case of each of Biomat USA, Inc. (“Biomat USA”) and Biomat Newco Corp (“Biomat Newco”), our U.S.-based plasma collection subsidiaries, to the extent dividends are declared by their respective shareholders, the GIC Investor (as defined Item 4 of this Part I, “Information on the Company—A. History of and Development of the Company—Important Milestones”) would be entitled to receive preferred dividends. Such dividends are equal to $4,168,421.05 per share annually payable by each of Biomat USA (in respect of its ten preferential shares) and Biomat Newco (in respect of its nine preferential shares) and carry additional rights with them as well as including redemption rights and a liquidation preference of $52,105,263.16 per share. See Item 5 of this Part I, “Operating and Financial Review and Prospects—A. Operating Results—Factors Affecting Our Financial Condition and Results of Operations—Dispositions—The Biomat Transactions.”
In addition, any payment of dividends, distributions, loans or advances to us by our subsidiaries could be subject to restrictions on dividends or, in the case of foreign subsidiaries, restrictions on repatriation of earnings under applicable local law and monetary transfer restrictions in the jurisdictions in which our subsidiaries operate. Furthermore, payments to us by our subsidiaries will be contingent upon our subsidiaries’ earnings. Our subsidiaries are permitted under the terms of our indebtedness to incur additional indebtedness that may restrict payments from those subsidiaries to us. We cannot assure you that agreements governing current and future indebtedness of our subsidiaries will permit those subsidiaries to provide us with sufficient cash to fund payments on our indebtedness when due.
Our subsidiaries are legally distinct from us and, except for existing and future subsidiaries that guarantee certain indebtedness, have no obligation, contingent or otherwise, to pay amounts due on our debt or to make funds available to us for such payment.
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We engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us.
We purchase goods and services from, sell products to and otherwise engage in other transactions with related parties. These related party transactions create the possibility of conflicts of interest between us and our management, including that:
● our senior managers, executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties;
● our senior managers, executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time;
● such conflicts could cause an individual in our management to seek to advance his or her economic interests or the economic interests of certain related parties above ours; and
● the appearance of conflicts of interest created by related party transactions could impair the confidence of our investors. Our Audit Committee regularly reviews these transactions. Notwithstanding these reviews, it is possible that a conflict of interest could have an adverse effect on our business, financial condition and results of operations.
For more information on our related party transactions, see Item 7 of this Part I, “Major Shareholders and Related Party Transactions—B. Related Party Transactions” and Note 31 to our audited consolidated financial statements included in this annual report on Form 20-F.
We are a foreign private issuer under the rules and regulations of the Securities and Exchange Commission and, thus, are exempt from a number of rules under the Securities Exchange Act of 1934 and are permitted to file less information with the Securities and Exchange Commission than a company incorporated in the United States.
As a foreign private issuer under the Securities Exchange Act of 1934, as amended, or the Exchange Act, we are exempt from certain rules under the Exchange Act, including the proxy rules under Section 14 of the Exchange Act, which impose certain disclosure and procedural requirements for proxy solicitations. Moreover, we are not required to file periodic reports and financial statements with the Securities and Exchange Commission, or the SEC, as frequently or as promptly as U.S. companies with securities registered under the Exchange Act; we are not required to file financial statements prepared in accordance with United States’ generally accepted accounting principles; and we are not required to comply with SEC Regulation FD, which imposes certain restrictions on the selective disclosure of material non-public information. In addition, our officers, directors and principal shareholders currently are not subject to the reporting or short-swing profit recovery provisions of Section 16 of the Exchange Act or the rules under the Exchange Act with respect to their purchases and sales of our Class A shares or Class B shares. Accordingly, you may receive less information about us than you would receive about a company incorporated in the United States and may be afforded less protection under the U.S. federal securities laws than you would be afforded with respect to a company incorporated in the United States. If we lose our status as a foreign private issuer at some future time, we will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements as if we were a company incorporated in the United States. The costs incurred in fulfilling these additional regulatory requirements could be substantial.
Additionally, pursuant to The NASDAQ Stock Market LLC (“NASDAQ”) listing rules (the “NASDAQ Listing Rules”), as a foreign private issuer we may elect to follow our home country practice in lieu of the corporate governance requirements of the NASDAQ Listing Rule 5600 Series, with the exception of those rules that are required to be followed pursuant to the provisions of NASDAQ Listing Rule 5615(a)(3). We have elected to follow Spanish practices in lieu of the requirements of the NASDAQ Listing Rule 5600 Series to the extent permitted under NASDAQ Listing Rule 5615(a)(3). See Item 16.G of Part II, “Corporate Governance.”
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Military conflicts around the world, and the global response thereto, may adversely affect our business and results of operations.
The occurrence of unforeseen or catastrophic events, including geopolitical and other economic or political conditions or events such as the military conflict between Russia and Ukraine since 2022, the ongoing conflict in Gaza following the terrorist attacks that occurred in Israel in October 2023, and the broader regional conflict involving Iran, Israel and the United States, depending on their scale and duration, may adversely affect national, regional and global economies and could disrupt our operations. For example, in response to these military conflicts, significant sanctions and export controls have been imposed against certain countries, individuals and entities. These conflicts have also resulted in significant volatility and disruptions to the global markets.
It is not possible to predict the long-term implications of these conflicts, which could include but are not limited to new trade restrictions, tariffs, or other retaliatory measures contingent upon ongoing developments and diverging foreign policy positions among governments, uncertainty about economic and political stability, increases in inflation rates, further increases in energy prices, supply chain challenges and adverse effects on currency exchange rates and financial markets.
In addition, these or any other future conflicts have led or could lead to increased threats of cyberattacks, which can pose risks to the security of our IT systems, our network and our service offerings, as well as the confidentiality, availability and integrity of our data.
Up to the present date, the conflicts in Ukraine, Gaza and Iran have not significantly affected our business operations, but we cannot be certain that such conflicts will not affect existing and potential customers and have an adverse impact on our operations in the future.
The ability to serve process and enforce civil liabilities under U.S. securities laws may be limited.
We are a company organized under the laws of Spain, and many of our subsidiaries are also incorporated outside of the United States. A substantial portion of our assets and the assets of our subsidiaries are located outside of the United States. In addition, nearly all of our directors and officers and certain of our subsidiaries’ officers and directors are nationals or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or certain of our subsidiaries or their directors or officers with respect to matters arising under the Securities Act of 1933 (the “Securities Act”) or to enforce against them judgments of courts of the United States predicated upon civil liability under the Securities Act. It may also be difficult to recover fully in the United States on any judgment rendered against such persons or against us or certain of our subsidiaries.
In addition, there is doubt as to the enforceability in Spain of original actions, or of actions for enforcement of judgments of U.S. courts of liabilities, predicated solely upon the securities laws of the United States. If a judgment was obtained outside Spain and efforts were made to enforce the judgment in Spain, there is some doubt that Spanish courts would agree to recognize and enforce a foreign judgment. Accordingly, even if you obtain a favorable judgment in a U.S. court, you may be required to re-litigate your claim in Spain.
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We are a multinational business that operates in numerous tax jurisdictions.
We are subject to evolving and complex tax laws in the jurisdictions in which we operate, and routinely obtain advice on tax-related matters. Significant judgment is required in determining our tax liabilities, and our tax returns are periodically examined by various tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our accrual for tax contingencies; however, due to the complexity of tax matters, the ultimate resolution of any tax matters may result in payments greater or less than the amounts accrued. In addition, we may be affected by changes in tax laws, including tax rate changes, new tax laws, and revised tax law interpretations in domestic and foreign jurisdictions and between jurisdictions, including by the E.U., which could have a material and adverse effect on our tax expense and/or tax balances, and changes in tax policies could have a material and adverse impact our business. Furthermore, the integrated nature of our worldwide operations can produce conflicting claims from revenue authorities in different countries as to the profits to be taxed in the individual countries, including potential disputes relating to the prices our subsidiaries charge one another for intercompany transactions, known as transfer pricing. Additionally, existing or future executive orders or other changes in laws regarding tariffs, including by the U.S. executive administration and Congress, the European Union and/or China, could adversely affect our business, financial position and results of operations. The impact of any changes in laws regarding tariffs on our business, if any, will depend on the specific restrictions imposed on trade, including the effective date and duration of such tariffs, jurisdictions covered in such tariffs, amounts of such tariffs, and potential retaliatory tariffs imposed by other jurisdictions. The occurrence of any of these risks could have a material adverse effect on our business, financial position and results of operations.
In particular, the Organization for Economic Co-operation and Development (“OECD”) introduced a new inclusive framework on Base Erosion and Profit Shifting that contains a two-pillar solution to address the tax challenges arising from the digitalization of the economy. These changes are now being progressively implemented by tax authorities around the world and represent a fundamental change to the international tax framework. Pillar One provides for a new nexus standard/taxing right that allocates a portion of intangible/residual profits directly to market jurisdictions but only for the largest and most profitable companies. Pillar Two provides for a global minimum level of taxation (15%) that establishes a floor for tax competition amongst jurisdictions. Since the introduction of the OECD Inclusive Framework, over 140 countries have endorsed the framework and E.U. member states formally adopted the E.U.’s Pillar Two Directive. However, the U.S. voiced concerns regarding the application of the global minimum tax and stated that it may impose retaliatory taxes or take other retaliatory actions against companies from jurisdictions (including in the E.U.) that applied or would apply the global minimum tax. Nevertheless, the U.S. Treasury Department has since stated that it reached an agreement with the G7 regarding the treatment of U.S.-headquartered multinational groups in connection with Pillar Two. On January 5, 2026, the OECD/G20 Inclusive Framework announced a “side-by-side” package; however, the implementation and potential effects of these developments remain uncertain.
As of the date of this annual report, certain E.U. member states have begun to transpose the directive into law, but enforcement dates vary. A number of E.U. member states have begun to implement the rules, subject to transitional rules and permitted deferrals. While we do not anticipate that Pillar Two will have a material impact on our tax provision or effective tax rate, it is possible that Pillar Two may result in top-up taxes in some jurisdictions in which we operate and we continue to monitor evolving tax legislation. Depending on the final rules, we may face requirements for increased tax and accounting disclosures, as well as additional compliance and reporting obligations. For more information, see Note 28 to the audited consolidated financial statements included in this annual report.
The unforeseen results of potential trade disputes and reciprocal tariffs around the world, including the United States, the European Union and/or China may cause an impact on our business.
Our operations expose us to the risk that increased trade protectionism from the United States, the European Union, China or other nations adversely affect our business. Governments may turn to trade barriers to protect or revive their domestic industries in the face of foreign imports. Restrictions on imports, including in the form of tariffs, could have a major impact on global trade and, indirectly, demand for our products. Trade protectionism in the markets we serve may cause an increase in the cost of exported goods, the length of time required to deliver goods and the risks associated with exporting goods and, as a result, a decline in the volume of exported goods and demand for imported products, including our plasma-derived therapies. In addition to tariffs, governments have increasingly implemented export controls, investment restrictions, anti-subsidy investigations, supply chain localization requirements and other trade-related measures that may affect cross-border flows of goods, capital and technology. Due to the interconnected nature of the global supply chain for many products, these policies could impact imports and exports from countries not directly imposing or subject to tariffs or other measures.
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Tensions over trade and other matters remain high between the U.S. and other countries, including the members of the E.U. and China. The current U.S. administration, led by President Trump, instituted widespread tariffs on a wide variety of goods, including from the European Union and China, which led, and could continue to lead, to retaliatory tariffs from other countries including China and the E.U. The continued use of tariffs and other trade policy tools by the United States and other governments has created significant uncertainty about the future relationship between the United States and China, the European Union, Canada, Mexico and other exporting countries, including with respect to trade policies, treaties, government regulations and tariffs, and has led to concerns regarding the potential for an extended trade war. Protectionist developments, or the perception they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade and, in particular, trade between the United States and other countries, including China and countries in the European Union, which could adversely affect our business, results of operations, and financial condition. Any new or increased trade barriers or restrictions on trade, including as a result of tariffs imposed by the United States or other countries, could have an adverse impact on our business, operating results and financial condition.
Changes in immigration laws in the countries in which we operate, including Canada and the United States, could affect our ability to send employees with specified expertise in manufacturing and IT into foreign regions for purposes of building or upgrading certain infrastructure.
We are highly dependent upon skilled personnel in key parts of our organization, and we invest heavily in recruiting, training and retaining qualified individuals. The success of our business is dependent on our ability to attract and retain talented and experienced professionals, and the ability to mobilize them around the world to meet our growth needs, including the construction of new facilities and upgrades of existing infrastructure throughout the world.
Laws, regulations and customs, including legislation and customary practice in the United States and Canada, our main markets, may restrict our ability to attract, motivate and retain the required level of qualified personnel. Some countries and non-governmental organizations have recently expressed concerns about a perceived connection between offshore outsourcing and the loss of domestic jobs. It is difficult to predict the political and economic events that could affect immigration laws, or the restrictive impact they could have on obtaining or renewing work visas for our manufacturing and technology professionals. Immigration laws in the countries we operate in are subject to legislative changes, as well as to variations in the standards of application and enforcement due to political forces and economic conditions. Changes in immigration laws to restrict outsourcing of services internationally by domestic corporations, limit the availability of certain work visas or increase visa fees in the key markets in which we operate may impact our ability to staff projects in a timely manner and negatively affect our profitability.
In addition to calls for changes to U.S. immigration laws regarding the admission of highly skilled temporary and permanent workers, legislation restricting outsourcing may be enacted at the federal and/or state level in the United States. Since a large part of our business centers around the United States, changes to U.S. immigration laws could make it more difficult to obtain the required nonimmigrant work authorizations for our employees that allow us to compete for and provide timely and cost-effective services to our clients in the United States, which in turn could adversely affect our revenues and operating profitability. Furthermore, our international expansion and our business in general may be materially adversely affected if legislative or administrative changes to immigration or visa laws and regulations impair our hiring processes or projects involving personnel who are not citizens of the country where their work is to be performed. If we are not able to add and retain employees effectively, our ability to achieve our strategic objectives will be adversely affected, and our business and growth prospects will be harmed.
Risks Relating to the Company and Our Business
Our manufacturing processes are complex and involve biological intermediates that may be susceptible to contamination and variations in yield. Plasma and plasma derivative products are fragile, and improper handling of the plasma or plasma derivative products could adversely affect our operations.
Plasma is a raw material that is susceptible to damage and contamination and may contain human pathogens, any of which would render the plasma unsuitable for further manufacturing. Almost immediately after its collection from a donor, plasma is stored and transported at temperatures that are at or below -20 degrees Celsius (-4 degrees Fahrenheit). For instance, contamination or improper storage of plasma by us or third-party suppliers may require us to destroy some of our raw material. If unsuitable plasma is not identified and discarded prior to its release to our manufacturing processes, it may be necessary to discard intermediate or finished product made from that plasma or to recall any finished product released to the market, resulting in a charge to cost of goods sold.
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Our failure, or the failure of third parties that supply, ship or distribute our plasma and plasma derivative products, to properly care for our plasma or plasma derivative products may require us to destroy some raw materials or products. If the volume of plasma or plasma derivative products damaged by such failures were to be significant, the loss of that plasma or those plasma derivative products could have a material adverse effect on our financial condition and results of operations.
The manufacture of our plasma products is an extremely complex process of fractionation (separating the plasma into component proteins), purification, filling and finishing. Our products can become non-releasable or otherwise fail to meet our specifications through a failure of one or more of our product testing, manufacturing, process controls and quality assurance processes. We may detect instances in which an unreleased product was produced without adherence to our manufacturing procedures or plasma used in our production process was not collected or stored in a compliant manner consistent with Current Good Manufacturing Practice (“cGMP”) regulations enforced by the U.S. Food and Drug Administration (“FDA”) and analogous regulatory authorities of other countries, or other similar regulations, which would likely result in our determination that the impacted products should not be released and therefore should be destroyed.
Once we have manufactured our plasma-derived products, they must be handled carefully and kept at appropriate temperatures. Our failure, or the failure of third parties that supply, ship or distribute our products, to properly care for our plasma-derived products may require that such products be destroyed.
While we expect to write off small amounts of work in process inventories in the ordinary course of business due to the complex nature of plasma, our processes and our products, unanticipated events may lead to write-offs and other costs materially in excess of our expectations. Such write-offs and other costs could cause material fluctuations in our profitability. Furthermore, contamination of our products could cause investors, consumers or other third parties with whom we conduct business to lose confidence in the reliability of our manufacturing procedures, which could adversely affect our sales and profits. In addition, faulty or contaminated products that are unknowingly distributed could result in patient harm, threaten the reputation of our products and expose us to product liability damages and claims.
Due to the nature of plasma, there will be variations in the biologic properties of the plasma we collect or purchase for fractionation that may result in fluctuations in the obtainable yield of desired fractions, even if cGMP regulations are followed. Lower yields may limit production of our plasma-derived products due to capacity constraints. If such batches of plasma with lower yields impact production for extended periods, it may reduce the total volume of product that we could market and increase our cost of goods sold, thereby reducing our profitability.
Our manufacture of intermediate immunoassay antigens and antibodies to screen human donated blood and blood products is also a complex biologic process, subject to substantial production risks. These processes typically involve an upstream or fermentation process and a downstream or purification process. Since in the upstream process we deal with living cells, we may face a contamination by undesired cells which would eventually translate into a low yield. Yields in general can also be greatly affected by the different nutrients compositions added to the reactors in this fermentation step. Likewise, during the purification step, we can face low yields due to poor resins composition, equipment failure or procedural mistakes.
Once our products are approved and marketed, we must continually monitor them for signs that their use may result in serious and unexpected side effects, which could jeopardize our reputation and our ability to continue marketing our products. We may also be required to conduct post-approval clinical trials as a condition to licensing a product.
As for all pharmaceutical products, the use of our products sometimes produces undesirable side effects or adverse reactions or events (collectively, “adverse events”). For the most part, these adverse events are known, are expected to occur at some frequency and are described in the products’ labeling. Known adverse events of a number of our products include allergic or anaphylactic reactions including shock and the transmission of infective agents. Further, the use of certain products sometimes produces additional adverse events, which are detailed below.
● The use of albumin sometimes produces the following adverse events: hypervolemia, circulatory overload, pulmonary edema, hyperhydration and allergic manifestations including urticaria, chills, fever and changes in respiration, pulse and blood pressure.
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● The use of blood clotting Factor IX sometimes produces the following adverse events: the induction of neutralizing antibodies; thromboembolism, including myocardial infarction; disseminated intravascular coagulation; venous thrombosis and pulmonary embolism; and, in the case of treatment for immune tolerance induction, nephrotic syndrome.
● The use of the antihemophilic blood clotting Factor VIII sometimes produces the following adverse events: the induction of neutralizing antibodies, thromboembolic events and hemolytic anemia or hemolysis.
● The use of immunoglobulins sometimes produces the following adverse events: nausea, vomiting, asthenia, pyrexia, rigors, injection site reaction, allergic or anaphylactic reaction, aseptic meningitis, arthralgia, back pain, dizziness, headache, rash, pruritus, urticaria, hemolysis or hemolytic anemia, hyperproteinemia, increased serum viscosity and hyponatremia, thromboembolic reactions such as myocardial infarction, stroke, pulmonary embolism and deep vein thromboses, transfusion-related acute lung injury and renal dysfunction and acute renal failure.
● The use of anti-hepatitis B immunoglobulin sometimes produces the following adverse events: thromboembolic reactions such as myocardial infarction, stroke, pulmonary embolism and deep vein thromboses, aseptic meningitis, hemolytic anemia or hemolysis and acute renal failure.
● The use of Koate-DVI, which we license exclusively in the United States to Kedrion S.p.A, a corporation organized under the laws of Italy, sometimes produces the following adverse events: allergic reactions, tingling in the arm, ear and face, blurred vision, headache, nausea, stomach ache and a jittery feeling.
● The use of Prolastin, Prolastin-C, alpha-1 proteinase inhibitor, or A1PI, sometimes produces the following adverse events: dyspnea, tachycardia, rash, chest pain, chills, influenza-like symptoms, hypersensitivity, hypotension and hypertension.
In addition, the use of our products may be associated with serious and unexpected adverse events, or with less serious reactions at a greater than expected frequency. This may be especially true when our products are used in critically ill patient populations. When these unexpected events are reported to us, we must undertake a thorough investigation to determine causality and implications for product safety. These events must also be specifically reported to the applicable regulatory authorities. If our evaluation concludes, or regulatory authorities perceive, that there is an unreasonable risk associated with the product, we would be obligated to withdraw the impacted lot(s) of that product. Furthermore, an unexpected adverse event caused by a new product may be recognized only after extensive use of the product, which could expose us to product liability risks, enforcement action by regulatory authorities and damage to our reputation.
Once we produce a product, physicians are responsible for prescribing and administering the product as we have directed and for the indications described on the labeling. It is not, however, unusual for physicians to prescribe our products for unapproved, or off-label, uses or in a manner that is inconsistent with our directions or the labeling. To the extent such off-label uses and departures from our administration directions become pervasive and produce results such as reduced efficacy or other adverse effects, the reputation of our products in the marketplace may suffer.
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Our ability to continue manufacturing and distributing our products depends on our continued adherence to cGMP regulations at our facilities.
The manufacturing processes for our products are governed by detailed written procedures and governmental regulations that set forth cGMP requirements for blood, blood products and other products. Our quality operations unit monitors compliance with these procedures and regulations, and the conformance of materials, manufacturing intermediates and final products to their specifications. Failure to adhere to established procedures or regulations, or to meet a specification, could require that a product or material be rejected and destroyed.
Our adherence to cGMP regulations and the effectiveness of our quality systems are periodically assessed through inspections of our facilities by the FDA, and analogous regulatory authorities of other countries. If deficiencies are noted during an inspection, we must take action to correct those deficiencies and to demonstrate to the regulatory authorities that our corrections have been effective. If serious deficiencies are noted or if we are unable to prevent recurrences, we may have to recall product or suspend operations until appropriate measures can be implemented. We are also required to report certain deviations from procedures to the FDA and analogous regulatory authorities of other countries, and even if we determine that the deviations were not material, such regulatory authorities could require us to take similar measures. Since cGMP reflects ever-evolving standards, we regularly need to update our manufacturing processes and procedures to comply with cGMP. These changes may cause us to incur costs without improving our profitability or the safety of our products. For example, more sensitive testing assays (if and when they become available) may be required or existing procedures or processes may require revalidation, all of which may be costly and time consuming and could delay or prevent the manufacturing of a product or launch of a new product. Further, changes in FDA policy, priorities, or resource allocation may affect our ongoing operations.
Changes in manufacturing processes, including a change in the location where the product is manufactured or a change of a third-party manufacturer, may require prior review and approval or revalidation by the FDA or other regulatory authorities of the manufacturing processes and procedures in accordance with cGMP regulations.
To validate our manufacturing processes and procedures following completion of our upgraded facilities, we must demonstrate that the processes and procedures at the upgraded facilities are comparable to those currently in place at our other facilities. To provide such a comparative analysis, both the existing processes and the processes that we expect to be implemented at our upgraded facilities must comply with the regulatory standards prevailing at the time that our expected upgrade is completed. In addition, regulatory requirements, including cGMP regulations, continually evolve. Failure to adjust our operations to conform to new or updated standards as established and interpreted by applicable regulatory authorities would create a compliance risk that could impair our ability to sustain normal operations.
Regulatory authorities, including the FDA and the European Medicines Office (“EMA”), routinely inspect our facilities to assess ongoing compliance with cGMP. If the FDA, the EMA or other regulatory authorities find our facilities to be out of compliance, our ongoing operations or plans to expand would be adversely affected.
A significant disruption in our supply of plasma, including as a result of macroeconomic conditions, pandemics or changes in immigration policies and enforcement could have a material adverse effect on our business and our growth plans.
The majority of our revenue depends on our access to U.S. source plasma (obtained through plasmapheresis), the principal raw material for our plasma derivative products. Our ability to increase revenue depends substantially on increased access to and availability of plasma. If we are unable to obtain sufficient quantities of source plasma, we may be unable to find an alternative cost-effective source of plasma and we would be limited in our ability to maintain current manufacturing levels of plasma derivative products. As a result, we could experience a substantial decrease in net revenue or profit margins, a loss of customers, a negative effect on our reputation as a reliable supplier of plasma derivative products or a substantial delay in our production growth plans.
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Our current business plan envisages an increase in the production of plasma derivative products, which depends on our ability to maintain and/or increase plasma collections or improve product yield. The ability to maintain and/or increase plasma collections may be limited, our supply of plasma could be disrupted or the cost of plasma could increase substantially, as a result of numerous factors, including:
● A reduction in the donor pool.
● Regulators in most of the largest markets for plasma derivative products, including the United States, restrict the use of plasma collected from specific countries and regions in the manufacture of plasma derivative products. For example, the outbreak in the early 1990s of the variant Creutzfeldt-Jakob, or mad cow disease, resulted in a suspension by the United States of the use of plasma collected from certain persons based on travel, residence or transfusion in the United Kingdom and concern over the safety of blood products, which led to increased domestic and foreign regulatory control over the collection and testing of plasma and the disqualification of certain segments of the population from the donor pool, significantly reducing the potential donor pool. This suspension was only lifted in 2022. The appearance of new viral strains could further reduce the potential donor pool. In past years, the COVID-19 pandemic also adversely impacted our plasma collection volumes because of, among other things, mobility restrictions.
● Changes in macroeconomic conditions could impact the number of donors. For example, during the early 2020s in the United States, the implementation of government stimulus programs issued to households during the COVID-19 pandemic had the two-pronged effect of both reducing the financial incentive for individuals to donate plasma and hindering our ability to maintain proper levels of workforce in plasma collection centers. Other macroeconomic factors such as a significant decrease in both inflation and interest rates in the United States in the future could result in increased access to cheaper debt to individuals, reducing the financial incentive for them to donate plasma;
● Changes in certain immigration policies and enforcement could impair some of our supply of plasma. A significant portion of the plasma we collect in the United States comes from donors who cross the U.S.-Mexico border to donate at plasma collection centers located in border states, such as California, Texas and Arizona. Over the years, U.S. authorities have imposed or proposed various measures that have restricted and could in the future restrict cross-border travel, including changes to visa policies, travel bans, or increased enforcement actions at border checkpoints. Any new or existing restrictions or policy changes or any other issues that limit or prevent Mexican nationals or holders of valid United States visas from entering the United States for this purpose could materially impact our ability to collect sufficient plasma to meet production needs.
● Regulatory requirements. See “—Disruption of the operations of our plasma collection centers would cause us to become supply constrained and our financial performance would suffer.”
● Plasma supply sources. In recent years, there has been vertical integration in the industry as plasma derivatives manufacturers have been acquiring plasma collection centers. Any significant disruption in the supply of plasma or an increased demand for plasma may require us to obtain plasma from alternative sources, which may not be available on a timely basis.
Disruption of the operations of our plasma collection centers would cause us to become supply-constrained and our financial performance would suffer.
In order for plasma to be used in the manufacturing of our products, the individual centers at which the plasma is collected must be licensed and approved by the regulatory authorities, such as the FDA and the EMA, of those countries in which we sell our products. When a new plasma collection center is opened, it must be inspected on an ongoing basis after its approval by the FDA, the EMA and other applicable regulatory authorities for compliance with cGMP and other regulatory requirements, and these regulatory requirements are subject to change. While we believe that our centers timely comply with evolving requirements, the compliance efforts necessary for evolving requirements may increase our costs. An unsatisfactory inspection could prevent a new center from being approved for operation or risk the suspension or revocation of an existing approval.
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In order for a plasma collection center to maintain its governmental approval to operate, its operations must continue to conform to cGMP and other regulatory requirements. In the event that we determine a plasma collection center did not comply with cGMP and other regulatory requirements in collecting plasma, we may be unable to use and may ultimately destroy plasma collected from that center, which would be recorded as a charge to cost of goods. Additionally, if noncompliance in the plasma collection process is identified after the impacted plasma has been pooled with compliant plasma from other sources, entire plasma pools, in-process intermediate materials and final products could be impacted. Consequently, we could experience significant inventory impairment provisions and write-offs.
We plan to continue to obtain our supplies of plasma for use in our manufacturing processes through collections at our plasma collection centers and through selective acquisitions or remodeling and relocations of existing centers. This strategy is dependent upon our ability to successfully integrate new centers, to obtain FDA and other necessary approvals for any centers not yet approved by the FDA or other regulatory authorities, to maintain a cGMP compliant environment in all centers and to attract donors to our centers.
Our ability to increase and improve the efficiency of production at our plasma collection centers may be affected by: (i) changes in the economic environment and population in selected regions where we operate plasma collection centers; (ii) the entry of competitive centers into regions where we operate; (iii) our misjudging the demographic potential of individual regions where we expect to increase production and attract new donors; (iv) unexpected facility related challenges; (v) unexpected management challenges at select plasma collection centers; (vi) adverse events at our centers; or (vii) unforeseen governmental changes to policies limiting the donor population or imposing regulations that make plasma donations onerous and restrictive.
A significant portion of our net revenue has historically been derived from sales of our immunoglobulin products and we expect that they will continue to comprise a significant portion of our sales. Any adverse market event with respect to these products could have a material adverse effect on us.
We have historically derived a significant portion of our net revenue from our immunoglobulin products. In 2025 and 2024, our immunoglobulin products accounted for approximately 54.3% and 50.8% of our net revenue, respectively. If any of these products were to lose significant sales or were substantially or completely displaced in the market, we would lose a significant and material source of our net revenue. Similarly, if either Flebogamma, Gamunex-C/Gamunex, Xembify or Prolastin were to become the subject of litigation or an adverse governmental ruling requiring us to cease sales of it, our business could be adversely affected. Although we do not currently anticipate any significant decrease in the sales of any of these products, a significant decrease could result from plasma procurement and manufacturing issues resulting in lower product availability for sales and changing market conditions.
We face significant competition, including from companies with greater financial resources.
We face significant competition. Each of Takeda, CSL Behring, Kedrion Biopharma, Octapharma Plasma and Bio Products Laboratory Ltd. now has a 10% liquid IVIG product in the United States. Both Octapharma and Bio Products Laboratory also have 5% liquid IVIG products. GC Biopharma introduced its 10% IVIG product, AlygloTM, to the U.S. market in 2024 and Argenx obtained FDA approval in 2021 for VYVGART (IV) and in 2024 for VYVGART Hytrulo (subcutaneous), a non-plasma derived product that would treat patients with chronic inflammatory demyelinating polyneuropathy (“CIDP”). Such products are direct competitors to some of our main products, Flebogamma, Gamunex-C/Gamunex or Xembify. As competition has increased, some of our competitors have discounted the price of immunoglobulin products as many customers have become increasingly price sensitive. If customers demand lower-priced products, we may lose sales or be forced to lower our prices.
In the therapeutic area of pulmonology, specifically alpha-1-antitrypsin augmentation therapy (“AAT”), we face competition from other companies such as Mereo Biopharma and AATec Medical in researching and developing novel oral and inhaled recombinant AAT therapies, respectively. In addition, gene therapies focusing on alpha-1 are potentially in development. We expect increased competition will come from Sanofi due to its acquisition from Inhibrx of all the assets and liabilities associated with INBRX-101, an optimized recombinant AAT augmentation therapy. In the area of alpha1-proteinase inhibitor deficiency, CSL’s Respreeza/Zemaira and Takeda’s Aralast (lyo)/Glassia (liquid) are competing with our Prolastin product. Our current and future competitors may increase their sales, lower their prices, change their distribution model or improve their products, causing harm to our product sales and market share. Also, if the attrition rate of our A1PI patient base accelerates faster than we have forecasted, we would have fewer patients and lower sales volume.
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Our competitors may also develop other new treatments, such as small molecules, recombinant products, inhaled products, gene therapies, or other novel therapies for indications for which our products are currently used. Recombinant Factor VIII and Factor IX products, which are currently available and widely used in the United States and Europe, compete with our plasma-derived product in the treatment of hemophilia A and B and are perceived by many to have lower risks of disease transmission. Additional recombinant products and new small molecules, some with extended half-lives, compete with and reduce the demand for our products. Genetech’s Hemlibra, a non-plasma product to control bleeding in patients with hemophilia A, is another competitor in the hemophilia market. The use of Hemlibra is a significant competitive risk for the use of plasma derived and recombinant Factor VIII. Additionally, numerous novel gene therapies have been approved and more are under development for the treatment of hemophilia which may further compete with our existing plasma derived therapies.
Furthermore, while we are investigating additional indications for the use of albumin, these new possibilities are countered by the fact that there are alternatives from competitors for albumin use in the main application we apply it, as a plasma volume expander. In addition to competition from other plasma-derived product manufacturers, there are several companies developing recombinant human albumin, primarily focusing on China, the largest albumin market, and also planning geographic expansion into certain countries in the Asia-Pacific region and the Middle East. Recombinant albumin products could primarily affect markets such as China and India in the short term due to their potentially unlimited supply, lower prices and shorter manufacturing times compared to plasma-derived albumin. Currently, there are five companies developing recombinant human albumin, three based in China and two based in India.
Healthgen, a Chinese company, developed the first recombinant human albumin product which was approved in July 2025 and is derived from rice. This product received approval only for the treatment of liver Cirrhosis with hypoalbuminemia (less than or equal to 30 g/L), which is not a harmonized indication comparable to those approved for plasma derived albumin products. Anrate and Proetgen are considered among the more promising recombinant albumin developers, as their products are based on yeast. Anrate is expected to submit a new drug application in the second or third quarter of 2026. Both Healthgen and Anrate have completed Phase III clinical trials and reported efficacy and safety; however, long term safety data for recombinant albumin products still needs to be proven. Recombinant technology may also provide manufacturing advantages, including shorter production timelines compared to the several months typically required for plasma derived albumin production, particularly for yeast based platforms. The Indian recombinant albumin developers are currently expected to obtain regulatory approvals beyond 2027.
We are only one of a number of companies that produce an alpha-1 anti-trypsin for the treatment of patients with hereditary emphysema and our competitors continually develop new products including inhaled, gene therapy, recombinant or other new various methods of administration for this therapy. Additionally, new treatments such as gene therapy, inhaled and recombinant products are in development by other companies and, regardless of the uncertainties surrounding the potential safety and efficacy of such new treatments, they increase our level of competition.
The introduction of products approved for alternative routes of administration, including subcutaneous, may also adversely affect sales of our products. For example, CSL Behring and Takeda introduced preparations of human immunoglobin at a 20% concentration for the treatment of people who need antibody replacement and Takeda has an immune globulin with a recombinant human hyaluronidase indicated for the treatment of primary immunodeficiency (“Pl”) in adults. Although we have FDA approval for similar concentrations and routes of administration, the level of competition remains significant and trending up as other players continue developing their operations in this expanding area of therapy.
Other companies are developing different therapies for the treatment of autoimmune diseases and other disorders that are currently treated with our immunoglobulins. If an increased use of alternative products for Factor VIII, Factor IX, albumin, alpha-1 or immunoglobulins makes it uneconomical to produce our plasma-derived products, or if further technological advances improve these products or create other competitive alternatives to our plasma derivative products, our financial condition and results of operations could be materially adversely affected. We expect in the future to face greater competition from biosimilar products which could further adversely affect our financial performance.
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We do not currently sell therapeutic recombinant products. We have additional versions of A1PI in our pipeline, but we cannot be certain that any of these products will be approved or sold in the future. Additionally, we are developing other potential innovations in the area of immunoglobulins. For example, our subsidiary GigaGen utilizes a proprietary, single-cell platform to discover and develop recombinant polyclonal and monoclonal antibody therapies to treat life-threatening diseases, with a number of initiatives currently under pre-clinical and clinical development. However, we cannot be certain that we will succeed in developing these products for licensed commercial use. As a result, our product offerings may remain plasma-derived in the near term, even if our competitors offer competing recombinant products.
In addition, some of our competitors have significantly greater financial resources than us. As a result, they may be able to devote more funds to research and development and new production technologies, as well as to the promotion of their products and business. These competitors may also be able to sustain for longer periods a deliberate substantial reduction in the price of their products or services. The development by a competitor of a similar or superior product or increased pricing competition may result in a reduction in our net revenue or a decrease in our profit margins.
Technological changes in the production of our products may require substantial investments in innovation, digital transformation and new technologies, which could render our production process uneconomical and diminish our competitiveness in the industries in which we operate.
The production of our plasma derivative, diagnostic and bio supplies products is characterized by factors such as rapid technological change, medical advances, changing consumer requirements, short device lifecycles, changing regulatory requirements and evolving industry standards. Technological advances have accelerated changes in recent years and future technological developments and medical advances could render our production processes uneconomical. Our success may depend on our ability to enhance our current technology, including through the use of artificial intelligence tools, and develop or acquire new technologies to keep pace with technological developments and evolving industry standards, while responding to changes in customer needs. Such innovation efforts may require us to invest substantial amounts of capital to upgrade our facilities and develop our products at competitive prices.
Additional investments in new technologies, processes, and business models expose us to certain risks and challenges, such as inconsistencies with the company’s strategy, talent resources and geographical constraints, financial resource limitations, and adaptation to external factors out of our control. These risks and challenges have the potential to undermine achieving the full benefits of digital transformation and diminish the company’s competitiveness within the industry in which we operate.
We utilize artificial intelligence, which could expose us to liability or adversely affect our business.
We have built and integrated, and may in the future build, integrate and utilize, artificial intelligence (“AI”) tools in connection with our business, products and services, including AI designed to reduce energy consumption in cooling plants and to enhance the production performance of IVIG. However, there are significant risks involved in utilizing AI and no assurance can be provided that our use will enhance our products or services or produce the intended results. For example, AI algorithms may be flawed, insufficient, of poor quality, reflect unwanted forms of bias or contain other errors or inadequacies, any of which may not be easily detectable, which could impair the acceptance of AI solutions, including those incorporated into our products and services. If the AI solutions that we create or use are deficient, inaccurate, controversial, highly regulated, or impermissible, we could incur operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business and financial results. Further, there can be no assurance that our use of AI will be successful in increasing our operational efficiencies or otherwise result in our intended outcomes.
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The use of certain artificial intelligence technology can give rise to intellectual property risks, including compromises to proprietary intellectual property and intellectual property infringement. Additionally, we expect to see increasing government, international, and supranational regulation related to artificial intelligence use and ethics, which may also significantly increase the burden and cost of research, development and compliance in this area. For example, the European Union’s Artificial Intelligence Act enacted in 2024 (the “AI Act”) — the world’s first comprehensive AI law — imposes significant obligations on providers and deployers of high-risk artificial intelligence systems and encourages providers and deployers of artificial intelligence systems to account for ethical principles in their development and use of these systems. If we develop or use AI systems that are governed by the AI Act, it may necessitate ensuring higher standards of data quality, transparency, and human oversight, as well as adhering to specific and potentially burdensome and costly ethical, accountability, and administrative requirements. The rapid evolution of artificial intelligence will require the application of significant resources to design, develop, test and maintain our products and services to help ensure that artificial intelligence is implemented in accordance with applicable law and regulation and in a socially responsible manner and to minimize any real or perceived unintended harmful impacts. Our vendors may in turn incorporate artificial intelligence tools into their own offerings, and the providers of these artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards, including with respect to privacy and data security. Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to conduct cyberattacks and to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property. Any of these effects could damage our reputation, result in the loss of valuable property and information, cause us to breach applicable laws and regulations, and adversely impact our business.
The discovery of new pathogens could slow our growth and adversely affect profit margins.
The possible appearance of new pathogens could trigger the need for changes in our existing inactivation and production methods, including the administration of new detection tests. Such a development could result in delays in production until the new methods are in place, as well as increased costs that may not be readily passed on to our customers.
Product liability claims or product recalls and/or voluntary withdrawals involving our products or products we distribute could have a material adverse effect on our business.
Our business exposes us to the risk of product liability claims. We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and an even greater risk when we commercially sell any products. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in any or all of the following:
● decreased demand for our products and any product candidates that we may develop;
● injury to our reputation;
● withdrawal of clinical trial participants;
● costs to defend the related litigation;
● substantial monetary awards to trial participants or patients;
● loss of revenue; and
● the inability to commercialize any products that we may develop.
Like many plasma fractionators, we have been, and may in the future be, involved in product liability or related claims relating to our products, including claims alleging the transmission of disease through the use of such products. Plasma is a biological matter that is known to be capable of transmitting viruses and pathogens, whether known or unknown. Therefore, our plasma and plasma derivative products, if donors are not properly screened or if the plasma is not properly collected, tested, inactivated, processed, stored and transported, could cause serious disease and possibly death to the patient. Any transmission of disease through the use of one of our products or third-party products sold by us could result in claims by persons allegedly infected by such products.
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Our potential product liability also extends to our Diagnostic business unit and Healthcare Solutions (as defined herein) products. In addition, we sell and distribute third-party products, and the laws of the jurisdictions where we sell or distribute such products could also expose us to product liability claims for those products. Furthermore, the presence of a defect in a product could require us to carry out a recall of such product.
A product liability claim, or a product recall and/or a voluntary withdrawal of products could result in substantial financial losses, negative reputational repercussions and an inability to retain customers. Although we have a program of insurance policies designed to protect us and our subsidiaries from product liability claims, and we self-insure a portion of this risk, claims made against our insurance policies could exceed our limits of coverage. We intend to expand our insurance coverage as our sales grow. However, as product liability insurance is expensive and can be difficult to obtain, a product liability claim could decrease our access to product liability insurance on acceptable terms. In turn, we may not be able to maintain insurance coverage at a reasonable cost and may not be able to obtain insurance coverage that will be adequate to satisfy any liability that may arise. Although we have not experienced a material liability claim, we cannot assure you that we will not experience one in the future.
Our ability to continue to produce safe and effective plasma derivative products depends on a plasma supply free of transmittable diseases.
Despite overlapping safeguards, including the screening of donors and other steps to remove or inactivate viruses and other infectious disease-causing agents, the risk of transmissible disease through plasma-derived products cannot be entirely eliminated. If a new infectious disease was to emerge in the human population in the future, the regulatory and public health authorities could impose precautions to limit the transmission of the disease that would impair our ability to procure plasma, manufacture our products or both. Such precautionary measures could be taken before there is conclusive medical or scientific evidence that a disease poses a risk for plasma-derived products.
In recent years, new testing and viral inactivation methods have been developed that more effectively detect and inactivate infectious viruses in collected plasma. There can be no assurance, however, that such new testing and inactivation methods will adequately screen for, and inactivate, infectious agents in the plasma used in the production of our products.
Ineffective IT governance, as well as a lack of related compliance, operational safeguards, and implementation of appropriate cybersecurity measures poses significant risks in today’s data-driven world, including data breaches, regulatory non-compliance, operational inefficiencies, financial losses and hindered innovation.
We are highly dependent on IT processes, which may make ineffective governance a material risk. Ineffective IT practices can result in data breaches, which can be impactful on us by way of breaching contractual requirements, violating certain applicable laws, and exposing us to financial and reputational damage. In addition, ineffective IT governance can result in us failing to comply with certain regulatory requirements in this area that can lead to legal penalties and loss of trust among stakeholders. Lastly, we can be exposed to certain operational inefficiencies by not having strong IT governance practices leading to increased costs and reduced productivity, disruptions in business processes and the need for remediation efforts. See Item 16K of Part II, “Cybersecurity,” for additional details.
In addition, in 2025 we began transitioning our main enterprise resource planning system to S/4HANA, a SAP platform, to streamline our operations. We have heavily invested in this transition, and any disruptions, data loss or systems failures resulting from the transition could negatively impact or business and financial results.
Our future success depends on our ability to retain members of our senior management and to attract, retain and motivate qualified personnel.
We are highly dependent on the principal members of our executive and scientific teams. The loss of the services of any of these persons might impede the achievement of our research, development, operational and commercialization objectives. In particular, we believe the loss of any member of our senior management team could significantly and negatively impact our business. For details regarding the members of senior management, see Item 6 of this Part I, “Directors, Senior Management and Employees—A. Directors and Senior Management—Senior Management.” We do not maintain “key person” insurance on any of our senior management.
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Recruiting and retaining qualified operations, finance and accounting, scientific, clinical and sales and marketing personnel will be critical to our success. We may not be able to attract and retain these personnel on acceptable terms, given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. If we are unable to attract, retain and motivate qualified and experienced personnel, we could lose customers and suffer reduced profitability. Even if we are successful in attracting and retaining such personnel, competition for such employees may significantly increase our compensation costs and adversely affect our financial condition and results of operations.
cGMP regulations also require that the personnel we employ and hold responsible for product manufacturing, including, for example, the collection, processing, testing, storage or distribution of blood or blood components, be adequate in number, educational background, training (including professional training as necessary) and experience, or a combination thereof, and have capabilities commensurate with their assigned functions, a thorough understanding of the procedures or control operations they perform, the necessary training or experience and adequate information concerning the application of relevant cGMP requirements to their individual responsibilities. Our failure to attract, retain and motivate qualified personnel may result in a regulatory violation, affect product quality, require the recall or market withdrawal of affected product or result in a suspension or termination of our license to market our products, or any combination thereof.
Our business requires substantial capital to operate and grow and to achieve our strategy of realizing increased operating leverage, including the completion of several large capital projects.
We have implemented several large capital projects to expand and improve the capacity and structure of our facilities and to improve the structure of our plasma collection centers in the United States. These projects may run over budget or be delayed. We cannot be certain that these projects will be completed in a timely manner or that we will maintain our compliance with cGMP regulations, and we may need to spend additional amounts to achieve compliance. Additionally, by the time these multi-year projects are completed, market conditions may differ significantly from our assumptions regarding the number of competitors, customer demand, alternative therapies, reimbursement and public policy, and as a result, capital returns might not be realized.
We also plan to continue to spend substantial sums on research and development, to obtain the approval of the FDA, and other regulatory authorities, for new indications for existing products, to develop new product delivery mechanisms for existing products and to develop innovative product additions. We face a number of obstacles to successfully converting these efforts into profitable products, including, but not limited to, the successful development of an experimental product for use in clinical trials, the design of clinical study protocols acceptable to the FDA and other regulatory authorities, the successful outcome of clinical trials, our ability to scale our manufacturing processes to produce commercial quantities or successfully transition technology, the approval of the FDA and other regulatory authorities of our products and our ability to successfully market an approved product or new indication.
For example, when a new product is approved, the FDA or other regulatory authorities may require post-approval clinical trials, sometimes called Phase IV clinical trials. If the results of such trials are unfavorable, this could result in the loss of the license to market the product, with a resulting loss of sales.
We continually make capital expenditures for the maintenance and enhancement of our facilities. The amount and timing of future capital spending is dependent upon a number of factors, including market conditions, regulatory requirements and the extent and timing of particular projects, among other things. Our ability to grow our business is dependent upon the timely completion of these projects and obtaining the requisite regulatory approvals.
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We may not be able to develop some of our international operations successfully.
We currently conduct sales in over 100 countries. The successful operation of such geographically dispersed resources requires considerable management and financial resources. In particular, we must bridge our business culture to the business culture of each country in which we operate. In addition, international operations and the provision of services in foreign markets are subject to additional risks, such as changing market conditions, currency exchange rate fluctuations, trade wars and barriers, including the imposition of tariffs by the United States or other countries, including China and/or countries in the E.U., on imported goods, exchange controls, regulatory changes, changes to tax regimes (including proposed changes to U.S. tax laws by the Trump administration and the U.S. Congress), foreign investment limitations, civil disturbances, armed conflict and emerging pandemics, as well as changes in global immigration policies that can hinder our ability to obtain visas to work in various countries. Furthermore, if an area in which we have significant operations or an area into which we are looking to expand suffers an economic recession or currency devaluation, our net revenues and accounts receivable collections in that region will likely decline substantially or we may not be able to successfully expand or operate in that region.
Uncertainties regarding the general regulatory and legal environment, particularly in China, could adversely affect our business.
Our international operations are governed by local laws and regulations applicable to foreign investments and foreign-owned enterprises. Our business could be adversely affected by the interpretation and enforcement of and changes in these laws and regulations. These laws and regulations often lack transparency, can be difficult to interpret and may be enforced inconsistently. A significant portion of our revenues is derived from our operations in China. China has not developed integrated legal systems that cover all aspects of our activities. The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, Chinese legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. Because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations are uncertain. In addition, the Chinese legal system is based in part on government policies and internal rules that may have retroactive effect and, in some cases, are not published at all. As a result, we may not be aware of any alleged violation of these policies and rules until after the alleged violation has occurred. Any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. Moreover, the United States and China have had significant disagreements over monetary, economic, political, environmental and social issues at various times during recent years. Changes in political conditions and China-U.S. relations are difficult to predict and could adversely affect our business.
We are susceptible to interest rate variations.
We use issuances of debt and bank borrowings as a source of funding. At December 31, 2025, we had $2.1 billion and €5.7 billion of senior interest-bearing debt outstanding. Of such amounts, 27.0% bore interest at variable rates, at a spread over the Secured Overnight Funding Rate (“SOFR”), for our U.S. dollar denominated debt and at a spread over the Euro Interbank Offered Rate (“EURIBOR”), for our euro denominated debt. Any increase in interest rates payable by us, which could be adversely affected by, among other things, our inability to meet certain financial ratios, would increase our interest expense and reduce our cash flow, which could materially adversely affect our financial condition and results of operations. See Item 11 of this Part I, “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.”
Our results of operations and financial condition may be affected by adverse changes in foreign currency exchange rates, especially a significant shift in the value of the euro as compared to the U.S. dollar.
A significant portion of our business is conducted in currencies other than our reporting currency, the euro. In 2025, €4.8 billion, or 64.0%, of our net revenue of €7.5 billion was denominated in U.S. dollars. We are also exposed to currency fluctuations with respect to other currencies, such as the British pound, the Brazilian real, the Canadian dollar and the Argentine, Mexican and Chilean pesos. Currency fluctuations among the euro, the U.S. dollar and the other currencies in which we do business result in foreign currency translation gains or losses that could be significant.
We are also exposed to risk based on the payment of U.S. dollar denominated indebtedness. At December 31, 2025, we had approximately $2.1 billion of U.S. dollar denominated senior debt outstanding. See Item 5 of this Part I, “Operating and Financial Review and Prospects—B. Liquidity and Capital Resources” and Item 11 of this Part I, “Quantitative and Qualitative Disclosures About Market Risk—Currency Risk.”
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If our main facilities were to suffer a crippling accident, or if a force majeure event materially affected our ability to operate and produce saleable products, a substantial part of our manufacturing capacity could be shut down for an extended period.
A substantial portion of our revenue is derived from plasma fractionation or products manufactured at our main facilities, including the facilities located in San Diego, Clayton, Emeryville, Los Angeles and Parets. In addition, a substantial portion of our plasma supply is stored at facilities in City of Industry, California, as well as at our Clayton and Parets facilities. If any of our main facilities, including the ones mentioned above, were to be impacted by an accident or a force majeure event such as an earthquake, major fire, storm or explosion, major equipment failure or power failure lasting beyond the capabilities of our backup generators, our revenue would be materially adversely affected. In this situation, our manufacturing capacity could be shut down for an extended period and we could experience a loss of raw materials, work-in-process or finished goods inventory. In addition, extreme weather conditions may become more severe and frequent as the temperature rises due to the effects of climate change, and such extreme weather conditions could heighten the risks and uncertainties noted above.
Other force majeure events such as terrorist acts, armed conflicts, influenza pandemic or similar events could also impede our ability to operate our business. In addition, in the event of the reconstruction of our Clayton, Los Angeles or Parets facilities or our plasma storage facilities, gaining the regulatory approval for such new facilities and the replenishment of raw material plasma could be time consuming. During this period, we would be unable to manufacture all of our products at other plants due to the need for FDA and foreign regulatory authority inspection and certification of such facilities and processes.
Our property damage and business interruption insurance may be insufficient to mitigate the losses from any such accident or force majeure event. We may also be unable to recover the value of the lost plasma or work-in-process inventories, as well as the sales opportunities from the products we would be unable to produce.
If we experience equipment difficulties or if the suppliers of our equipment or disposable goods fail to deliver key product components or supplies in a timely manner, our manufacturing ability would be impaired and our product sales could suffer.
We depend on a limited number of companies that supply and maintain our equipment and provide supplies such as chromatography resins, filter media, glass and stoppers used in the manufacture of our products. If our equipment should malfunction, the repair or replacement of the machinery may require substantial time and cost, which could disrupt our production and other operations. Our plasma collection centers rely on disposable goods supplied by third parties and information technology systems hosted by third parties. Our plasma collection centers cannot operate without an uninterrupted supply of these disposable goods and the operation of these systems. Alternative sources for key component parts or disposable goods may not be immediately available. And while we have experienced periodic outages of these systems, a material outage would affect our ability to operate our collection centers.
Any new equipment or change in supplied materials may require revalidation by us or review and approval by the FDA or other regulatory authorities, including the EMA, which may be time-consuming and require additional capital and other resources. We may not be able to find an adequate alternative supplier in a reasonable time period, or on commercially acceptable terms, if at all. As a result, shipments of affected products may be limited or delayed. Our inability to obtain our key source supplies for the collection of plasma and manufacture of products may require us to delay shipments of products, harm customer relationships and force us to curtail operations.
If our shipping or distribution channels were to become inaccessible due to a crippling accident, a pandemic, an act of terrorism, a strike, earthquake, major fire, armed conflict or storm, or any other force majeure event, our supply, production and distribution processes could be disrupted.
Not all shipping or distribution channels are equipped to transport plasma. If any of our shipping or distribution channels becomes inaccessible due to a crippling accident, a pandemic, an act of terrorism, a strike, earthquake, major fire, armed conflict or storm or any other force majeure event, we may experience disruptions in our continued supply of plasma and other raw materials, delays in our production process or a reduction in our ability to distribute our products directly to our customers.
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We rely in large part on third parties for the sale, distribution and delivery of our products.
We regularly enter into distribution, supply and fulfillment contracts with group purchasing organizations (“GPOs”), home care companies, alternate infusion sites, hospital groups, distributors and others. We are highly dependent on these agreements for the successful sale, distribution and delivery of our products. For example, in the United States, we rely principally on GPOs and on our distributors to sell our immunoglobulin products. If such parties breach, terminate or otherwise fail to perform under these contracts, our ability to effectively distribute our products could be impaired and our business may be materially and adversely affected. In addition, through circumstances beyond our control, such as general economic decline, market saturation or increased competition, we may be unable to successfully renegotiate our contracts or secure terms which are as favorable to us. Furthermore, we rely in certain countries on distributors for sales of our products. Disagreements or difficulties with our distributors supporting our export business could result in a loss of sales.
We rely on the services of third parties for the manufacture of certain products.
We have rights of sale and distribution for several different products, including Tavlesse in the European market. However, for many of these products we rely upon supply from third parties. To the extent such third parties are unable to properly and timely manufacture and deliver the necessary products and services in Europe, our business could be materially affected.
We may not be able to commercialize products in development.
Before obtaining regulatory approval for the sale of our product candidates or for the marketing of existing products for new indicated uses, we must conduct, at our own expense, extensive preclinical tests to demonstrate the safety of our product candidates in animals and clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Preclinical and clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more of our clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of, preclinical testing and the clinical trial process that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including, without limitation, the following:
● regulators or institutional review boards (“IRBs”) may not authorize us to commence a clinical trial or conduct a clinical trial within a country or at a prospective trial site;
● the regulatory requirements for product approvals may not be explicit, may evolve over time and may diverge by jurisdiction;
● our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or we may be required by regulators, to conduct additional preclinical testing or clinical trials or to abandon projects that we had expected to be promising;
● the number of patients required for our clinical trials may be larger than we anticipate, enrollment in our clinical trials may be slower than we anticipate or participants may withdraw from our clinical trials at higher rates than we anticipate, any of which would result in significant delays;
● our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner;
● we may be forced to suspend or terminate our clinical trials if the participants are being exposed to unacceptable health risks or if any participant experiences an unexpected serious adverse event;
● regulators or IRBs may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements;
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● undetected or concealed fraudulent activity by a clinical researcher, if discovered, could preclude the submission of clinical data prepared by that researcher, lead to the suspension or substantive scientific review of one or more of our marketing applications by regulatory authorities and result in the recall of any approved product distributed pursuant to data determined to be fraudulent;
● the cost of our clinical trials may be greater than we anticipate;
● the supply or quality of our product candidates or other materials necessary to conduct our clinical trials may be insufficient or inadequate, as we currently do not have any agreements with third-party manufacturers for the long-term commercial supply of any of our product candidates;
● an audit of preclinical or clinical studies by the FDA or other regulatory authorities may reveal noncompliance with applicable regulations, which could lead to disqualification of the results, potential financial and reputational harm, and the need to perform additional studies;
● the effects of our product candidates may not achieve the desired clinical benefits or may cause undesirable side effects, or the product candidates may have other unexpected characteristics;
● regulatory authorities may refuse to accept or review our marketing applications if they determine that the applications are not sufficiently complete, or may issue complete response letters requiring additional information;
● the timing of regulatory review of our marketing applications may be delayed by changes in policies, priorities, funding, staffing levels, or resource allocation of the FDA or other regulatory authorities; and
● our clinical trials, or the ability of regulatory authorities to review the results of our clinical trials, may be delayed as a result of future pandemics with a similar impact to the COVID-19 pandemic.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete our clinical trials or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may be delayed in or unable to obtain marketing approval or reimbursement for our product candidates, or be unable to obtain approval for indications that are not as broad as intended or have the product removed from the market after obtaining marketing approval.
Our product development costs will also increase if we experience delays in testing or approvals. We do not know whether any preclinical tests or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, if at all. Significant preclinical or clinical trial delays could also shorten the patent protection period during which we may have the exclusive right to commercialize our product candidates or could allow our competitors to bring products to market before we do, impairing our ability to commercialize our products or product candidates.
Even if preclinical trials are successful, we still may be unable to commercialize a product due to difficulties in obtaining regulatory approval for its engineering process or problems in scaling that process to commercial production. Additionally, if produced, a product may not achieve an adequate level of market acceptance by physicians, patients, healthcare payors and others in the medical community to be profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, some of which are beyond our control, including the following:
● the prevalence and severity of any side effect;
● the efficacy and potential advantages over alternative treatments;
● the ability to offer our product candidates for sale at competitive prices;
● relative convenience and ease of administration;
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● the willingness of physicians to prescribe new therapies and of the target patient population to try such therapies;
● the strength of marketing and distribution support; and
● sufficient third-party coverage or reimbursement.
Therefore, we cannot guarantee that any products we may seek to develop will ever be successfully commercialized, and to the extent they are not successfully commercialized, such products could involve significant expense with no corresponding revenue.
Complex and evolving U.S. and international laws and regulations regarding privacy and data security and increased risk of cybersecurity incidents to our information technology systems could result in increased costs of operations and a significant disruption to our business.
Our operations are highly dependent on our information technology systems, including internet-based systems, which may be vulnerable to breakdown, cybersecurity incidents, wrongful intrusions, data breaches, malware, ransomware, and malicious attack. In addition, information security risks have generally increased in recent years, increasing our systems’ potential vulnerability, such as to data security breaches or cyber-attack, whether by employees or others, which may expose sensitive data to unauthorized persons. Such data security breaches could lead to the loss of trade secrets or other intellectual property, or could lead to the public exposure of personal information (including sensitive personal information) of our employees, customers, plasma donors and others. Data security breaches may also adversely impact the conduct of scientific research and clinical trials, including the submission of research results to support marketing authorizations.
Additionally, our information technology systems utilize certain third-party service organizations that manage sensitive data, such as personal medical information regarding plasma donors, and our business may be adversely affected if these third-party service organizations are subject to data security breaches. We may continue to incur significant expenses to comply with existing privacy and security standards and protocols imposed by law, regulation, industry standards or contractual obligations.
In addition to the E.U.’s General Data Protection Regulation (“GDPR”), which entered into force in 2016, the California Consumer Protection Act (“CCPA”), effective as of January 1, 2020, and the U.S. Health Insurance Portability and Accountability Act of 1996, as amended, and its implementing regulations (“HIPAA”), federal, state and foreign governments continue to adopt new, or modify existing laws and regulations addressing data privacy and the collection, processing, storage, transfer and use of data.
In the United States, an increasing number of federal, state, and local privacy, data security and breach notification laws have been enacted, and additional legislation has been proposed. As of January 1, 2026, comprehensive privacy laws are in effect in 20 states, further complicating our privacy compliance obligations through the introduction of increasingly disparate requirements across the various U.S. jurisdictions in which we operate. Certain states have also enacted or are considering laws that impose stricter requirements on the processing of health-related data. While Congress is considering legislation that may preempt some or all of such U.S. state privacy laws, such legislation may also provide a more expansive private right of action for privacy claims than exists under current state laws.
Our use of personal information in connection with data analytics and emerging technologies, including artificial intelligence, may be subject to additional privacy constraints. Regulators in multiple jurisdictions have implemented or are considering new privacy and AI-specific legal frameworks, and any failure or perceived failure by us to comply with such requirements could lead to regulatory investigations, enforcement actions, fines, or restrictions on data use. We may also face enforcement risk where our partners, vendors, or service providers leverage AI in ways that involve personal data, even if we do not control the underlying technology.
In our efforts to comply with these laws and regulations, we have made and continue to make certain operational changes to our business practices. Other governmental authorities throughout the United States and around the world are considering similar types of legislative and regulatory proposals concerning data protection. These privacy, security and data protection laws and regulations could impose increased business operational costs, require changes to our business, require notification to customers or workers of a security breach, or restrict our use or storage of personal information.
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For example, health information laws and regulations, such as regulations under HIPAA and potential revisions thereto, include requirements to implement various recordkeeping, operational, notice and other practices intended to safeguard that information, limit its use to allowed purposes and notify affected individuals in the event of privacy and security breaches, establish standards regarding electronic health data transmissions and set rules for specific electronic transactions, such as transactions involving claims submissions to third party payers. Failure to comply with HIPAA and similar state laws currently in effect or enacted in the future could expose us to breach of contract claims, substantial fines, penalties and other liabilities and expenses, costs for remediation and harm to our reputation.
The European Parliament and the Council of the European Union adopted the GDPR, which increased privacy rights for individuals in Europe, extended the scope of responsibilities for data controllers and data processors and imposed increased requirements and potential penalties on companies offering goods or services to individuals who are located in Europe or monitoring the behavior of such individuals (including by companies based outside of Europe). Noncompliance can result in penalties of up to the greater of €20 million, or 4.0% of global company revenues. In addition, the Network and Information Security Directive (NIS2) was approved by the Council of the European Union. While some member states have yet to transpose the NIS2 into law (despite the October 2024 deadline), once effective in each E.U. member state the NIS2 imposes enhanced cybersecurity risk management and incident reporting obligations on certain entities, including those operating in healthcare and life sciences sectors. To the extent entities in our Group are or become subject to NIS2, compliance with these requirements may increase our operational and compliance costs and expose us to additional regulatory scrutiny and potential fines in case of noncompliance.
Moreover, data sovereignty regulations increasingly restrict cross-border data flows critical to our activities. Accelerating geopolitical tensions have transformed data sovereignty from focusing primarily on privacy concerns to focusing on national security imperatives, as evidenced by the U.S. Data Security Program (DSP). Our early-stage pipeline development, M&A activities, digital transformation initiatives, AI scaling ambitions, and end-to-end supply chain all depend on cross-border data flows now subject to increasing restrictions. For example, the recent U.S. Executive Order on Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern prohibits or restricts specific types of commercial transactions involving “bulk sensitive personal data,” to “countries of concern,” including China. Such rules and regulations could have a material adverse impact on our business, results of operations or financial condition, including due to our diverse portfolio, our extensive research activities, the fragmented digital landscape with which we are forced to comply, our extensive third-party relationships, and our global supply chain.
Our efforts to implement programs and controls that comply with the GDPR, HIPAA, the multitude of general and sector- or data-specific U.S. state privacy laws, NIS2, data sovereignty and other data protection requirements are likely to impose additional costs on us, and we cannot predict whether the interpretations of the requirements, or changes in our practices in response to new requirements or interpretations of the requirements, could have a material adverse effect on our business.
Cyber-attacks or other privacy and data security incidents (for example involving the personal information of our plasma or blood donors) could disrupt our business and expose us to significant losses, liability and reputational damage.
We and our third-party service providers routinely process, store and transmit large amounts of data in our operations, including sensitive personal information as well as proprietary or confidential information relating to our business or third parties, including our plasma or blood donors. We may be subject to breaches of the information technology security systems we use both internally and externally with third-party service providers.
Cyber-attacks may penetrate our and our third-party service providers’ security controls and result in the misappropriation or compromise of sensitive personal information or proprietary or confidential information (e.g. information regarding our plasma or blood donors), including such information which is stored or transmitted on the systems used by certain of our or their products, to create system disruptions, cause shutdowns (including disruptions to our production plants), or deploy viruses, worms, ransomware, denial-of-service attacks and other malicious software programs that attack our systems. We and our third-party service providers handle the personal information of our patients and beneficiaries, patient personal data, throughout the United States and other parts of the world. We or our business associates may experience data breaches in violation of the requirements of HIPAA, GDPR, NIS2 and/or other similar laws, for example:
● data breaches involving the impermissible use, access, or disclosure of patient identifying information or unsecured personal data;
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● a data breach where we or our business associates neglect to implement the required administrative, technical and physical safeguards of its electronic systems and devices, or
● a data breach that results in impermissible use, access or disclosure of personal identifying information of our employees, beneficiaries, and/or plasma or blood donors.
When appropriate, we have filed complaints against the unknown attackers with the relevant authorities, and we have contacted the patients who were affected by the illegal data publication as well as any relevant regulatory authorities and other stakeholders. While there has not been any material impact to our financial condition and operations as a result of these data breaches and attacks, future cyber-attacks against our IT systems may result in a loss of financial data or interruptions of our operations that could have a material adverse impact on our business, financial condition and results of operations in the future. The current military conflicts have increased the risk of cyber-attacks against our systems and data.
As we increase the amount of sensitive personal information or financial data that we store and share digitally, our exposure to these privacy and data breaches and cyber-attack risks increases (particularly as medical or pharmaceutical records are a high-value target), including the risk of undetected attacks, damage, loss or unauthorized disclosure or access, and the cost of attempting to protect against these risks also increases. There are no assurances that our security technologies, processes and procedures that we or our outside service providers have implemented to protect sensitive personal information and proprietary or confidential information and to build security into the design of our products will be effective.
Any failure to keep our information technology systems, financial data and our patients’ and customers’ sensitive information secure from attack, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction or that of our third-party business associates or vendors that utilize and store such personal information on our behalf, could materially adversely affect our reputation and ability to continue normal operations, expose us to mandatory public disclosure requirements, litigation and governmental enforcement proceedings, material fines, penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders and other adverse actions, any of which could have a material adverse impact on our business, financial condition and results of operations. For information regarding our cybersecurity risk management and governance, see Item 16K of Part II of this annual report, “Cybersecurity.”
Our success depends in large part on our ability to obtain and maintain protection in the United States and other countries of the intellectual property relating to or incorporated into our technology and products.
Our success depends in large part on our ability to obtain and maintain protection in the United States and other countries for the intellectual property covering or incorporated into our technology and products, especially intellectual property related to our purification processes. The patent landscape in the field of biotechnology and pharmaceuticals generally is highly uncertain and involves complex legal and scientific questions. We may not be able to obtain additional issued patents relating to our technology or products. Even if patents are issued to us or to our licensors, they may be challenged, narrowed, invalidated, held to be unenforceable or circumvented, which could limit our ability to stop competitors from marketing similar products or limit the length of time our products have patent protection. Additionally, most of our patents relate to the processes we use to produce our products, not to the products themselves. In many cases, the plasma-derived products we produce or develop in the future will not, in and of themselves, be patentable. Since our patents relate to processes, if a competitor is able to design and utilize a process that does not rely on our protected intellectual property, such competitor could sell a plasma-derived or other product similar to one we developed or sell.
Our patents also may not afford us protection against competitors with similar technology. Because patent applications in the United States and many other jurisdictions are typically not published until 18 months after their filing, if at all, and because publications of discoveries in the scientific literature often lag behind actual discoveries, neither we nor our licensors can be certain that we or they were the first to make the inventions claimed in our or their issued patents or pending patent applications, or that we or they were the first to file for protection of the inventions set forth in such patent applications. If a third party has also filed a U.S. patent application covering our product candidates or a similar invention, we may be required to participate in an adversarial proceeding, known as an “interference proceeding,” declared by the U.S. Patent and Trademark Office to determine priority of invention in the United States. The costs of these proceedings could be substantial and our efforts in them could be unsuccessful, resulting in a loss of our anticipated U.S. patent position.
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Our patents expire at various dates. Our pending and future patent applications may not issue as patents or, if issued, may not issue in a form that will provide us with any competitive advantage. Even if issued, we cannot guarantee that: any of our present or future patents or patent claims or other intellectual property rights will not lapse or be invalidated, circumvented, challenged or abandoned; our intellectual property rights will provide competitive advantages; our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; any of our pending or future patent applications will be issued or have the coverage originally sought; our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; or we will not lose the ability to assert our intellectual property rights against, or to license our technology to, others and collect royalties or other payments. In addition, our competitors or others may design around our protected patents or technologies.
Effective protection of our intellectual property rights may be unavailable, limited or not applied for in some countries. Changes in patent laws or their interpretation in the United States and other countries could also diminish the value of our intellectual property or narrow the scope of our patent protection. In addition, the legal systems of certain countries do not favor the aggressive enforcement of patents, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. In order to preserve and enforce our patent and other intellectual property rights, we may need to make claims or file lawsuits against third parties. Such lawsuits could entail significant costs to us and divert our management’s attention from developing and commercializing our products.
We, like other companies in the pharmaceutical industry, may become aware of counterfeit versions of our products becoming available domestically and abroad. Counterfeit products may use different and possibly contaminated sources of plasma and other raw materials, and the purification process involved in the manufacture of counterfeit products may raise additional safety concerns, over which we have no control. Any reported adverse events involving counterfeit products that purport to be our products could harm our reputation and the sale of our products in particular and consumer willingness to use plasma-derived therapeutics in general.
Unauthorized use of our intellectual property may have occurred or may occur in the future. Although we have taken steps to minimize this risk, any failure to identify unauthorized use and otherwise adequately protect our intellectual property would adversely affect our business. For example, any unauthorized use of our trademarks could harm our reputation or commercial interests. Moreover, if we are required to commence litigation related to unauthorized use, whether as a plaintiff or defendant, such litigation would be time consuming, force us to incur significant costs and divert our attention and the efforts of our management and other employees, which could, in turn, result in lower revenue and higher expenses.
In addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes and know-how.
We generally seek to protect proprietary information by entering into confidentiality agreements with our employees, consultants, scientific advisors and third parties. These agreements may not effectively prevent disclosure of confidential information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, our trade secrets may otherwise become known or be independently developed by our competitors or other third parties. To the extent that our employees, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to determine and enforce the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. We also rely on contractual protections with our customers, suppliers, distributors, employees and consultants and implement security measures designed to protect our trade secrets. We cannot assure you that these contractual protections and security measures will not be breached, that we will have adequate remedies for any such breach or that our suppliers, employees or consultants will not assert rights to intellectual property arising out of such contracts.
Since we rely on trade secrets and nondisclosure agreements, in addition to patents, to protect some of our intellectual property, there is a risk that third parties may obtain and improperly utilize our proprietary information to our competitive disadvantage. We may not be able to detect the unauthorized use of such information, prevent such use or take appropriate and timely steps to enforce our intellectual property rights.
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We may infringe or be alleged to infringe intellectual property rights of third parties.
Our products or product candidates may infringe or be accused of infringing one or more claims of an issued patent or may fall within the scope of one or more claims in a published patent application that may be subsequently issued and to which we do not hold a license or other rights. Third parties may own or control these patents or patent applications in the United States and/or abroad. These third parties could bring claims against us or our collaborators that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages. Further, if a patent infringement suit were brought against us or our collaborators, we or they could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit.
If we are found to be infringing on the patent rights of a third party, or in order to avoid potential claims, we or our collaborators may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms.
There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference proceedings declared by the U.S. Patent and Trademark Office and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to our products. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We take steps to ensure that our employees do not use the proprietary information or know-how of others in their work for us. We may, however, be subject to claims that we or these employees have inadvertently or otherwise used or disclosed intellectual property, trade secrets or other proprietary information of any such employee’s former employer. Litigation may be necessary to defend against these claims and, even if we are successful in defending ourselves, could result in substantial costs to us or be distracting to our management. If we fail to defend any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.
We have in-licensed certain patent rights and co-own certain patent rights with third parties.
Our rights in certain intellectual property that we have in-licensed or co-own with third parties and the value therein may depend on our third party licensors’ or co-owners’, as applicable, performance under our intellectual property agreements with them. If one of these third parties is unable to, or does not, enforce their own rights in such intellectual property or perform under our agreements with them, it could affect our ability to effectively compete in the marketplace and operate our business.
Our in-license agreements for certain patent rights may impose payment and/or other material obligations on us as a licensee. Although we are currently in compliance with all of our material obligations under these licenses, if we were to breach any such obligations, our counterparty licensors may be entitled to terminate the licenses. Such termination may restrict, delay or eliminate our ability to develop and commercialize our products, which could adversely affect our business. We cannot guarantee that the third-party patents and technology we license will not be licensed to our competitors. In the future, we may need to obtain additional licenses, renew existing license agreements or otherwise replace existing technology. We are unable to predict whether these license agreements can be obtained or renewed or whether the technology can be replaced on acceptable terms, or at all.
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We may not realize the expected benefits from the entry into new or amended contracts, cost-savings and business improvement initiatives.
We recently acquired plasma collection centers from ImmunoTek GH, LLC (in 2024 and 2025), from Canadian Plasma Resources Corporation (“CPR”) (via the purchase of a single center in 2023 and then our acquisition of CPR itself in 2025), Haema Plasma Kft. (in 2024), Biotest GmbH & Co. KGaA (formerly known as Biotest AG) (“Biotest”) (in 2022), from BPL Plasma Inc. and Kedplasma, LLC (in 2021), from South Korean firm GC Pharma (Group) (“GC Pharma”) (in 2020) and the Interstate Blood Bank Group (in 2019), among others. There can be no assurance we will be successful with this plasma acquisition strategy or that we will realize all of the benefits we expect from such new centers. Moreover, we have implemented a cost savings plan to reduce headcount, become more efficient in the plasma procurement process and close certain underperforming plasma centers, among other strategies. See Item 5 of this Part I “A. Operating Results—Factors Affecting Our Financial Condition and Results of Operations—Operational Improvement Plan.” Our cost savings and business improvement initiatives could result in unexpected charges and expenses that negatively impact our financial results and we could fail to achieve the desired efficiencies and estimated cost savings. In addition, if we are not able to effectively implement these initiatives, or if they fail to operate as intended, our financial results could be adversely affected. Additionally, these types of initiatives could yield unintended consequences such as distraction of management and employees, business disruption, an inability to attract or retain key personnel, which could negatively affect our business or financial condition and results of operations. If we are not able to effectively develop, implement and manage our cost savings or business improvement initiatives (including our acquisitions), we may experience operational difficulties and increased costs, which may adversely affect our results of operations.
Climate change and increased risk of major natural disasters may adversely affect our business.
Climate change is already causing extreme heat and poor air quality in some areas, which threaten to exacerbate pre-existing health conditions such as respiratory diseases. In addition, an increase in temperature and humidity may cause a proliferation of insects that carry vector-borne diseases, including dengue fever and malaria. Ultimately, climate change could undermine decades of progress in improving human health at a time when antimicrobial resistance is also rising.
We are exposed to climate risks such as physical risks (e.g., heat, water scarcity, sea level rise, flooding from severe weather events) and transition risks (e.g., regulatory frameworks, carbon pricing, cost of and access to capital), which could vary in magnitude and impact country by country. For example, some of our production facilities that depend on the availability of significant water supplies are located in areas where water is increasingly scarce. Other facilities are located in places that, because of increasingly violent weather events, sea level rise, or both, are increasingly at risk of substantial flooding. In regions where this risk is present, it impacts not only our own operations but also our distribution supply chain. Such events may result in increased costs, business interruptions, destruction of facilities, loss of life, and disruption to healthcare systems that patients use to access our medicines.
Climate change has triggered the adoption of new regulatory requirements across the globe. For example, recent legislation in California has expanded requirements for companies to report greenhouse gas emissions, which may indirectly result in increased requirements to invest in technology to reduce energy use, water use and greenhouse gas emissions, beyond what we expect to invest in our existing plans. Item 4 of this Part I, “Information on the Company—B. Business Overview—Climate Change.” In addition, legislation could include carbon pricing, climate risk disclosure mandates, and changes in zoning or building codes to increase climate resilience. The combined impact of these transition risks could increase our direct operating costs and result in the same impact across our supply chain.
Changes, enactment, and/or enforcement of biometric information, consumer health data, biometric information, information and other privacy laws of different jurisdictions, including federal and state laws in the United States, could expose us to potential liability.
Regulatory authorities and governments around the world have implemented and are considering further legislative and regulatory proposals regarding biometric information privacy. New laws and regulations governing biometric information privacy and data protection imposing more stringent requirements may be introduced in various jurisdictions, including the United States, the European Union and the United Kingdom. Complying with laws and regulations for an increasing number of jurisdictions could require significant resources and costs, including those associated with adapting our facilities, products or processes.
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In the United States, there are various laws and regulations concerning biometric data privacy and data protection, and certain U.S. state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts. U.S. federal and state regulators, including the Federal Trade Commission (the “FTC”), have engaged in enforcement actions focused on biometric information.
Various state privacy laws, such as the Biometric Information Privacy Act in Illinois (the “BIPA”), the Capture or Use of Biometric Identifier Act in Texas (the “CUBI”) and the My Health My Data Act in Washington (the “MHMD”) restrict the collection and use of biometric identifiers and biometric information. Multiple class action lawsuits have been brought under BIPA’s private right of action, and BIPA has generally been broadly interpreted by the courts. In the past, we were named in a class action lawsuit that alleged that we failed to comply with BIPA’s requirements when collecting fingerprint data of plasma donors. The lawsuit was subsequently settled.
Any future similar legal proceedings and any government enforcement actions we may become subject to under applicable privacy and data protection laws may cause us significant losses in addition to legal costs, which could adversely affect our business, results of operations and financial condition. In addition, any failure, or perceived failure, by us to comply with the above and other regulatory requirements or biometric information privacy and data protection-related laws, rules and regulations could result in reputational damages or proceedings or actions against us by governmental entities, consumers or other parties. Such proceedings or actions could subject us to significant penalties and negative publicity, require us to change our data and other business practices, increase our costs and severely disrupt our business or hinder our global expansion.
Risks Relating to the Healthcare Industry
United States Healthcare Reform may adversely affect our business.
The United States Patient Protection and Affordable Care Act and the companion Healthcare and Education Reconciliation Act, each enacted in March 2010, as amended (collectively, the “ACA”), increased federal oversight of private health insurance plans and included a number of provisions designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud and abuse, and to provide access to increased health coverage. While the ACA has materially expanded the number of individuals in the United States with health insurance, it has faced ongoing legal challenges, including federal litigation seeking to invalidate some of or all of the law or the manner in which it has been interpreted, and could have a significant impact on the United States healthcare industry.
There are also uncertainties due to federal legislative and administrative efforts to repeal, substantially change, replace or invalidate portions or all of the ACA. The One Big Beautiful Bill Act (“OBBBA”), signed into law on July 4, 2025, includes a number of provisions that are expected to result in reductions in the number of Medicaid enrollees, as well as reductions in federal funding to state Medicaid programs, resulting in potentially adverse impacts on utilization of services and coverage of products. Any future legislation, guidance, rules or regulations and/or executive orders that materially alter the healthcare industry could have a significant impact on our operations. The uncertain status of the ACA affects our ability to plan, and its repeal without adequate replacement could have a material adverse effect on our United States operations.
Government pressures and constraints on reimbursement may adversely affect our business.
We engage in various manufacturing, processing, marketing and sales activities pertaining to pharmaceutical products in a number of jurisdictions around the world. These activities subject us to several governmental regulations mandating multiple types of controls over pricing and general operations in the various countries in which we operate. The growth of overall healthcare costs as a percentage of gross domestic product in many countries means that governments and payers are under intense pressure to control spending even more tightly. In addition to ongoing cost containment pressures, healthcare pricing frameworks in key markets are subject to significant structural reform and policy shifts, including reforms that may alter the mechanisms by which prices are set, negotiated, benchmarked or subject to rebates, inflation penalties or other direct government intervention. Such reforms may be implemented rapidly and could materially affect the pricing, reimbursement levels and commercial viability of our products.
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In the United States, which is our main market, trends in recent years in the healthcare industry have caused significant changes including a shift towards managed or value-based care, collective purchasing agreements, consolidation in office-based healthcare providers, and other cost-saving, revenue and payment reduction measures with respect to, for example, several government healthcare programs that cover our products, including Medicaid, Medicare Parts B and D and the 340B Program. Recent U.S. legislative and regulatory developments, including provisions of the Inflation Reduction Act of 2022 and related rulemakings, introduce mechanisms for direct government price negotiation, inflation-based rebate obligations and expanded manufacturer discount requirements, and may result in increased rebate liabilities, lower net realized prices, reduced reimbursement levels or changes in product demand. The interpretation, implementation and potential expansion of these measures remain subject to evolving regulatory guidance and legal challenges. These trends could have a material adverse impact on our financial performance. Global emphasis on healthcare cost containment exerts significant pressures on the pricing of our products and on our ability to obtain and maintain reimbursement rates to cover our products, which may adversely affect our business.
In addition, the availability of federal funds to pay for our products under Medicaid and Medicare requires that we extend discounts under the 340B Program, and changes to this program could adversely affect our financial performance. The 340B Program extends discounts to a variety of eligible entities, including community health clinics and certain other entities that receive certain governmental healthcare grants, as well as hospitals that serve a disproportionate share of certain low income individuals, and certain cancer centers, children’s hospitals, critical access hospitals and rural referral centers. The 340B Program price, or ceiling price, cannot exceed the average manufacturer price (“AMP”) (as reported to the U.S. Centers for Medicare & Medicaid Services (“CMS”) under the Medicaid drug rebate program) less the Medicaid unit rebate amount. We have entered into a pharmaceutical pricing agreement (“PPA”), with the government in which we have agreed to participate in the 340B Program by charging eligible entities no more than the ceiling price for drugs intended for outpatient use. Evolving requirements with respect to this program continue to be issued by the Health Resources and Services Administration (“HRSA”) of the United States Department of Health and Human Services (“HHS”), the federal agency responsible for oversight of the 340B Program, which creates uncertainty, and certain aspects of the 340B Program, such as relating to manufacturers’ 340B pricing restrictions for prescriptions filled at contract pharmacy locations, continue to be challenged in federal courts, which adds to such uncertainty. In December 2025, a federal court in Maine preliminarily enjoined the HRSA’s 340B Rebate Model Pilot Program, which would have replaced upfront discounts with a retroactive rebate for ten drugs. In February 2026, HRSA officially withdrew its 340B Rebate Model Pilot Program and subsequently issued a request for information seeking comments on launching a new 340B Program rebate model. We believe that we meet the requirements of the 340B Program, and are continuing to review and monitor these and other developments affecting the 340B Program.
Continuing efforts of certain regulatory and legislative bodies, as well as the United States Congress, are focused on pricing and reimbursement, and we expect that the healthcare industry will continue to be subject to increasing pricing and cost containment pressures in 2026 and beyond. These pricing and cost containment pressures may impact the reimbursement rates for our products and have an adverse effect on our business. For more details, see Item 4 of this Part I, “E. Regulatory Matters—Pharmaceutical Pricing and Reimbursement.”
Impact of government regulations relating to product development and regulatory approvals may adversely affect our business.
We develop and manufacture pharmaceutical products in a number of jurisdictions around the world. These activities subject us to several governmental regulations mandating specific governmental approvals that are necessary for us to develop our products in the various countries in which we operate. Obtaining market approval for our products is a lengthy, costly and complex regulatory process that requires intensive preclinical and clinical data, and the approval process can vary significantly depending on the regulatory authority of each jurisdiction. Relevant health authorities may, at the time of the filing of the application for a marketing authorization, or later during their review, impose requirements that can evolve over time, including requiring additional clinical trials, and such authorities may delay or refuse to review our application or grant market approval. Also, the centrality to our business of government regulatory oversight by relevant health authorities exposes us to risks of administrative and enforcement changes or delays, including as may derive from health authorities’ staffing levels or resources, including as a result of a government shutdown. For example, the development and regulatory approval of new products may be delayed due to reductions to the FDA’s budget and staffing, which may lead to slower response times and longer review periods.
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Even where we have obtained marketing approval for a product in one or more major markets, we may need to invest significant time and resources in applying for approval in other markets, and there is no assurance that we will be able to obtain such approval. In recent years, health authorities have become increasingly focused on product safety and on the risk/benefit profile of pharmaceutical products, which could lead to more burdensome and costly approval processes and negatively affect our ability to obtain regulatory approval for products under development. For example, the FDA and the EMA have been implementing strict requirements for approval, particularly in terms of the volume of data needed to demonstrate a product’s efficacy and safety. In December 2025, the Council of the European Union and the European Parliament reached provisional agreement on a comprehensive overhaul of the EU legislative framework for pharmaceuticals. There are a number of significant changes, including a potential reduction in regulatory data protection, a streamlining of the regulatory approval process potentially allowing products to reach the market in a shorter period of time, and introduction of shortage prevention plans. The agreement still requires formal approval and adoption, but, if adopted, may have a significant impact on the pharmaceutical industry in general and our business.
In the United States, our main market, there is an abbreviated regulatory approval pathway for biological products found to be “biosimilar” to or “interchangeable” with a biological “reference product” previously licensed under a Biologics License Application (“BLA”). This abbreviated approval pathway is intended to permit a biosimilar product to come to market more quickly and less expensively by relying to some extent on the data generated by the reference product’s sponsor, and the FDA’s previous review and approval of the reference product.
The law provides that no biosimilar application may be accepted for FDA review until four years after the date the reference product was first licensed by the FDA, and that the FDA may not make approval of an application effective until 12 years after the reference product was first licensed. The law also includes an extensive process for the innovator biologic and biosimilar manufacturer to litigate patent infringement, validity, and enforceability, which could increase costs of protecting our reference products. In addition, the Creating and Restoring Equal Access to Equivalent Samples Act of 2019 authorizes sponsors of abbreviated new drug applications, 505(b)(2) NDAs or biosimilar product applications to bring actions against NDA or BLA holders that decline to provide sufficient quantities of an approved reference product on commercially reasonable, market-based terms. If a court determines that a reference product sponsor failed to provide such quantities without a legitimate business justification, the court may order the provision of product without delay and may award reasonable attorney fees and costs and, in certain circumstances, damages in an amount sufficient to deter such conduct. Although we intend to comply with applicable statutory requirements, we may be exposed to litigation and related costs, damages and reputational harm, and such provisions may facilitate competition with our products.
Once approved, biosimilars likely would compete with, and in some circumstances may be deemed under applicable laws to be “interchangeable with,” the previously approved reference product. The extent to which a biosimilar product, once approved, will be substituted for any of our products, in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. For example, in October 2025, the FDA issued draft guidance that proposes to eliminate the need for sponsors of biosimilar products to conduct comparative human clinical efficacy studies. In connection with the FDA’s authority to ensure the development of safe and effective biosimilars, in September 2022, the FDA Biosimilar User Fee Amendments of 2022 were signed into law. The FDA Biosimilar User Fee Amendments of 2022 reauthorize for an additional five years (through 2027) the Biosimilar User Fee Act of 2012, which allows the FDA to assess and collect fees for biosimilars. While the fee rates charged to biosimilar program sponsors are intended to expedite the process for reviews of biosimilar applications, it is unknown how such fees will be passed on in the future, which could also impact our financial results. We expect in the future to face greater competition from biosimilar products, including a possible increase in patent challenges, all of which could adversely affect our financial performance.
Regarding access to our products, the ACA established and provided significant funding for a Patient-Centered Outcomes Research Institute to coordinate and fund Comparative Effectiveness Research, as those terms are defined in the ACA. While the stated intent of Comparative Effectiveness Research is to develop information to guide providers to the most efficacious therapies, outcomes of Comparative Effectiveness Research could influence the reimbursement or coverage for therapies that are determined to be less cost effective than others. Should any of our products be determined to be less cost effective than alternative therapies, the levels of reimbursement for these products, or the willingness to reimburse at all, could be impacted, which could materially impact our financial results. In connection with the FDA’s authority to ensure the development of safe and effective biosimilars, in September 2022, the FDA User Fee Reauthorization Act of 2022 was signed into law, which allows the FDA to assess and collect fees for biosimilars for a five-year period through 2027. While the fee rates charged to biosimilar program sponsors are intended to expedite the process for reviews of biosimilar applications, such fees could be passed onto manufacturers and, thus, could also impact our financial results.
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Failure to comply with laws and regulations governing the sales and marketing of our products or an adverse decision in lawsuits may result in adverse consequences for us.
We engage in various marketing, promotional and educational activities pertaining to, as well as the sale of, pharmaceutical products in a number of jurisdictions around the world. The promotion, marketing and sale of pharmaceutical products and medical devices is highly regulated and the sales and marketing practices of market participants such as us have been subject to increasing supervision by governmental authorities around the world, and we believe that this trend will continue.
For example, the laws governing our conduct in the United States are enforceable by criminal, civil and administrative penalties. Violations of laws such as the Federal Food, Drug and Cosmetic Act (“FDCA”), the Federal False Claims Act (“FCA”), the Public Health Service Act (“PHS Act”) or provisions of the U.S. Social Security Act known as the “Anti-Kickback Statute” and the “Civil Monetary Penalties Law,” or any regulations promulgated under their authority, may result in jail sentences, fines or exclusion from federal and state programs, as may be determined by Medicare, Medicaid, the Department of Defense, other regulatory authorities and the courts. There can be no assurance that our activities will not come under the scrutiny of regulators and other government authorities or that our practices will not be found to violate applicable laws, rules and regulations or prompt lawsuits by private citizen “relators” under federal or state false claims laws. For a description of fraud and abuse laws see Item 4 of this Part I, “Information on the Company—E. Regulatory Matters—Government Regulation—United States Government Regulation—Anti-fraud and Abuse Regulation.”
Failure to comply with fraud and abuse laws and regulations could also result in other significant civil and criminal penalties and costs, including the loss of licenses and the inability to participate in federal and state health care programs, and could have a material adverse effect on our business. In addition, these measures may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations or incur substantial defense and settlement expenses. Fraud and abuse laws and regulations have been subject to heightened enforcement activity over the past few years. Since the ACA significantly strengthened provisions of the FCA, the anti-kickback provisions of Medicare and Medicaid and other healthcare antifraud provisions, there have also been a greater number of qui tam suits brought by “relator” whistleblowers, who may receive up to 30% of total government recoveries. Even unsuccessful challenges by regulatory authorities or private relators could result in reputational harm and the incurring of substantial costs. Further, many of these laws are vague or indefinite and have not been interpreted by the courts, and have been subject to frequent modification and varied interpretation by prosecutorial and regulatory authorities, increasing the risk of noncompliance. Most states have adopted similar state false claims laws, and these state laws have their own penalties which may be in addition to FCA penalties, as well as other fraud and abuse laws. While we believe that we are substantially compliant with applicable fraud and abuse laws and regulations, and have adequate compliance programs and controls in place to ensure substantial compliance, we cannot predict whether changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in response to changes in applicable law or interpretation of laws, could have a material adverse effect on our business.
Failure to satisfy requirements under the FDCA can also result in penalties, as well as requirements to enter into consent decrees or orders that prescribe allowable corporate conduct. In this regard, our Los Angeles facility was previously managed pursuant to a consent decree that was entered into in February 1998 based on action by the FDA and the U.S. Department of Justice (the “DOJ”), addressing FDCA violations committed by the former owner of the facility, Alpha Therapeutic Corporation (“Alpha”). The consent decree provided for annual inspection of the plant by the FDA. On March 15, 2012, the United States District Court for the Central District of California entered an order vacating the consent decree on the Los Angeles facility.
Adverse consequences can also result from failure to comply with the requirements of the 340B Program under the PHS Act, which extends discounts to a variety of community health clinics and other entities that receive health services grants under the PHS Act (the “340B Program”). In early 2016, HRSA finalized a regulation regarding the 340B Program pricing methodology, providing. HRSA regulations prescribes when civil monetary penalties may be issued for “knowing and intentional” manufacturer overcharges of 340B Program covered entities, and provides that manufacturers who overcharge may be subject to significant monetary penalties. Such findings could also result in negative publicity that could harm the manufacturer’s reputation or cause business disruption, penalties, or CMP. Under the HRSA regulations, the CMP may be up to $5,000 for each instance of overcharging a covered entity. If we are ultimately required to change our sales or pricing practices with regard to the distribution of drugs under the 340B Program, or if we were required to pay penalties under the applicable regulations, there would be an adverse effect on our revenues and profitability.
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In addition, companies in the United States, Canada and the European Union are generally restricted from promoting approved products for other indications that are not specifically approved by the competent regulatory authorities, nor can companies promote unapproved products. Improper promotion of unapproved drugs or devices or unapproved indications for a drug or device may subject us to warnings from, or enforcement action by, regulatory authorities, harm demand for our products, and subject us to civil and criminal sanctions. Further, sanctions under the FCA have been brought against companies accused of promoting off-label uses of drugs, and the DOJ has increasingly scrutinized off-label drug promotion in recent years, because such promotion induces the use and subsequent claims for reimbursement under Medicare and other federal programs. Industry data indicates that a significant portion of IVIG volume may be used to fill physician prescriptions for indications not approved by the FDA or similar regulatory authorities. Violations or allegations of violations of the foregoing restrictions could materially and adversely affect our business.
We are required to report detailed pricing information, net of applicable discounts, rebates and other concessions, to CMS for the purpose of calculating national reimbursement levels, certain federal prices and certain federal and state rebate obligations. We have established systems for collecting and reporting this data accurately to CMS and have instituted a compliance program designed to assure that the information collected is complete in all respects. If we report pricing information that is not accurate to the federal government, we could be subject to fines and other sanctions (including potential FCA liability) that could adversely affect our business.
To market and sell our products outside of the United States, we must obtain and maintain regulatory approvals and comply with regulatory requirements in such jurisdictions. The approval procedures vary among countries in complexity and timing. We may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all, which would preclude us from commercializing products in those markets. In addition, some countries, particularly the countries of the European Union, regulate the pricing of prescription pharmaceuticals. In these countries, pricing discussions with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost effectiveness of our product candidate to other available therapies. Such trials may be time consuming and expensive and may not show an advantage in efficacy for our products. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, in either the United States or the European Union, we could be adversely affected.
In the United States, under the federal Physician Payment Sunshine Act or Open Payments Program (the “PPS Act”), we are required to report and disclose payments or other transfers of value made to certain healthcare providers, including physicians, certain advanced practice providers such as physician assistants and nurse practitioners, and teaching hospitals. CMS publishes information from these reports on a publicly available website, including amounts transferred and healthcare provider identities. Under the PPS Act we are required to collect and report detailed information regarding certain financial relationships we have with covered healthcare providers. The PPS Act preempts certain state reporting laws, although we or our subsidiaries may also be required to report under certain state transparency laws that address circumstances not covered by the PPS Act, and some of these state laws are also ambiguous. We are also subject to foreign regulations requiring transparency of certain interactions between suppliers and their customers. While we believe we have substantially compliant programs and controls in place to comply with these reporting requirements, we cannot assure you that regulations will not require us to take additional compliance steps. Our compliance with these rules imposes additional costs on us.
We also are subject to certain laws and regulations concerning the conduct of our foreign operations outside the United States, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and other anti-bribery laws and related laws, and laws pertaining to the accuracy of our internal books and records, which have been the focus of increasing enforcement activity in recent years. Under the FCPA, the United States has increasingly focused on regulating the conduct by U.S. businesses occurring outside of the United States, generally prohibiting remuneration to foreign officials for the purpose of obtaining or retaining business. Also, in some countries we may rely on third parties for the marketing and distribution of our products, and these parties may lack sufficient internal compliance resources, and may operate in foreign markets involving substantial corruption. If our efforts to monitor these parties fail to detect potential wrongdoing, we could be held responsible for the noncompliance of these third parties with applicable laws and regulations, which may have a material adverse effect on our business.
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We could be adversely affected if other government or private third-party payors decrease or otherwise limit the amount, price, scope or other eligibility requirements for reimbursement for the purchasers of our products.
Certain of our products are subject to various cost-containment measures, such as government-imposed industry-wide price reductions, mandatory pricing systems, reference pricing systems, payors limiting access to treatments based on cost-benefit analyses, an increase in imports of drugs from lower-cost countries to higher-cost countries, shifting of the payment burden to patients through higher co-payments, limiting physicians’ ability to choose among competing medicines, mandatory substitution of generic drugs for the patented equivalent, and growing pressure on physicians to reduce the prescribing of patented prescription medicines. Such pressures could have a material adverse impact on our business, financial condition or results of operations, as well as on our reputation.
For example, certain pharmaceutical products, such as plasma derivative products, are subject to price controls in several of our principal markets, including Spain and countries within the European Union. In the United States, where pricing levels for our products are established by governmental payors and negotiated with private third-party payors, if the amount of reimbursement available for a product is reduced, it may cause groups or individuals dispensing the product to discontinue administration of the product, to administer lower doses, to substitute lower cost products or to seek additional price-related concessions. These actions could have a negative effect on our financial results, particularly in cases where our products command a premium price in the marketplace or where changes in reimbursement induce a shift in the location of treatment. The existence of direct and indirect price controls and pressures over our products has affected, and may continue to materially adversely affect, our ability to maintain or increase gross margins. In addition, the growth of overall healthcare costs and certain weak economic and financial environment in certain countries where we do business, as well as increased scrutiny over pharmaceutical pricing practices, such as in the United States, all enhance these pricing pressures.
In the United States, pricing concerns have led to heightened scrutiny and ongoing governmental efforts to increase transparency around healthcare and pharmaceutical drugs costs. For example, pursuant to current CMS rules applicable to hospitals and group health plans, payers must disclose in-network provider negotiated rates (which include rates with device suppliers and manufacturers) and historical out-of-network allowed amounts for all covered items and services, including all prescription drugs. In addition, in May 2025, the United States government issued an executive order aiming to implement “most-favored-nation” pricing mechanics, which would limit the price of prescription drugs in the United States to prices in selected comparably developed nations. In July 2025, several pharmaceutical companies received letters from the U.S. government seeking commitments to advance such “most-favored-nation” drug pricing goals. States are also enacting a variety of transparency measures. The publication of our negotiated rates could impact our ability to independently negotiate sales contracts and rate agreements. In addition, uncertainty around ongoing price transparency proposals affects our ability to plan, as the proposals, if adopted, in whole or in part, could adversely affect our business.
An increasing number of states in the United States have also proposed or passed legislation that seeks to directly or indirectly regulate pharmaceutical drug pricing, such as by requiring drug manufacturers to provide advance notice of certain price increases, or to place a maximum price ceiling on pharmaceutical products purchased by state agencies. State laws regulating pharmaceutical drug pricing may cause us to experience additional pricing pressures on our affected products, and could adversely affect our business.
Also, the intended use of a drug product by a physician can affect pricing. Physicians frequently prescribe legally available therapies for uses that are not described in the product’s labeling and that differ from those tested in clinical studies and that are approved by the FDA or similar regulatory authorities in other countries. These off-label uses are common across medical specialties, and physicians may believe such off-label uses constitute the preferred treatment or treatment of last resort for many patients in varied circumstances. In the United States, many off-label uses of drug products may be reimbursed by Medicare and other third-party payors, generally based on the payors’ determination that the intended use is for a medically accepted indication, for example, based on studies published in peer-reviewed medical journals or information contained in drug compendia, such as the United States Pharmacopeia-National Formulary. However, companies have also faced sanctions under the FCA in connection with the promotion of off-label drug uses that induce claims for reimbursement under Medicare and other federal programs. If reimbursement for off-label uses of products, including IVIG, is reduced or eliminated by Medicare or other third-party payors, including those in the United States or the European Union, we could be adversely affected.
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Proposed federal and state legislation have targeted drug pricing, including, without limitation, direct negotiations with manufacturers over price, reimbursement and discounts. Plasma protein therapeutics have been excluded from certain aspects of the several legislations; however, there is a continuing risk that our products may be subject to new pricing restrictions.
We are subject to extensive government regulatory compliance and ethics oversight.
Our business is subject to extensive government regulation and oversight by the many countries in which we operate. We have enacted anticorruption, privacy, healthcare and corporate compliance policies and procedures that govern our business practices and those of our distributors and suppliers. These policies and procedures are effectuated through education, training and monitoring of our employees, distributors and suppliers. In addition, to enhance compliance with applicable healthcare laws and mitigate potential liability in the event of noncompliance, regulatory authorities, such as HHS’s Office of the Inspector General (“OIG”) of the United States, have recommended the adoption and implementation of a comprehensive healthcare compliance program that generally contains the elements of an effective compliance and ethics program described in Section 8B2.1 of the U.S. Sentencing Commission Guidelines Manual. Increasing numbers of U.S.-based pharmaceutical companies have such programs, and we have adopted U.S. healthcare compliance and ethics programs that generally incorporate the OIG’s recommendations. However, our adoption and enforcement of these various policies and procedures does not ensure that we will avoid investigation or the imposition of penalties by applicable government agencies.
Failure to comply with changing regulatory requirements could materially adversely affect our business.
We engage in various manufacturing, processing, marketing and sales activities pertaining to pharmaceutical products in a number of jurisdictions around the world. These activities subject us to several governmental regulations governing our global operations. The laws and regulations of the many jurisdictions that govern our business and operations are subject to varying and evolving interpretations that affect our ability to comply, and future changes, additions, and enforcement approaches, including in light of political changes. Changes with respect to the applicable laws and regulations may require us to update or revise our operations, services, marketing practices, and compliance programs and controls, and may impose additional and unforeseen costs on us, pose new or previously immaterial risks to us, or may otherwise have a material adverse effect on our business. There can be no assurance that current and future government regulations will not adversely affect our business, and we cannot predict new regulatory priorities, the form, content or timing of regulatory actions, and their impact on the health care industry and on our business and operations.
We are subject to extensive environmental, health and safety laws and regulations.
Our business involves the controlled use and the generation, handling, management, storage, treatment and disposal of hazardous substances, wastes and various biological compounds and chemicals. The risk of contamination or injury from these materials cannot be eliminated. If an accident, spill or release of any regulated chemicals, substances or wastes occurs, we could be held liable for resulting damages, including for investigation, remediation and monitoring of the contamination, including natural resource damages, the costs of which could be substantial. As owners and operators of real property, we could also be held liable for the presence of hazardous substances as a result of prior site uses or activities, without regard to fault or the legality of the original conduct that caused or contributed to the presence or release of such hazardous substance on, at, under or from our property. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials, chemicals and wastes.
Although we maintain workers’ compensation insurance to cover the costs and expenses that may be incurred due to injuries to our employees resulting from the use and handling of these materials, chemicals and wastes, this insurance may not provide adequate coverage against potential liabilities.
Additional or more stringent federal, state, local or foreign laws and regulations affecting our operations may be adopted in the future. We may incur substantial capital costs and operating expenses to comply with any of these laws or regulations and the terms and conditions of any permits required pursuant to such laws and regulations, including costs to install new or updated pollution control equipment, modify our operations or perform other corrective actions at our respective facilities. In addition, fines and penalties may be imposed for noncompliance with environmental and health and safety laws and regulations or for the failure to have or comply with the terms and conditions of required environmental permits.
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Unsuccessful management of sustainability (environmental, social and governance) matters could adversely affect our reputation and we may experience difficulties meeting the expectations of our stakeholders.
Companies are increasingly expected to behave in a responsible manner on a variety of sustainability matters by governmental and regulatory authorities, counterparties, customers, investors and the public. This context, driven in part by a rapidly changing regulatory framework in Europe, is raising new challenges and influencing strategic decisions. Evolving regulatory requirements are likely to result in increased costs and complexities of compliance to collect, measure and report ESG-related information and may expose us to additional regulatory, litigation and reputational risk. Political and geopolitical developments may also result in the amendment or rollback of certain rules, creating further uncertainty and compliance costs.
We have adopted a sustainability strategy; however, we may be unable to meet our sustainability or other strategic objectives efficiently, on time or at all. Statements regarding our ESG initiatives, goals and progress may be based on developing standards, evolving internal controls and assumptions that may change. We may also be unable to meet the criteria used by rating agencies in their sustainability assessments, which are increasingly used by institutional investors to inform investment decisions.
If we are unable to meet stakeholder expectations or the targets contained in our sustainability strategy, our reputation may be harmed, compliance or other costs may increase, and interest in subscribing to our securities and our ability to access debt and equity markets may decrease. In addition, increasing “anti-ESG” and “anti-DEI” initiatives in certain jurisdictions may result in additional scrutiny, investigations, enforcement actions or reputational harm.
Risks Relating to Our Shares and American Depositary Shares
If we discover material weaknesses or significant deficiencies in our internal control over financial reporting, it may adversely affect our ability to provide timely and reliable financial information and satisfy our reporting obligations under U.S. federal securities laws, which also could affect the market price of our American Depositary Shares or our ability to remain listed on NASDAQ.
Effective internal and disclosure controls are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. A “significant deficiency” is a deficiency, or combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention of those responsible for oversight of our financial reporting. In addition, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
To the extent that any material weakness or significant deficiency exists in our internal control over financial reporting, such material weakness or significant deficiency may adversely affect our ability to provide timely and reliable financial information necessary for the conduct of our business and satisfaction of our reporting obligations under U.S. federal securities laws, which could affect our ability to remain listed on NASDAQ. Ineffective internal and disclosure controls could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our American Depositary Shares, or ADSs, or the rating of our debt.
The Grifols Family may exercise significant influence over the conduct of our business.
The founders of the Company and their relatives (the “Grifols Family”) and Scranton Enterprises B.V. own, directly and indirectly, approximately 36% of our Class A shares. The Class A shares exercise 100% of the voting control of our Company. As a result, the Grifols Family and Scranton Enterprises B.V. may exercise significant influence over matters requiring shareholders’ approval, including, among other things, the election of our board of directors, dividend policy and certain fundamental corporate action, such as the issuance of bonds, a merger or a dissolution. Conflicts may arise between the interests of the principal shareholders and those of the other shareholders, and the principal shareholders may choose to resolve the conflict in a way that does not coincide with the interests of the other shareholders. See Item 7 of this Part I, “Major Shareholders and Related Party Transactions—Related Party Transactions.”
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The market price of our Class B ADSs on NASDAQ, as well as the market price of our Class A ADSs traded in over the counter markets, may be volatile.
The market price of our Class B ADSs and Class A ADSs may be volatile as a result of various factors, many of which are beyond our control. These factors include, but are not limited to, the following:
● market expectations for our financial performance;
● actual or anticipated fluctuations in our results of operations and financial condition;
● changes in the estimates of our results of operations by securities analysts;
● techniques employed by short sellers or other market disruptors to drive down the market price of our shares;
● the dissemination of false or maliciously distorted information with respect to our business operations, financials or corporate disclosures;
● potential or actual sales of blocks of our Class B ADSs in the market by any shareholder or short selling of our Class B ADSs. Any such transaction could occur at any time or from time to time, with or without notice to us (see “—Techniques employed by short sellers may drive down the market price of our shares, negatively impact our business operations and/or generate non-meritorious litigation”);
● the entrance of new competitors or new products in the markets in which we operate;
● volatility in the market as a whole; and
● the risk factors mentioned in this section.
The market price of our Class B ADSs may be adversely affected by any of the preceding or other factors regardless of operations and financial condition. Since December 31, 2023, our Class B ADSs have traded as high as $10.85 per ADS on July 30, 2025 and as low as $6.05 per ADS on March 18, 2024. At market close on April 15, 2026, our Class B ADSs were traded for $8.69.
Techniques employed by short sellers or other market disruptors may drive down the market price of our shares, negatively impact our business operations and/or generate non-meritorious litigation.
Short selling is the practice of selling securities that a seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. Short sellers seek to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement securities, as short sellers hope to pay less in that purchase than they received in the sale. As it is in short sellers’ interest for the price of the securities to decline, certain short sellers publish, or arrange for the publication of, negative research reports and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, created downward pressure on the price of the relevant securities.
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We have been the subject of negative publicity by a short seller. For more information, see Item 5 of this Part I, “A. Operating Results—Factors Affecting Our Financial Condition and Results of Operations—Short Seller Reports” and Item 8 of this Part I, “Consolidated Statements and Other Financial Information—Legal Proceedings—Executive Committee of the CNMV.” It is not clear what long-term effect such negative publicity could have on us and/or whether we will continue to be subject to short seller attacks from time to time in the future. If we were to become the subject of any additional unfavorable allegations, even when such allegations are untrue, we may have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. For example, in response to such negative publicity, we invested significant resources and time, including undertaking both internal and external reviews. While we would prefer to strongly defend against any such short seller attacks, we may be constrained in the manner in which we can respond to any allegations due to applicable state or federal law, or issues of commercial confidentiality. In addition, such allegations have led, and may further lead, to heightened scrutiny, investigations and enforcement proceedings conducted by the SEC or the CNMV. Any future response to negative publicity from short sellers or responses to information requests from regulators could be costly and time-consuming, and could divert management’s attention from our day-to-day operations.
Even groundless or outright false allegations against us could severely impact the market price of our Class A shares, Class B shares, ADSs and our business operations. Because of the nature of our business in collecting plasma and manufacturing and selling plasma-derived therapies, we depend significantly on our brand and on customer confidence in our services. As a result, such allegations may impact our revenues by damaging our reputation, confidence in our services and relationships with our existing customers and potential new customers.
In the event that any lawsuit is filed against us as a result of negative publicity by a short seller, we cannot predict the timing, outcome or consequences of such actions, and we cannot assure you that our defenses will be successful or whether we will be subject to any damages, or how much. Whether or not we prevail in case any such proceedings are created against us, we may incur significant expenses defending them, which may materially and adversely affect our financial condition and results of operations.
Fluctuations in the exchange rate between the U.S. dollar and the euro may increase the risk of holding our ADSs or shares.
The Spanish securities market for equity securities consists of four stock exchanges located in Madrid, Barcelona, Bilbao and Valencia (collectively, the “Spanish Stock Exchanges”). The majority of the transactions conducted on the Spanish Stock Exchanges are done through the Spanish Automated Quotation System (Sistema de Inteconexión Bursátil Español, or SIBE).
Our Class A shares and Class B shares are listed on the Spanish Stock Exchanges and quoted on SIBE in euros. In addition, our Class B shares are traded in the United States on the NASDAQ Global Select Market in the form of ADSs, evidenced by American Depositary Receipts, or ADRs, in U.S. dollars. In addition, a number of our Class A shares are traded over the counter in the form of ADSs. Fluctuations in the exchange rate between the U.S. dollar and the euro may result in temporary differences between the value of our ADSs and the value of our shares, which may result in heavy trading by investors seeking to exploit such differences. This may increase the volatility of, and have an adverse effect on, the price of our shares or ADSs.
In addition, as a result of fluctuations in the exchange rate between the U.S. dollar and the euro, the U.S. dollar equivalent of the proceeds that a holder of our ADSs would receive upon the sale in Spain of any shares withdrawn from the ADR depositary and the U.S. dollar equivalent of any cash dividends paid in euros on our shares represented by the ADSs could also decline.
Subscription (or preemptive) rights may be unavailable to U.S. holders of our shares or ADSs.
In the case of a future increase of our registered share capital, existing shareholders will generally be entitled to subscription (or preemptive) rights pursuant to Spanish law, unless waived by a resolution of the shareholders or, if such power has been delegated to the Board pursuant to a shareholders’ resolution, by a resolution of the Board and except in certain situations, such as capital increases made for an in-kind contribution, in which subscription (or preemptive) rights are not applicable by law. Holders of the Class B shares will generally not have a right to vote on any resolution on a capital increase or on the waiver of subscription (or preemptive) rights, unless such resolution does not treat the Class B shares in the same way as the Class A shares, except in the limited circumstances set out in the Articles of Association of Grifols, S.A. as amended (the “Articles of Association”).
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Holders of our ADSs representing Class A shares or, even if preemptive rights are granted, holders of our ADSs representing Class B shares, or U.S. resident shareholders may not be able to exercise voting power or subscription (or preemptive) rights, as the case may be, in which case holders of our ADSs could be substantially diluted, unless a registration statement under the Securities Act, as amended, or the Securities Act, is effective with respect to such rights and the shares for which they give such right or an exemption from the registration requirements of the Securities Act is available.
We intend to evaluate at the time of any rights offering the costs and potential liabilities associated with any such registration requirements, as well as the benefits of enabling the exercise of subscription (or preemptive) rights for the shares. In doing so, we will also evaluate any other factors that we may consider appropriate at the time.
There can be no assurance that we will decide to comply with such registration requirements. If no such registration requirements are satisfied, the depositary will sell the subscription (or preemptive) rights relating to the ADSs on deposit and will distribute the proceeds of such sale, if any, to the holders of the ADSs. If the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case no value will be given for these rights.
ADS holders may be subject to limitations on the transfer of their ADSs.
ADSs are transferable on the books of the depositary. However, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when the books of the depositary are closed or if such action is deemed necessary or advisable by the depositary or by us because of any requirement of law or of any government or governmental body or commission or under any provision of the deposit agreement. Moreover, the surrender of ADSs and withdrawal of our shares may be suspended subject to the payment of fees, taxes and similar charges or if we direct the depositary at any time to cease new issuances and withdrawals of our shares during periods specified by us in connection with shareholders’ meetings, the payment of dividends or as otherwise reasonably necessary for compliance with any applicable laws or government regulations.