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3.A. [RESERVED]
3.B. CAPITALIZATION AND INDEBTEDNESS
Not Applicable.
3.C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not Applicable.
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3.D. RISK FACTORS
You should carefully consider the risks described below, together with all of the other information included in this Annual Report, in evaluating Alcon and our securities. The following risk factors could adversely affect our business, financial condition and results of operations and the price of our securities.
Risks Related to Our Business Generally
Cybersecurity breaches and technology failures could disrupt operations, adversely impact our reputation and compromise confidential or protected data.
We rely on complex and interdependent information technology systems, including internet-based platforms, to support essential business processes. We are also increasingly developing or acquiring technology-based products to improve patient outcomes, which may involve collecting personal information electronically.
The size, complexity, and in some cases, age of our information technology systems make them vulnerable to external and internal security incidents, including malicious intrusions, cybercrime, state-sponsored attacks, malware, misplaced or lost data, programming or human errors and other similar events. For technology-based products connected to the internet, failure to update software on our medical devices, whether by us or our customers, could increase their vulnerability to attacks, potentially impacting healthcare facility operations, patient safety and data confidentiality and integrity.
Our technology landscape has become more complex as we rely on third-party partners to maintain cyber resilience. Cyberthreats continue to evolve and grow more sophisticated, making detection and defense increasingly difficult, particularly given strong competition for a limited pool of cybersecurity professionals. Consequently, breaches may remain undetected for extended periods. We have experienced adverse incidents and expect future attempts, and we may not be able to prevent breakdowns or breaches in our systems or those of our partners. Further, several of our third‑party partners and suppliers have experienced cyber incidents; however, none of these events have resulted in any material system failure or had any other material impact on our business.
A significant breach could impair critical processes such as scientific research, clinical trials, regulatory submissions, manufacturing and supply chain operations, and could result in loss of intellectual property, enforcement actions, fines, litigation, remediation costs and reputational harm. These risks are heightened when associates work remotely. Any such event could require substantial additional investment to restore systems and maintain business continuity.
An inability to effectively address the ethical, regulatory and operational risks of artificial intelligence and disruptive technologies could negatively impact our business and reputation.
Recent technological advances in disruptive technologies such as artificial intelligence (AI) present both opportunities and risks. The healthcare industry has benefited from automation of medical tasks, diagnostics, personalized treatment, predictive analytics and virtual healthcare assistance. In eye care, we may leverage AI in areas such as automated refraction for prescriptions, retinal imaging analysis, contact lens fitting, cataract detection, surgery and glaucoma diagnosis and management. However, if we fail to keep pace with rapidly evolving AI technologies, our competitive position and business results may suffer.
The introduction of these technologies, particularly generative AI, into internal processes or product offerings—whether through internally developed software or third-party platforms—may create new risks and liabilities. These include heightened regulatory scrutiny, litigation, compliance challenges, ethical concerns, confidentiality and security risks and other factors that could adversely impact our business and reputation. Improper use of AI by our personnel, even without our knowledge, could also expose us to significant risk. AI-driven development may lead to intellectual property loss, infringement claims, data privacy issues and cybersecurity vulnerabilities. AI-generated outputs can be inaccurate, misleading or biased, resulting in unintended consequences such as discriminatory outcomes or flawed medical analyses, which could harm patients and damage our reputation. We also risk falling behind if competitors use AI more effectively to improve operations or develop products or services that we are unable to compete against.
AI-based software also presents technical and operational risks specific to our industry. Algorithms used in clinical decision support, diagnostics or device automation may be flawed, and training data may be insufficient or biased—potentially impacting patient outcomes or regulatory compliance. Inappropriate data practices by developers or users could impair results. If AI-assisted analyses are inaccurate, we could face competitive harm, legal liability and reputational damage. Cyberattackers may also exploit AI to generate malicious code, sophisticated phishing attempts or deepfakes—manipulated content that impersonates individuals, including senior management, to spread false messages or commit fraud. Such incidents could harm our reputation and financial performance. Additionally, AI use may inadvertently expose confidential patient or proprietary data, potentially compromising our intellectual property protections and regulatory standing.
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Finally, compliance with emerging AI regulations across jurisdictions could increase costs, require operational changes or limit our ability to use AI in certain markets. For example, the EU Artificial Intelligence Act may impose significant obligations, including transparency and reporting requirements, that could disadvantage us or require changes to our business practices. Regulatory changes could further increase compliance costs and negatively affect our ability to innovate and compete.
Data privacy, identity protection and information security compliance may require significant resources, and our failure to comply with applicable law could lead to significant liability.
Our routine business operations, including through the use of information technologies such as the internet, social media, artificial intelligence, mobile technologies and technology-based medical devices like our surgical equipment, increasingly involve collecting, storing, accessing and processing personal data and other information about patients, vendors, customers, associates, collaborators and others that are subject to privacy and security laws, regulations and customer-imposed controls. Failure to protect that information could expose personal data to unauthorized access. As we transform into a more digital organization through the launch of products and services such as MARLO, SMARTCataract, ADI and other technology and data-driven projects, our risk increases. See "Item 4. Information on the Company—B. Business Overview—Our Products." Any such event could give rise to significant liability and reputational harm, including potentially substantial monetary penalties.
We are subject to privacy laws and regulations that continue to evolve, including Swiss privacy laws, the EU General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA) and the US Health Insurance Portability and Accountability Act (HIPAA) with respect to some of our products and services. In addition, there are different and potentially conflicting data privacy laws in effect in the various jurisdictions in which we operate, and we must understand and comply with each law and standard while ensuring data security. We must also make significant efforts to ensure that any international transfers of personal data comply with applicable law.
Failure to comply with these laws could lead to significant monetary liability, enforcement actions and reputational damage. Compliance obligations may require substantial investment in systems, processes and personnel, and as regulations evolve, these costs may increase.
Migration to cloud platforms could disrupt critical systems and increase costs.
We have a five-year strategic plan to create a digitally empowered business, which involves an ongoing cloud transformation to migrate critical systems and data to cloud-based platforms. We expect this transformation to enhance scalability, automation and system modernization; however, it also introduces significant operational, financial and compliance risks. If we fail to execute this transition effectively, we could experience business disruptions, cost overruns and regulatory penalties, including:
•Migration may cause downtime or service interruptions due to incompatibility of legacy systems, misconfiguration or connectivity issues.
•Noncompliance with privacy regulations or data residency requirements can lead to financial penalties.
•Unexpected costs may arise from underestimating migration complexity, licensing fees or data transfer charges.
•Misconfigured cloud services can create vulnerabilities, increasing the risk of data breaches and non-compliance with privacy and audit requirements.
•Failure to deliver a secure and efficient cloud environment could undermine customer confidence and damage our reputation.
We also face challenges related to governance, data integrity and organizational readiness. Without robust security frameworks and oversight, we may fail to enforce standardized usage policies, leading to inconsistent practices and increased risk exposure. Inadequate planning or monitoring could result in incomplete or inaccurate data transfers, operational inefficiencies and system downtime. Our migration strategy depends on external vendors and licensing arrangements, which may introduce additional risks if these parties experience outages, fail to meet obligations or encounter security incidents. Transitioning from on-premises to cloud environments requires new skills and processes, and insufficient change management could lead to delays, cost overruns and reduced productivity.
Any of these events could materially affect our operations, financial condition and strategic objectives.
Disruptions in our global supply chain or important facilities could cause production interruptions, delays and inefficiencies.
We manufacture and source products and materials on a global scale, and our operations and those of our suppliers could be disrupted by a number of factors, including disruptions in logistics; strikes and other labor disputes; loss or impairment of key manufacturing sites; loss of key suppliers; supplier capacity constraints; raw material and product quality or safety
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issues; inflation; industrial accidents or other occupational health and safety issues; the impact on our suppliers of tighter credit or capital markets; epidemics and pandemics; natural and man-made disasters, including climatic events (including any potential effect of climate change), power grid failures, acts of war or terrorism, workplace violence, political unrest, fires or explosions; changes in public policy, law or public opinion affecting the availability of key components in our manufacturing process; and other external factors over which we have no control.
We single-source or rely on limited sources of supply for some components, raw materials and production services, such as sterilization, viscoelastics and active pharmaceutical ingredients (API) used in the production of our products. The loss of one of these suppliers or the inability of any such supplier to meet performance and quality specifications, requested quantities or delivery schedules could cause our sales and profitability to decline and harm our customer relationships. A price increase from a supplier where we do not have an alternative could also reduce profitability if we cannot pass the increase on to customers. To ensure sufficient supply, we may determine that we need to provide financing to some suppliers, such as the financing arrangement with Lifecore Biomedical, Inc. we entered into in May 2023, which could increase our financial exposure.
In past years, we have incurred shortages of critical components. For example, beginning in 2022 and continuing through mid-2023, our contact lens care business was impacted by a shortage of components used to manufacture bottles. These shortages have resulted, and may continue to result, in delays in the manufacture of our products, increased costs to source alternative supplies, harm to our reputation and loss of business to competitors.
Finally, in some cases, we manufacture our products at a single facility, and regulatory approvals of our products are often limited to a specifically approved site. If we fail to produce enough of a product at a facility, or if our manufacturing process at that facility is disrupted, we may be unable to deliver that product on a timely basis. Problems may arise during the manufacturing process for a variety of reasons, including technical, labor or other difficulties, equipment malfunction, contamination, failure to follow protocols, destruction of or damage to any facility, power grid failures or other events. In the event of a quality control issue, we may voluntarily, or regulators may require us to, close a facility indefinitely. If any such problems arise, we may be unable to purchase substitute products from third-party manufacturers to make up any resulting shortfall, as such manufacturers may only exist in limited numbers or appropriate substitutes may not be available. This risk is particularly relevant for products for which we represent a substantial portion of the market, such as vitreoretinal equipment and related products including viscoelastic. A failure to deliver products on a timely basis could lead to customer dissatisfaction and damage to our reputation. Significant delays in the delivery of our products or a delay in the delivery of a key product could also negatively impact our sales and profitability.
Our reliance on outsourcing key business functions to third parties heightens the risks faced by our businesses.
We outsource certain key business functions to third parties and invest significant effort and resources in doing so. These functions include research and development collaborations, clinical trial activities, manufacturing operations, human resources, warehousing and distribution, certain finance functions, submission of regulatory applications, marketing activities and data management. Outsourcing these services could expose us to suboptimal quality of service or deliverables and result in missed deadlines, erroneous data, supply disruptions, non-compliance with legal or regulatory requirements and industry standards, and reputational harm, any of which could negatively affect our results.
If third parties fail to meet their obligations, we may lose our investment in these collaborations and fail to receive expected benefits. Contractual remedies may be inadequate to compensate for damage to our business or lost profits. Many companies to which we outsource may have limited resources and may lack compliance capabilities comparable to ours. If these third parties fail to comply with contractual duties, regulatory obligations or applicable laws—including anti-bribery laws and export and trade controls—or act inappropriately while performing services for us, we could be held responsible for their acts, suffer reputational harm and face penalties.
Any such failures by third parties could have a material adverse effect on our business, financial condition, results of operations or reputation.
While China remains an important and attractive market, our operations are subject to increasingly challenging economic, political and legal environment.
Approximately 6% of our net sales in 2025 were made to customers in China, and we expect that percentage to grow, particularly in our surgical franchise. However, economic conditions in China have been, and may continue to be, volatile and uncertain. The legal and regulatory system in China continues to evolve and is subject to change. There is also significant uncertainty about the relationship between the US and China, including with respect to geopolitics, trade policies, treaties, government regulations and tariffs. Recent US actions under multiple trade authorities have resulted in reciprocal tariffs and actions by other countries, including China, creating a patchwork of tariffs and restrictions. Temporary tariff agreements and suspensions have proven volatile and subject to modification or reversal without advance notice. These developments increase unpredictability for companies operating across borders and could adversely affect our transactions with customers in China, particularly where handled by our US subsidiaries.
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Pricing pressure in China has intensified as the government pursues healthcare reform initiatives aimed at reducing costs. The Volume-Based Procurement (VBP) program, first implemented for medical devices in 2019 and expanded in 2023, uses a tendering process that drives prices lower and can cause abrupt changes in revenue streams as product selections shift. These dynamics create uncertainty for our surgical portfolio and may negatively impact margins.
In addition, the Chinese government has a strong preference for purchasing locally manufactured goods as part of its broader strategy to support domestic industries, enhance technological self-sufficiency and reduce reliance on foreign imports. Policies such as “Made in China 2025” and related procurement rules favor domestic manufacturers, particularly in public tenders and VBP programs. These measures make it challenging for foreign companies to compete unless they partner with local firms or establish a domestic manufacturing presence. Such developments could require us to adjust pricing, absorb higher costs or restructure operations, any of which could adversely affect our business.
Changing economic and financial environments in many countries and increasing global political and social instability may adversely impact our business.
We operate in more than 140 countries and territories and our results are influenced by local and global economic, financial, political and social conditions. Unpredictable developments, including trade disputes, anti-immigrant sentiment, tariffs, sanctions, economic nationalism, social unrest, terrorism and conflicts in regions such as the Middle East, North Korea, Ukraine and Taiwan, could disrupt global supply chains, increase costs and reduce demand for our products.
The global trade environment remains highly volatile. Governments have imposed tariffs, sanctions and other restrictions that affect our ability to sell products and increase the cost of doing business. For example, the ongoing trade dispute between the US and China, exacerbated by tensions involving Taiwan, could adversely affect exports of our surgical equipment to China. The US has implemented a patchwork of tariff measures under multiple authorities and recent executive actions have raised duties on imports from several countries. These measures have triggered retaliatory tariffs from key markets such as the EU and China, creating uncertainty and potential disruption to our supply chain. Temporary tariff suspensions have been announced but remain volatile and subject to reversal, adding further unpredictability to global trade conditions.
Economic nationalism programs, such as India's Atmanirbhar Bharat placing high tariffs and opaque import licensing rules designed to favor domestic manufacturers, may also make it difficult for us to compete. These policies include preferential treatment for local suppliers in public procurement and regulatory scrutiny of foreign companies, particularly in sectors such as medical devices. Such developments could require us to adjust pricing, absorb higher costs or reconfigure supply chains, any of which could negatively impact profitability.
Local economic conditions may also affect the ability of payors, distributors, customers and suppliers to pay for our products or meet contractual obligations. We have significant receivables dependent on payments from governmental and non-governmental entities worldwide and delays or defaults, particularly in fiscally challenged jurisdictions, could affect profits and cash flow.
Further, in many emerging markets, average income levels are relatively low, government reimbursement for healthcare products and services is limited, and prices and demand are sensitive to general economic conditions. These factors may limit our ability to realize the expected benefits of investments in these markets and could adversely affect our business, financial condition and results of operations.
Economic deterioration due to inflation, epidemics or pandemics, natural or man-made disasters (including climatic events such as effects of climate change), acts of war or terrorism, political unrest, fires, explosions and other external factors beyond our control could further impact demand. Declines in consumer spending may particularly affect elective surgical procedures and discretionary purchases such as contact lenses which often require out-of-pocket payments. For example, while cataract surgery involving monofocal IOLs is generally covered by insurance or government programs, certain ATIOL products may only be partially reimbursed, making individuals less willing to incur costs in weak economic conditions.
If we fail to comply with anti-corruption, anti-bribery, export control, trade sanction or other global trade laws, we could face penalties, and our business could be materially adversely affected.
We operate internationally and sell products in more than 140 countries and territories, and accordingly, we are subject to numerous legal regimes in the countries in which we operate. This includes emerging markets with evolving legal systems, and jurisdictions perceived to have high levels of public sector corruption. Our global operations are subject to various, heavily enforced anti-corruption and anti-bribery laws, such as the US Foreign Corrupt Practices Act ("FCPA") and similar laws that prohibit improper payments to government officials or third parties. Enforcement efforts can be broad-based or industry-specific. For example, in 2023 China launched a broad anti-corruption campaign targeting the healthcare industry. While we strive to abide by these laws and regulations and maintain internal controls, we face significant risks if any of our associates, third party business partners or agents fail to comply with the relevant laws. Any violation of the applicable anti-bribery, anti-corruption or similar laws could result in investigations, loss of export privileges, severe
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criminal or civil sanctions and suspension or debarment from certain government contracts, any of which could have a material and adverse effect on our business, financial condition and results of operations.
We also must comply with global trade laws including import, export control and economic sanctions regulations. These laws may prohibit certain transactions or require us to obtain export licenses before shipping products or technology. Compliance can restrict access to products, increase costs and occasionally interrupt supply. Failure to comply or maintain required permits could result in civil, criminal or administrative penalties and disrupt operations. For example, following Russia’s invasion of Ukraine, the US, EU, UK and other governments imposed coordinated sanctions and export controls including:
•Comprehensive financial sanctions against major Russian banks including removal from SWIFT;
•Designations of Russian individuals with significant business interests, military involvement or government ties; and
•Enhanced export controls and trade restrictions targeting a broad range of goods.
Although sales in Russia and Belarus are not material, we have worked to maintain patient and provider access to our products in those markets. Sanctions and trade laws change frequently often without notice. Any violation could lead to investigations, adverse media coverage and sanctions harming our reputation, business, results of operations, cash flows and financial condition.
We may be unable to attract, develop and retain qualified personnel, which could impair our ability to execute our strategy.
Our success depends on our ability to recruit, develop and retain highly skilled personnel across critical functions, including senior scientific and management teams, researchers, development specialists and manufacturing staff. Losing key talent or failing to build a strong pipeline could delay product development, disrupt operations and hinder achievement of strategic objectives.
Competition for talent in our industry is intense, particularly in the US, where specialized expertise is concentrated. Our ability to hire and retain qualified individuals depends on offering competitive compensation and flexibility to reward performance. However, laws and customary practices on executive pay—especially in Switzerland and other European jurisdictions—may limit our ability to match US market benchmarks. This disparity can make it more difficult to recruit and retain talent in key markets.
Beyond compensation, we face risks throughout the associate life cycle:
•Recruitment challenges: Tight labor markets and specialized skill requirements increase hiring costs and time-to-fill critical roles;
•Performance management: Inconsistent evaluation processes or failure to address underperformance can reduce productivity and morale;
•Career development: Lack of clear career paths and development opportunities may lead to disengagement and attrition; and
•Succession planning: Inadequate planning for leadership transitions or critical roles could create operational gaps and weaken strategic execution.
Frequent travel requirements between Switzerland and the US add complexity. Certain associates may be unwilling or unable to commit to regular international travel, which is essential for collaboration and oversight of global operations. Restrictions on global mobility—whether due to immigration policies or public health crises—could further limit our ability to deploy talent where needed.
Our manufacturing operations require a stable workforce. Tight labor markets have increased labor costs, and failure to manage these costs effectively could pressure margins and disrupt production.
Failure to attract, develop and retain qualified personnel could result in:
•delays in product development and regulatory submissions;
•operational disruptions, including manufacturing and supply chain interruptions;
•loss of institutional knowledge and leadership continuity;
•increased recruitment and retention costs; and
•reduced competitiveness in innovation and market execution.
Any of these outcomes could materially adversely affect our business, financial condition and results of operations.
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To the extent we operate as a third-party contract manufacturer, we may face risks similar to, but not identical to, those we experience when manufacturing products for ourselves.
We currently act, and plan to continue acting, as a third-party contract manufacturer for a limited number of customers. While we are not seeking additional contract manufacturing revenue, we remain party to certain historical contracts. In addition, if we divest or out-license certain products, we have agreed, and may continue to agree, to manufacture those products on behalf of the purchaser of those rights. Acting as a third-party contract manufacturer exposes us to risks similar to, but not identical to, those we face when manufacturing products for ourselves, including:
•Shortages or price increases of components specified by our contract manufacturing customers may delay shipments and lead to contractual penalties;
•We may bear the risk of component price increases that occur between periodic re-pricing of products during the term of a customer contract;
•Our contract manufacturing customers do not commit to long-term production schedules, making it difficult to plan production and optimize manufacturing capacity;
•Customers may require rapid increases in production, which can strain resources and reduce operating margins;
•Because many of our costs and operating expenses are relatively fixed, reductions in customer demand can harm our gross profits and operating results; and
We may encounter significant delays or defaults in payments owed to us by contract manufacturing customers.
Our investments in early-stage companies with unproven technologies may result in significant losses, balance sheet volatility and liquidity constraints.
We invest in convertible notes and equity securities in, or enter into option agreements, to acquire early-stage companies that develop and commercialize emerging technologies. Many of these technologies are unproven and may never achieve market acceptance. These investments carry significant risks, including the potential for complete loss of our investment. Early-stage companies often face numerous challenges, such as limited operating histories, untested business models, uncertain revenue streams, high capital requirements and regulatory hurdles. In addition, the technologies these companies develop may fail during development or proof-of-concept stages. Even if successfully developed, these technologies may fail to gain commercial traction, become obsolete due to rapid technological advancements or be subject to unforeseen legal or regulatory constraints.
Our ability to realize returns on these investments depends on various factors, many of which are outside our control, including market conditions, competitive pressures and the ability of these companies to secure additional financing. Many early-stage businesses experience high failure rates, and if the companies in which we invest are unsuccessful, we may be required to write down or write off these investments, adversely affecting our financial condition and results of operations. Even if these investments generate returns, they may take years to materialize, creating uncertainty regarding our ability to monetize our holdings in a timely manner.
If an early-stage company in which we have invested successfully completes an initial public offering (IPO), our ability to realize gains from our investment may still be subject to significant risks. Newly public companies often experience extreme stock price volatility due to factors such as limited trading volume, market speculation and changing investor sentiment. As a result, the market value of our holdings in these companies may fluctuate significantly. In some cases, we may be subject to lock-up agreements or other trading restrictions that prevent us from selling shares for a specified period after the IPO, exposing us to the risk of a decline in stock price before we can liquidate our position.
Furthermore, even after any restrictions lapse, we may be unable to exit our investment at desirable prices due to market conditions, liquidity constraints or other factors affecting the trading dynamics of the newly public company. If the stock price of an invested company declines significantly after going public, we could suffer substantial losses.
Our investments in early-stage companies with unproven technologies may not be successful, and these investments may negatively impact our financial condition, operating results and shareholder value.
We operate in a highly competitive industry, and failure to innovate could adversely affect our market position and growth.
Our industry is highly competitive, and in both our surgical and vision care businesses, we face intense competition. In surgical, competitors range from large manufacturers with diversified product lines to smaller companies offering specialized products. Development by other companies of new or improved products, processes or technologies—including digital solutions—may render our products less competitive or obsolete. In contact lenses, we face strong competition from existing global players and expect increased competition from manufacturers in Asia. Competitors and new entrants are also challenging traditional distribution models through non-traditional, disruptive approaches such as
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direct-to-consumer, internet and other e-commerce channels. These developments could reduce the importance of the eye care professional (“ECP”) channel, where we have a significant presence, and increase pricing pressure.
In ocular health, particularly pharmaceuticals, we compete against companies with more established R&D capabilities, greater experience in preclinical and clinical trials and broader product portfolios. Our vision care business also competes with eyeglass manufacturers and providers of other vision correction options, including ophthalmic surgery. New drug discoveries could disrupt core elements of both our surgical and vision care businesses.
While we currently hold leading positions in several markets, our success depends on maintaining or building on those positions. We cannot predict the timing or impact of competitive product introductions, including new market entrants, “generic” versions of approved products or private-label alternatives. To compete effectively, we must continue to develop or acquire advanced technologies, integrate them into proprietary products, obtain regulatory approvals where required and manufacture and market successfully. Shifts in market share can occur due to product issues, physician advisories, safety alerts or publications about our products. Competitors’ products may be safer, more effective, more convenient, better reimbursed or more aggressively marketed than ours. In pharmaceuticals, generic versions of branded products, including ours, may be sold at substantially lower prices. In an environment of managed care, provider consolidation, increased competition, and declining reimbursement rates, failure to innovate could force us to compete primarily on price. See “–Our research and development efforts may not succeed in bringing new products to market or may fail to do so in a cost-efficient manner or at a scale sufficient to grow our business.” and “–We may not successfully complete or integrate strategic acquisitions to expand or complement our business.”
Our financial performance also depends on our ability to build and expand the markets in which we compete. While we expect growth in key areas such as multifocal contact lenses and ATIOLs, market sizes may not increase beyond current levels and we may not regain or gain market share, expand our market penetration, or increase procedural volumes. Decreases in market size or share, declines in average selling prices or lower procedural volumes could materially adversely affect our results. Failure to expand our markets beyond existing levels could limit our ability to grow in line with industry expectations. Our ability to respond to competitive pressures will depend on reducing costs, maintaining margins, achieving manufacturing efficiencies and sustaining capacity.
Our research and development efforts may not succeed in bringing new products to market or may fail to do so in a cost-efficient manner or at a scale sufficient to grow our business.
Our ability to maintain and grow our business, replace sales lost to competition and capitalize on new and potentially disruptive technologies depends heavily on the success of our research and development activities. We commit substantial financial, human and capital resources to product development through internal programs and Business Development & Licensing ("BD&L") transactions. Developing and marketing new products is costly, lengthy and uncertain. Even when projects reach commercialization, they may later be discontinued for technical, clinical, regulatory or commercial reasons.
Despite these investments, our research and development activities and external collaborations may not produce commercially successful products that are sufficient to replace lost sales or generate incremental revenue to grow our business. We may fail to identify promising opportunities or realize expected value from strategic partnerships. In some cases, new products may cannibalize existing product revenues rather than drive growth.
Further, even if we secure regulatory approval and achieve initial commercial success for new products, our, products may abruptly cease to be viable due to unforeseen safety concerns. See “–We may implement product recalls or voluntary market withdrawals of our products.”
The pace of technological change in our industry is rapid, and emerging innovations—such as AI-driven diagnostic tools, telehealth platforms, drug-device combination therapies, and advanced biomaterials—could disrupt traditional surgical and vision care models. If we fail to anticipate or adapt to these developments, the products we develop may become less competitive or obsolete.
If we cannot maintain a cost-effective pipeline of successful new products sufficient to sustain growth, offset competitive erosion and capture market opportunities, our business, financial condition or results of operations could be materially adversely affected. For a description of the regulatory approval processes required to market our products, see “–Regulatory clearance and approval processes for our products are expensive, time-consuming and uncertain, and failure to obtain and maintain required regulatory clearances and approvals could prevent us from commercializing our products” and “Item 4. Information on the Company–4.B. Business Overview–Government Regulation.”
We may not successfully complete or integrate strategic acquisitions to expand or complement our business.
As part of our growth strategy, we regularly evaluate and pursue external investments, alliances, license arrangements, acquisitions and other transactions—collectively referred to as “BD&L” transactions—to expand or complement our business. For example, in 2025 we acquired a majority interest in Aurion Biotech, Inc., and closed the acquisitions of Cylite
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Pty Ltd. and LumiThera, Inc. In 2024 we closed the acquisition of BELKIN Vision, Ltd. These and other ventures may bring new technologies, products or customers to enhance our position in the ophthalmic industry. However, we may be unable to identify suitable acquisition candidates at attractive prices or at all. Acquisition efforts can be impeded by competing bids from other companies and by governmental regulation, including market concentration limitations and other competition laws.
Additionally, certain acquisitions may be subject to approval by the target company's shareholders or other material closing conditions. For example, in August 2025, we announced our intent to acquire STAAR Surgical Company ("STAAR"). After an extended period of discussions with STAAR, STAAR was unable to receive the necessary shareholder approvals to consummate the acquisition. Future deals could face similar outcomes. If we are unable to successfully complete these acquisitions, we may incur significant costs without realizing the anticipated benefits, synergies or scale, which could delay or impede our growth strategy and adversely affect our business, financial condition and results of operations.
Even when we successfully complete an acquisition, we face risks related to our ability to:
•integrate the acquired business effectively, including overcoming cultural differences and retaining key personnel, customers and suppliers;
•maintain consistent standards, controls and policies across acquired entities, including integration into our internal control over financial reporting;
•achieve expected synergies and realize anticipated financial or strategic benefits within projected timeframes, if at all; and
•operate in categories or markets where we have limited or no prior experience.
Acquisitions also require significant resources and may divert management’s attention from our existing business. They can result in unforeseen liabilities, tax or accounting complexities and potentially dilutive issuances of equity securities, as well as increased debt, contingent liabilities and operating expenses—all of which could adversely affect our financial condition and results of operations. If the economic benefits associated with any acquisition or investment do not meet our expectations, we may be required to record impairment charges related to goodwill, intangible assets or other assets associated with such transactions.
Governance gaps may increase as associates adopt AI tools outside approved controls.
The rapid evolution and widespread availability of AI-driven tools make it difficult for us to evaluate new technologies in accordance with company policy before they are used in practice. As AI products, features and plugins are released at a pace that outstrips formal review processes, associates may adopt unapproved tools, often unknowingly, outside of our governance and security frameworks. This creates a form of “shadow IT” and introduces material risks, including:
▪sensitive product design files, clinical trial data and patient information could be uploaded to external AI platforms or unvetted applications, creating exposure under HIPAA, GDPR and other privacy laws;
▪unapproved tools bypassing internal controls required for FDA submissions and ISO 13485 compliance, which can undermine documentation integrity and audit readiness;
▪AI-generated outputs incorporating third-party data or unclear licensing, leading to ownership disputes and jeopardizing patent filings;
▪expansion of our attack surface as ungoverned tools create entry points for threat actors using automated and AI-enhanced methods, potentially compromising device firmware or connected health platforms. Alcon has observed several attempted cyberattacks in which threat actors sought to use AI to enhance or automate malicious activity. While none of these attempts resulted in a material impact to the company, we expect such attempts to continue to increase in sophistication and volume; and
▪inconsistent processes, errors in regulatory filings and interruptions in critical R&D and manufacturing workflows due to use of systems that are not integrated with validated infrastructure.
Failure to address these governance gaps could result in financial loss, reputational harm and regulatory penalties.
Terrorism, war, and other events may harm our business, operating results and financial condition.
The continued threat of terrorism and related security measures, military actions or other acts of war—such as the ongoing conflicts between Russia and Ukraine and in the Middle East—may disrupt global economies and create significant uncertainty. These events, along with economic sanctions, trade restrictions and government or market reactions (including sanctions related to the Russia–Ukraine conflict), could negatively impact our business, operating results and financial condition.
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Additionally, events such as the loss of critical infrastructure or utility services—including energy, transportation or telecommunications—could have similar adverse effects. To the extent such disruptions or uncertainties result in delays or cancellations of customer orders or interfere with the manufacture or shipment of our products, our business, operating results and financial condition could be materially harmed.
Our inability to forecast demand accurately may adversely affect our sales and earnings and increase quarterly variability.
We balance the need to maintain inventory levels sufficient to ensure competitive lead times against the risk of inventory obsolescence due to changing customer requirements, fluctuating commodity prices, product changes, transfers or life cycle considerations. To manage inventories effectively, we must estimate customer demand and produce products in quantities that substantially correspond to that demand. If we fail to forecast demand accurately or determine the optimal product mix, we may face production capacity issues and be unable to manufacture sufficient quantities of certain products. Failures in our information technology systems or human error could also lead to inaccurate forecasting.
As the number of unique products (SKUs) we offer grows—particularly with increasing variations in IOL and contact lens styles—the precision required for demand forecasting rises. This proliferation of SKUs could increase the risk of product unavailability and lost sales, as well as global inventory requirements for consigned products such as IOLs. These factors may negatively impact working capital and lead to write-offs due to obsolescence or expired products.
Compounding these risks, our manufacturing processes involve lengthy lead times to acquire and install new equipment and product lines. If we fail to forecast demand adequately, we may be unable to scale production in time to meet unexpected increases in demand.
Additionally, a significant portion of our vision care products are sold to major healthcare distributors and retail chains. Our sales and quarterly growth comparisons, as well as inventory estimates, may be affected by fluctuations in their buying patterns due to seasonality, pricing, competitor recalls or other factors. Overestimating demand could result in excess inventory and obsolescence, while underestimating demand could force us to produce additional quantities at higher cost or forego sales entirely.
Changes in third-party payor coverage and reimbursement methodologies and potential regulatory price controls may adversely impact our ability to sell our products at prices necessary to support our current business strategy.
The prices, sales and demand for some of our products, particularly our surgical and pharmaceutical products, could be adversely affected by the increased emphasis managed care organizations and governments continue to place on reducing health care costs. In addition, some third-party payors will not provide reimbursement for a new product until we demonstrate its innovative value or improved patient outcomes, which could impact our ability to grow the market for sales of the product. For our pharmaceutical products, we must compete for placement on formularies of managed care organizations. Exclusion of a product from a formulary can lead to reduced usage within that organization. There have also been recent initiatives by third-party payors to challenge the prices charged for medical products. Physicians, eye care professionals and other healthcare providers may be reluctant to purchase our products if they do not receive adequate reimbursement from third-party payors to cover the cost of those products and for procedures performed using those products. This risk can be heightened in times of higher inflation if reimbursement rates do not keep pace with increasing costs. Reductions in the prices for our products in response to these trends could reduce our profit margins, which would adversely affect our ability to invest and grow our business.
Governmental programs that typically reimburse at predetermined fixed rates may also decrease or otherwise limit amounts available through reimbursement. For example, in the EU, member states impose controls on whether products are reimbursable by national or regional health service providers and on the prices at which products are reimbursed under state-run healthcare schemes. Some member states operate reference pricing systems in which they set national reimbursement prices by reference to those in other member states. Countries implementing a volume-based procurement process, such as the one initiated in China, can lead to decreased prices. The US recently passed the Inflation Reduction Act in 2022, which introduced significant changes to how drugs are covered and paid for under the Medicare program, including the creation of financial penalties for drugs whose prices rise faster than the rate of inflation, a redesign of the Medicare Part D program to require manufacturers to bear more of the liability for certain drug benefits and the introduction of government price-setting for certain Medicare Part D drugs starting in 2026. Other governmental funding restrictions, legislative proposals and interpretations of policy may negatively impact amounts available through reimbursement, including by restricting payment increases to hospitals and other providers through reimbursement systems or by restricting whether reimbursement is available for our products at all.
In the United States, federal policymakers have also periodically pursued executive‑branch initiatives aimed at tying reimbursement under Medicare or other federal programs to the lowest prices available in certain foreign markets, sometimes referred to as “most favored nation” pricing. Although prior versions of these initiatives have faced legal, operational and implementation challenges, future executive orders, rulemaking or agency actions could revive or expand
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these policies. Any such measures could require price concessions, impose new reporting or compliance obligations or create uncertainty around reimbursement levels. If implemented, these actions could reduce the prices we are able to charge for certain products, limit access to federal reimbursement or otherwise adversely affect our business, financial condition and results of operations.
We expect that additional health care reform measures will be adopted in the future in the countries in which we operate, including those initiatives affecting coverage and reimbursement for our products, any of which could limit the amounts that governments will pay for health care products and services, which could adversely affect the growth of the market for our products or the demand for our products or result in additional pricing pressures. We cannot predict the effect such reforms or the prospect of their enactment may have on our business.
Financial markets, including inflation, interest rates and volatile exchange rates, are unpredictable, which could lead to unexpected impacts to our earnings, the return on our financial investments and the value of some of our assets.
Financial market conditions may adversely affect our earnings, the return on our financial investments and the value of some of our assets. For example, inflation rates in the US and EU were at multi-decade highs in 2022 and remained elevated in 2023, which increased the cost to manufacture our products. If inflation rates were to rise again, we would need to manage this pressure through pricing actions and productivity initiatives while maintaining margins and market share. Increasing prices to offset inflation may cause some customers, particularly in elective surgical and contact lens businesses where patients typically do not receive reimbursement, to reduce purchases or choose lower-cost alternatives. Failure to manage inflationary pressures could adversely impact our results of operations or cash flows.
Fluctuations in interest rates could also materially impact our financial condition and results of operations. Higher interest rates could increase borrowing costs and interest expense on future debt issuances or refinancings. Lower interest rates could reduce interest income on cash and short-term investments. Changes in interest rates may also affect market conditions, capital availability and investor demand for equity and debt securities, influencing our ability to access financing on favorable terms.
Exchange rate volatility between the US dollar, our reporting currency, and other currencies can result in significant changes in reported sales, costs and earnings in US dollars and in the reported value of assets, liabilities and cash flows. A stronger US dollar relative to foreign currencies negatively impacts our consolidated financial position and results of operations as foreign currency amounts translate into fewer US dollars. Despite any hedging measures we may undertake, because a significant portion of our earnings and expenditures are in currencies other than the US dollar, and because our expenditures in Swiss francs and US dollars exceed our revenue in those currencies, exchange rate volatility may materially impact our business, results of operations and financial condition. Additionally, some customers pay us in US dollars, and when the dollar is strong, their debts to us become harder to repay.
Countries experiencing financial distress, high inflation or large capital outflows may impose foreign exchange controls, which could limit our ability to distribute retained earnings from local affiliates or pay intercompany obligations.
For more information on the effects of currency fluctuations on our Consolidated Financial Statements and on how we manage currency risk, see “Item 5. Operating and Financial Review and Prospects—5.A. Operating Results—Effects of Currency Fluctuations” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”
We are subject to laws targeting fraud and abuse in the healthcare industry.
We are subject to numerous global laws addressing healthcare fraud and abuse, including state and federal anti-kickback and physician self-referral laws. For example, the US federal anti-kickback statute prohibits knowingly offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or recommending any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed programs and in some cases private insurance. These laws have been interpreted to apply broadly to arrangements between manufacturers and prescribers, purchasers, formulary managers and other healthcare professionals. A claim for reimbursement resulting from a violation of the anti-kickback statute constitutes a false or fraudulent claim under federal law.
Pricing and rebate programs for covered outpatient drugs reimbursed under federal healthcare programs must comply with complex and evolving requirements under the Medicaid drug rebate program and other statutes, including the Omnibus Budget Reconciliation Act of 1990, the Veterans Health Care Act of 1992 and the Deficit Reduction Act of 2005, each as amended. Guidance on these requirements is limited, and interpretations by the Centers for Medicare & Medicaid Services (CMS), other agencies or courts could differ from ours, resulting in adverse consequences for us. If products are offered through the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. Similar controls and restrictions exist in the EU, its member states, Japan and elsewhere. Our activities are also potentially subject to federal and state consumer protection and unfair competition laws.
In recent years, the US government and several states have enacted legislation requiring medical device companies to maintain marketing compliance programs and file periodic reports, and similar legislation is being considered in other
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states. Many of these requirements are new and uncertain, and failure to comply could result in enforcement actions, fines and adverse publicity. If physicians or other providers we work with fail to comply with applicable laws, they may face sanctions that could negatively affect our business.
Failure to meet these requirements can result in civil litigation, criminal prosecution, fines, injunctions, product recalls or seizures, suspension of production, withdrawal of approvals, whistleblower actions or exclusion from government contracts, any of which could materially adversely affect our business, financial condition or results of operations.
Regulatory clearance and approval processes for our products are expensive, time-consuming and uncertain, and failure to obtain and maintain required regulatory clearances and approvals could prevent us from commercializing our products.
Our businesses are subject to extensive regulation in the countries where we operate, and the trend is toward increasingly stringent requirements. Regulatory authorities such as the FDA continue to increase testing and documentation requirements, raising costs and extending timelines for product introduction. Similar trends exist in the EU and other markets. Compliance is costly and materially affects our business by increasing the time, complexity and expense of obtaining and maintaining approvals for new and existing products.
Most of our products are regulated as medical devices or pharmaceuticals and face rigorous development and approval processes, particularly in the US and EU, though some products may be regulated under other categories such as lasers, dietary supplements or medical foods. Developing new products and obtaining FDA clearance or approval, CE marking or other marketing authorizations is lengthy, expensive and uncertain. Regulatory authorities may require additional testing or clinical data, delaying authorization or limiting approved indications. Even after approval, regulators may impose post-marketing obligations or restrict promotion and distribution. We discuss these regulations more thoroughly in "Item 4. Information on the Company-4.B. Business Overview-Government Regulation-Product Approval and Monitoring".
We may also be unable to maintain existing registrations, licenses or clearances. Routine modifications to products, labeling, instructions, manufacturing processes or packaging may require notification or re-registration, creating operational complexity. Managing multiple versions of products globally can require additional inventory, bridging stock and redress operations, which may strain manufacturing capacity and supply chains. These challenges could lead to prolonged product shortages and loss of customers, negatively impacting sales.
Legislative and regulatory reforms may impact our ability to develop and commercialize our products.
The global regulatory environment is increasingly stringent and unpredictable, and unexpected changes can adversely affect our business, financial condition and results of operations.
First, compliance with changes and new requirements relating to regulatory approvals and postmarket obligations applicable to our products is costly and onerous. As discussed in "Item 4. Information on the Company – 4.B. Business Overview – Government Regulation – Product Approval and Monitoring," the EU Medical Device Regulation (EU MDR) imposes stricter requirements for the marketing and sale of medical devices. All new devices marketed in the EU require certification under EU MDR. Devices certified under prior directives with valid CE certificates may remain on the market until December 2027 or 2028 depending on classification, provided the manufacturer submitted an application for conformity assessment by May 2024. These changes require significant investment in testing, documentation and notified body reviews. Several countries that previously lacked medical device regulations have introduced them, and others have expanded or plan to expand existing frameworks. While some countries may harmonize regulations, requirements continue to differ significantly. In the US, the FDA is pursuing efforts to modernize device regulation, including changes to the 510(k) pathway that could broaden evidentiary requirements for substantial equivalence, increasing cost and time to market. Additionally, the Quality Management System Regulation (QMSR) becomes mandatory in February 2026, aligning FDA requirements more closely with ISO 13485. Given the number of devices we market, it is possible not all products will be certified by the EU MDR deadline, and some may be rationalized if certification costs are prohibitive.
Second, new legislation and new interpretations of existing healthcare statutes are frequently adopted, which could affect our business. For example, in the US, federal and state healthcare reform measures have introduced changes to reimbursement methodologies, transparency reporting and compliance obligations that have had significant impact on our operations.
Third, if countries such as the US eliminate prescription requirements for contact lenses, our marketing and distribution model would need significant changes. Such reforms could reduce the role of ECPs as intermediaries, requiring us to invest heavily in direct-to-consumer marketing and distribution infrastructure, which could increase costs and negatively impact sales of vision care products.
Finally, within our surgical business, a considerable portion of sales and growth relies on patient-pay premium technologies in markets where access has been established. For example, in the US, two landmark rulings issued by CMS created a bifurcated payment system for certain ATIOLs, with part of the cost reimbursed under Medicare and the
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remainder paid out-of-pocket. For more details, see "Item 4. Information on the Company – 4.B. Business Overview – Our Products – Surgical." If CMS or other authorities amend regulations governing patient-pay reimbursement for advanced technologies, our sales and growth could be negatively impacted. Similar changes in other jurisdictions could further limit access to premium technologies and reduce demand.
We may implement product recalls or voluntary market withdrawals of our products.
The manufacturing and marketing of our products, including surgical equipment, instruments and pharmaceuticals, involve an inherent risk that our products may prove defective and pose health risks. We are subject to laws requiring us to report adverse events, and issues identified through monitoring or clinical studies may lead to voluntary or mandatory actions, including recalls, withdrawals or changes to product instructions.
Government authorities such as the FDA have the authority to mandate recalls for material deficiencies or defects in design, labeling or manufacture. We may also voluntarily initiate field actions, such as corrections or removals, due to component failures, manufacturing errors, design or labeling defects or other issues. If a correction or removal addresses a health risk or a US Food Drug, and Cosmetic Act ("FDCA") violation, it must be reported to the FDA. Similarly, safety-related field actions in the European Economic Area must be reported to regulators in each affected country.
A recall of one of our products—or a similar competing product—could impair sales and subsequent regulatory approvals of other products and lead to a general loss of customer confidence. Recalls can also trigger inspections, regulatory actions or litigation, and may result in significant costs and reputational harm.
The manufacture of our products is highly regulated and complex.
The manufacture of our products, including surgical equipment, instruments and pharmaceuticals, is complex and subject to extensive regulation by health authorities worldwide, including the FDA. Whether produced at our own facilities or by third parties, we must ensure compliance with current Good Manufacturing Practices, quality system requirements, and other applicable regulations, such as national and local environmental, health and safety laws, as well as our own quality standards. In recent years, health authorities have intensified scrutiny of manufacturers’ compliance with these requirements.
Any significant failure by us or our third-party suppliers to meet these requirements or health authorities’ expectations could result in the shutdown of production facilities or lines or prevent us from importing products across borders. In addition, if we fail to properly plan for manufacturing capacity, the complexity of our processes could lead to long lead times to increase capacity. These events could cause product shortages or prevent us from supplying products for an extended period. Such shortages or shutdowns have led to, and could continue to lead to, significant revenue losses and potential third-party litigation. Health authorities have also imposed substantial penalties for noncompliance. Failure to comply fully could delay approval of new products to be manufactured at the affected site.
If we fail to comply with environmental, health and safety laws and regulations, we may face significant administrative, civil or criminal fines, penalties or other sanctions. We may also incur substantial costs to comply with current or future environmental, health and safety laws and regulations, which have become more stringent over time, including potential laws addressing global climate change. Compliance with these laws may increase costs or impair research, development or production efforts.
We may be subject to penalties or market restrictions if we fail to comply with post-approval regulatory requirements.
Our products are subject to extensive post-approval regulation, including requirements related to testing, manufacturing, labeling, advertising, promotion, recordkeeping, reporting, import and export. Regulatory authorities such as the FDA and their counterparts globally monitor compliance with these requirements.
We are required to report adverse events and product malfunctions. In the US, for example, we must notify the FDA of any incident in which a marketed medical device may have caused or contributed to a death or serious injury or has malfunctioned in a way that could recur and cause harm. In the European Economic Area, manufacturers must report serious or potentially serious incidents to the relevant authorities.
Our advertising and promotional activities are also subject to strict regulatory oversight. Marketing approvals typically limit our products to specific uses, and we are prohibited from promoting unapproved or “off-label” uses. We must ensure that all product claims are adequately substantiated. Claims deemed false, misleading or deceptive may result in enforcement actions, consumer litigation or competitor challenges. In addition, interactions with healthcare providers are subject to complex laws and industry codes that govern promotional practices, including restrictions on benefits, sponsorships and educational activities. These rules vary by jurisdiction and are subject to evolving interpretations. Failure to comply could lead to investigations, fines or reputational harm. As our associates increasingly use social media, the risk of disseminating inappropriate or noncompliant messaging has increased. We have previously modified or withdrawn promotional materials at the request of regulators and may be required to do so again.
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Failure to comply with applicable regulatory requirements or to adequately respond to notices of violation could result in enforcement actions, including warning or untitled letters; fines, civil penalties, injunctions or criminal prosecution; product recalls, seizures or import detentions; delays or refusals in product approvals; suspension or withdrawal of existing approvals; operating restrictions or production interruptions; and export bans.
Any of these actions could result in unexpected costs, damage our reputation and adversely affect our business, financial condition and results of operations.
Social impact and sustainability matters may impact our business and reputation.
Investors, advocacy groups, lenders and other market participants increasingly evaluate companies based on social impact and sustainability (SIS) performance, which is viewed as contributing to long-term value. Various organizations rate SIS performance across topics such as climate change, human rights, ethics and compliance, corporate governance, board oversight of sustainability issues and access to products and solutions. These ratings are widely publicized and influence investment decisions, including eligibility of Alcon securities for certain portfolios and funds.
From time to time, we are asked by certain investors to set ambitious SIS goals and provide robust disclosures on progress. Some customers, particularly EU and UK governments, have adopted procurement policies imposing sustainability standards, which may affect our ability to win tenders. In response, we have adapted our corporate responsibility program to evolving SIS frameworks and announced goals and objectives. These goals reflect current plans and aspirations, but factors beyond our control may prevent achievement. Efforts to accomplish and report on these goals present operational, reputational, financial and legal risks.
Standards for SIS tracking and reporting remain new, fragmented and evolving. Regulatory authorities in the US, Switzerland and Europe have imposed, and may continue to impose, mandatory SIS disclosure requirements, which could require significant revisions to our goals and reporting processes and increase compliance costs. Enhancing processes and controls to meet evolving standards and third-party assurance requirements may require substantial resources, and the lack of consistent or meaningful comparative data across the industry could make it difficult to benchmark performance or demonstrate progress.
While many stakeholders advocate for SIS progress, there is also backlash against certain initiatives from government officials, consumers and others. Reconciling these opposing views may not be possible. Failure or perceived failure to meet SIS expectations, goals or reporting standards could negatively impact our reputation, ability to attract talent, competitiveness and investment appeal, and could expose us to enforcement actions or litigation.
If we fail to properly educate and train healthcare providers on our products, then customers may not buy our products.
We market our surgical and certain vision care products including pharmaceutical products to healthcare providers such as ECPs, public and private hospitals, ambulatory surgical centers, eye clinics and ophthalmic surgeons’ offices and group purchasing organizations and our other vision care products to retailers and distributors. We have developed and strive to maintain strong relationships with these groups who assist in product research and development and advise us on how to meet consumer and surgeon needs. We rely on these groups to recommend our products to their patients and to other members of their organizations.
Contact lens and lens care consumers tend not to switch products regularly and are repeat purchasers. As a result, the success of these products depends on an ECP’s initial recommendation, which may be influenced by our ability to educate the ECP on our products. Even if we succeed in educating ECPs, their influence over consumer choice may decline, which could make our business more dependent on direct-to-consumer marketing. Increased direct-to-consumer marketing could strain our relationships with ECPs who may view such efforts as a threat to their business.
In our surgical business and with pharmaceutical products, ECPs including ophthalmic surgeons play a significant role in determining treatment and selecting products for conditions such as cataracts, vitreoretinal disorders, refractive errors, glaucoma and dry eye. Acceptance of our products depends on our ability to train ECPs and their clinical staff on safe and appropriate use, which takes time. Training may take longer than expected and could delay sales growth. After training, we rely on ECPs to advocate for our products in the broader marketplace. Convincing ECPs to dedicate time and resources to training is challenging, and we may not succeed. If we fail to educate ECPs on the merits and proper use of our products, they may not adopt them, which would limit commercialization and profitability.
Even if we protect our intellectual property to the fullest extent permitted by applicable law, our competitors and other third parties could develop and commercialize products similar or identical to ours, which could impair our ability to compete.
We rely on a combination of patents, trademarks, designs and copyrights to protect our intellectual property. The scope, strength and duration of these rights vary significantly by product and jurisdiction. We also rely on trade secrets, know-how and other confidential information to supplement these protections. In the aggregate, these intellectual property rights are of material importance to our business.
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These protections may limit competitors from commercializing products covered by our intellectual property rights, but they do not prevent competitors from marketing alternative products that compete with ours. In addition, these rights may be challenged by third parties or regulatory agencies, and trade secrets protected through confidentiality agreements may be independently developed or misappropriated. In certain countries, particularly emerging markets, ambiguities in the law and enforcement difficulties may render intellectual property rights less effective than in Western Europe or the US.
For our pharmaceutical products, we face challenges from third parties seeking to manufacture and market generic versions before patent expiration. In the US, generic manufacturers may challenge the validity or claim non-infringement of our patents through the Abbreviated New Drug Application (ANDA) process with the FDA and related litigation. Loss of patent protection for a pharmaceutical product would generally lead to a significant and rapid decline in sales as lower-priced generics become available.
Therefore, even if we protect our intellectual property to the fullest extent permitted by law, competitors and other third parties may nonetheless develop and commercialize products similar or identical to ours, which could impair our ability to compete and adversely affect our business, financial condition and results of operations.
We are a multinational business that operates in numerous tax jurisdictions.
We conduct operations in multiple tax jurisdictions, and the tax laws of those jurisdictions generally require that transfer prices between affiliated companies in different jurisdictions be the same as those between unrelated companies dealing at arm’s length and that such prices be supported by contemporaneous documentation. While we believe we operate in compliance with applicable transfer pricing laws and intend to continue to do so, our transfer pricing procedures are not binding on tax authorities. If tax authorities in any jurisdiction successfully challenge our transfer prices as not reflecting arm’s length transactions, they could require us to adjust our transfer prices and reallocate income, which could result in a higher overall tax liability and possibly interest and penalties.
The integrated nature of our worldwide operations can produce conflicting claims from tax authorities in different countries as to the profits to be taxed in each country. Most jurisdictions in which we operate have double tax treaties with other foreign jurisdictions, which provide a framework for mitigating the impact of double taxation on our revenues and capital gains. However, mechanisms developed to resolve such conflicting claims are largely untested, can be lengthy and do not always contain a mandatory dispute resolution clause.
In recent years, tax authorities around the world have increased scrutiny of company tax filings and have become more rigid in exercising discretion. The Organization for Economic Co-operation and Development (OECD) has proposed changes to international tax standards under its Base Erosion and Profit Shifting Action Plans to address transparency, coherence and substance. Most recently, the OECD released plans, including model rules and guidelines, for further amendments to international tax standards, including Pillar One, which reallocates taxing rights based on customer location, and Pillar Two, which establishes a 15% global minimum tax. Many countries are drafting or have enacted legislation to implement Pillar Two rules, with some effective dates as early as January 1, 2024.
Several jurisdictions implemented domestic rules inspired by OECD Pillar Two in 2024. The OECD issued further guidance in January 2025 and January 2026, including new interpretations of existing rules, a “Side‑by‑Side” mechanism that exempts US‑parented groups from certain elements of Pillar Two and extensions of safe harbors that may affect compliance burdens and potential exposure. Adoption of a Side‑by‑Side mechanism would partly mitigate the risk of retaliatory tax or tariff measures, but there remains uncertainty about how jurisdictions will interpret and implement the 2025 and 2026 publications. We have not recorded a material impact to current tax expense, but new interpretations or guidance could increase tax expense and affect our financials. We continue to expect Pillar Two to lead to a recurring increase in our tax expense and effective tax rate, although we do not expect that impact to be material. Recommendations by the OECD or other supranational bodies such as the EU could also require broader disclosures to tax authorities on global operations, leading to greater audit scrutiny.
On July 4, 2025, budget reconciliation bill H.R. 1 was enacted in the US, introducing, among other items, amendments to a number of corporate income tax mechanisms such as GILTI and FDII and methods, including the option to accelerate the deduction of domestic research and development expenses as well as the depreciation of certain categories of assets.
In general, tax reform efforts, including changes to tax base or rate, transfer pricing, intercompany dividends, cross-border transactions, controlled corporations and limitations on tax relief for interest on intercompany debt, will require us to continually assess our organizational structure and could increase the risk of international tax disputes, raise our effective tax rate and adversely affect our financial condition.
Goodwill and other intangible assets may result in significant noncash impairment charges.
We carry a substantial amount of goodwill and other intangible assets on our Consolidated Balance Sheet, primarily related to the Alcon brand name, as well as technologies, acquired research and development, currently marketed
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products and marketing know-how. If the fair value of these assets or the cash-generating units containing goodwill falls below their carrying value, we may incur significant noncash impairment charges. For example, we recorded $45 million and $9 million in impairment charges in 2025 and 2024, respectively.
For details on impairment testing, factors that could trigger an impairment and the impact of impairment charges on our results, see “Note 2. Selected Accounting Policies – Goodwill and intangible assets” to our Consolidated Financial Statements.
We may underestimate future pension and other post-employment benefit obligations.
We sponsor pension and other post-employment benefit plans in various forms. While most plans are defined contribution, some associates remain under defined benefit plans. For these defined benefit plans, we make significant assumptions and estimates about future events when calculating the present value of expected obligations, including discount rates and future compensation increases.
Actual results may differ materially from our assumptions due to changing market conditions, withdrawal rates or participant life spans. For example, at December 31, 2025, a decrease of 0.25% in the discount rate applied to our defined benefit obligations would have increased our year-end obligation by $26 million. Differences between assumptions and experience could require additional contributions. Further, employer contributions may be required if plan funding falls below levels mandated by local regulations.
If our financial reporting, accounting practices or internal controls are inadequate, we could face regulatory penalties, litigation and loss of investor confidence.
We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB and are subject to complex accounting and disclosure requirements under applicable securities laws. Preparing accurate financial statements requires significant judgment and estimates, and changes in IFRS or interpretations could affect our reported results.
We rely on internal controls over financial reporting to ensure the integrity of our disclosures. Under Section 404 of the Sarbanes-Oxley Act, we must assess and report on the effectiveness of these controls, and our independent auditors must attest to management’s assessment. If we identify a material weakness or fail to maintain effective controls, we could be required to restate prior financial statements, which may result in regulatory inquiries, penalties, shareholder litigation and reputational harm.
In addition, we depend on timely and accurate information from multiple systems and third-party service providers. Errors, system failures or cybersecurity incidents could disrupt our financial reporting processes. Any failure to maintain effective internal controls or comply with applicable reporting requirements could adversely affect our business, financial condition and the market price of our securities.
Our existing debt may limit our flexibility or adversely affect our liquidity.
We had $4.7 billion of outstanding debt as of December 31, 2025, and we may incur additional indebtedness in the future for various reasons, including fluctuations in operating results, capital expenditures and potential acquisitions.
Our indebtedness may:
•make it difficult for us to satisfy our obligations, including interest payments;
•require us to dedicate cash flows to debt service, reducing funds available for capital expenditures, BD&L or other strategic transactions, working capital and dividends;
•limit our flexibility to plan for and respond to changes in our business;
•negatively impact our credit rating and increase borrowing costs;
•place us at a competitive disadvantage relative to less-leveraged competitors;
•increase our vulnerability to adverse economic and industry conditions, including interest rate changes; and
•make it difficult to refinance existing debt or obtain new financing on commercially reasonable terms.
Any of these events could materially adversely affect our business, financial condition or results of operations or significantly reduce our liquidity and impair our ability to meet debt obligations. In addition, recent monetary policy changes and interest rate increases have raised borrowing costs and may continue to do so.
We may need to obtain additional financing, which may not be available or, if it is available, may not be on favorable terms and could result in shareholder dilution.
We may need to raise additional funds to:
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•finance unanticipated working capital requirements or refinance existing debt;
•develop or enhance infrastructure and existing products and services;
•engage in mergers, acquisitions or other strategic BD&L transactions;
•fund strategic relationships; and
•respond to competitive pressures.
If we raise funds through equity or convertible debt, existing shareholders may experience dilution, and holders of these securities may have rights or preferences senior to those of current shareholders. Financing used for research and development, acquisitions or capital expenditures may not generate expected returns or cash flows. Significant judgment is required to select investments that deliver optimal returns, and we could make investments that are less profitable than alternatives we do not pursue.
Litigation and governmental investigations may harm our business or distract our management.
We are, and may in the future be, subject to investigations and legal proceedings involving product liability, sales and marketing practices, commercial disputes, employment, antitrust or competition, securities, health and safety, environmental, tax, international trade, privacy, intellectual property (including Hatch-Waxman litigation) and anti-bribery regulations such as the FCPA. See “Item 8. Financial Information-8.A. Consolidated Statements and Other Financial Information-Legal Proceedings”.
Substantial, complex or extended litigation could result in significant expenditures, affect our ability to market and distribute products and divert management attention. For example, intellectual property litigation could lead to damage awards or injunctions preventing manufacture and sale of affected products or requiring significant royalty payments. In 2024, we resolved litigation with Hoya Corporation after the court granted summary judgment in our favor on certain key claims, and also resolved the patent infringement claims we had assumed in connection with the acquisition of Aerie Pharmaceuticals Inc. We may not be successful in defending ourselves in the future.
Even meritless claims can generate adverse publicity, increase legal costs and hinder insurance coverage. Litigation and investigations could result in:
•significant legal expenses and damage awards;
•injunctions or restrictions on product sales;
•reputational harm and adverse publicity;
•limitations on insurance coverage or increased premiums; and
•management distraction from core operations.
Any of these outcomes could materially adversely affect our business, prospects, financial condition and results of operations.
Failure to comply with laws that result in legal proceedings or government investigations may negatively affect our business.
We operate in multiple jurisdictions and must comply with a wide range of laws and regulations, which vary by country and continue to evolve as enforcement priorities and public expectations change. Associates, contractors, consultants, partners or vendors may engage in misconduct or noncompliance, exposing us to liability.
We face increasing transparency requirements, including disclosure of payments or transfers of value to healthcare professionals and organizations, as well as compliance with privacy laws such as the EU General Data Protection Regulation and the California Consumer Privacy Act. We also operate in developing countries where compliance cultures may be less established.
Although we maintain a global ethics and compliance program, it may not prevent violations. Any actual or alleged failure to comply with laws or heightened expectations could lead to substantial liabilities, reputational harm and losses not covered by insurance.
Government investigations and enforcement actions in our industry are increasing and may involve criminal proceedings or retroactive challenges to prior practices. These proceedings are unpredictable and can result in:
•large judgments or penalties, including repayment of amounts allegedly obtained improperly;
•costly settlements, including corporate integrity agreements that impose long-term compliance obligations;
•exclusion from government reimbursement programs; and
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•reputational damage and related civil litigation.
Any such outcomes could materially adversely affect our business, financial condition or results of operations. See “Item 8. Financial Information-8.A. Consolidated Statements and Other Financial Information-Legal Proceedings."
Risks related to the Ownership of our Shares
Your percentage ownership in Alcon may be diluted in the future.
In the future, your percentage ownership in Alcon may be diluted because of equity issuances from acquisitions, capital markets transactions or otherwise, including equity awards that we may grant to our directors, officers and associates under our associate participation plans. These additional issuances will have a dilutive effect on our earnings per share, which could adversely affect the market price of our shares.
Our maintenance of two exchange listings could result in pricing differentials of our ordinary shares between the two exchanges.
Our shares trade on the NYSE in US dollars and on the SIX in Swiss francs, which may result in price differentials between the two exchanges for a variety of factors, including fluctuations in the US dollar/Swiss franc exchange rate and differences in trading schedules.
We may not pay or declare dividends.
Although we expect to continue recommending a regular cash dividend based on prior year core net income, we may not pay or declare dividends in the future. Any dividend declaration, timing and amount is subject to shareholder approval at the General Meeting and depends on factors such as our financial condition, earnings, corporate strategy, capital requirements, covenants and legal requirements.
Any dividends we declare will be denominated in Swiss francs. Exchange rate fluctuations will affect the US dollar equivalent of dividends received by holders of shares held via DTC or registered with Computershare Trust Company, N.A. in the US. If the Swiss franc decreases against the US dollar, the US dollar value of dividends will decline. See Item 8.A. Consolidated Statements and Other Financial Information – Dividend Policy for more information.
As a foreign private issuer, we are subject to different US securities laws and rules than a domestic issuer, which may limit the information publicly available to US shareholders.
We report under the Securities Exchange Act of 1934, as amended ("Exchange Act") as a foreign private issuer. As a result, we are exempt from certain provisions applicable to US domestic companies, including rules on proxy solicitation, certain insider reporting and short-swing profit liability obligations and requirements to file quarterly reports on Form 10-Q or current reports on Form 8-K. We are also exempt from Regulation Fair Disclosure and may rely on exceptions from certain NYSE corporate governance requirements. Consequently, US shareholders may not have the same protections as shareholders of US domestic issuers.
We prepare our financial statements under IFRS, which differs from US GAAP in areas such as pension accounting, taxation and recognition and impairment of long-lived assets. Our reported earnings and financial information may therefore not be comparable to companies reporting under US GAAP.
We may lose our foreign private issuer status.
We currently qualify as a foreign private issuer and are not required to comply with all periodic disclosure and current reporting requirements applicable to US domestic issuers. To maintain this status, either (a) a majority of our shares must be owned of record by non-US residents or (b) a majority of our executive officers or directors may not be US citizens or residents, more than 50% of our assets cannot be located in the US and our business must be administered principally outside the US.
If we lose foreign private issuer status, we would be subject to more extensive Exchange Act requirements, including reporting under US GAAP instead of IFRS, which would be costly and could require significant changes to historical financial statements. We may also need to modify corporate governance practices and incur higher compliance costs. Loss of this status could make it more difficult and expensive to obtain director and officer liability insurance and could materially increase our regulatory burden.
Our status as a Swiss corporation may limit our flexibility to raise capital, issue dividends and manage capital needs.
Swiss law reserves certain corporate actions for shareholder approval that boards in other jurisdictions may execute independently. For example, shareholders must approve dividend payments and authorize increases or decreases in share capital. While our shareholders have authorized limited flexibility for capital adjustments and conditional share capital, some of these authorizations expire in May 2028 and require renewal.
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Swiss law generally grants existing shareholders subscription rights for new share issuances and advance subscription rights for shares issued in connection with convertible instruments, which can only be restricted or excluded by a qualified shareholder vote. Swiss law also limits flexibility in structuring share classes compared to other jurisdictions. These requirements may restrict our ability to raise capital quickly or adjust our capital structure, and situations may arise where greater flexibility would have benefited shareholders.
It may be difficult to enforce US judgments against us.
We are organized under the laws of Switzerland, which may make it difficult for investors to serve process within the US or enforce US court judgments against us, including those based on US securities laws. Swiss counsel has advised that enforcement of US judgments in Switzerland is uncertain and subject to the Swiss Federal Act on Private International Law, which precludes applying foreign law if it conflicts with Swiss public policy and mandates compliance with Swiss procedural standards.
Switzerland and the US do not have a treaty for reciprocal recognition and enforcement of civil judgments. Under Swiss law, a US judgment may only be enforced if:
•the US court had jurisdiction under Swiss law;
•the judgment is final and non-appealable;
•enforcement does not contravene Swiss public policy;
•due process standards were met; and
•no conflicting Swiss or third-country judgment exists.
These limitations may make it difficult or impossible for US investors to enforce judgments against us in Switzerland.
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