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What changed in Organon & Co.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Organon & Co.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+485 added−437 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-26)

Top changes in Organon & Co.'s 2024 10-K

485 paragraphs added · 437 removed · 331 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

100 edited+43 added−26 removed54 unchanged
Biggest changeWe currently own prescription rights for Clarinex in the United States and Aerius in markets around the world. -7- Table of Contents Dermatology, Bone Health and Non-Opioid Pain Management In 2023, our dermatology, bone health and non-opioid pain management portfolios accounted for $782 million, or approximately 12%, of our total revenues, nearly all of which were generated outside the United States. • Our dermatology portfolio consists of two core products, including Diprosone™ ¹ (betamethasone cream), a corticosteroid approved for treatment in relief of skin conditions, and Elocon ® (mometasone cream), a topical prescription medicine approved for treatment in relief of inflammation and other symptoms caused by certain skin conditions. • Our bone health portfolio includes Fosamax ® (alendronate sodium), a bisphosphonate medicine used for the treatment and prevention of osteoporosis in postmenopausal women and to increase bone mass in men with osteoporosis. • Our non-opioid pain management portfolio consists of three core products, including: Arcoxia™ ¹ (etoricoxib), a selective cyclooxygenase-2 inhibitor used for acute and chronic treatment of conditions such as acute pain, osteoarthritis and rheumatoid arthritis, Diprospan™ ¹ (betamethasone), an injectable glucocorticoid drug approved for treatment of conditions such as bursitis, dermatological disorders and inflammatory conditions, and Celestone® (betamethasone injectable suspension), a sterile aqueous suspension approved for treatment of inflammation and conditions such as endocrine disorders and gastrointestinal diseases.
Biggest changeDermatology, Bone Health and Non-Opioid Pain Management In 2024, our dermatology, bone health and non-opioid pain management portfolios accounted for $867 million, or approximately 14% of our total revenues, nearly all of which were generated outside the United States. • Our dermatology portfolio currently consists of three core products, including: Vtama , a topical treatment for mild, moderate and severe plaque psoriasis in adults and atopic dermatitis, also known as eczema, in adults and children two years of age and older, which was acquired through our acquisition of Dermavant in October 2024; Diprosone™ ¹ (betamethasone cream), a corticosteroid approved for treatment in relief of skin conditions; and Elocon ® (mometasone cream), a topical prescription medicine approved for treatment in relief of inflammation and other symptoms caused by certain skin conditions. • Our bone health portfolio includes Fosamax ® (alendronate sodium), a bisphosphonate medicine used for the treatment and prevention of osteoporosis in postmenopausal women and to increase bone mass in men with osteoporosis. • Our non-opioid pain management portfolio consists of three core products, including: Arcoxia™ ¹ (etoricoxib), a selective cyclooxygenase-2 inhibitor used for acute and chronic treatment of conditions such as acute pain, osteoarthritis and rheumatoid arthritis, Diprospan™ ¹ (betamethasone), an injectable glucocorticoid drug approved for treatment of conditions such as bursitis, dermatological disorders and inflammatory conditions, and Celestone® (betamethasone injectable suspension), a sterile aqueous suspension approved for treatment of inflammation and conditions such as endocrine disorders and gastrointestinal diseases.
Global Supply Chain We manage our global supply chain through a centralized supply planning organization and regional demand management, with distribution and logistics teams structured around North America, Europe, Middle East and Africa, Asia-Pacific and Latin America.
Global Supply Chain We manage our global supply chain through a centralized supply planning organization and regional demand management, with distribution and logistics teams structured around North America, Europe, Middle East, Africa, Asia-Pacific and Latin America.
There can be no assurance that any EU Member State will allow favorable pricing, reimbursement and market access conditions for any of our products, or that it will be feasible to conduct additional cost-effectiveness studies, if required. Japan In Japan, the pharmaceutical industry is subject to government-mandated biennial price reductions of pharmaceutical products.
There can be no assurance that any EU Member State will allow favorable pricing, reimbursement and market access conditions for any of our products, or that it will be feasible to conduct additional cost-effectiveness studies, if required. Japan In Japan, the pharmaceutical industry is subject to government-mandated price reductions of pharmaceutical products.
We anticipate that pricing pressures and market access challenges will continue in the future to varying degrees in such markets. In addressing cost containment pressures, we engage in public policy advocacy with policymakers and continues to work to demonstrate that our medicines provide value to patients and to those who pay for health care.
We anticipate that pricing pressures and market access challenges will continue in the future to varying degrees in such markets. In addressing cost containment pressures, we engage in public policy advocacy with policymakers and continue to work to demonstrate that our medicines provide value to patients and to those who pay for health care.
Sales, Marketing and Distribution Capabilities Sales and Marketing We have approximately 4,000 employees worldwide focused on commercialization activities, such as marketing, direct sales, digital and omni-channel and insight generation, covering data stewardship, data analytics and data science. We have a global team of experienced marketers, pricing and access professionals, and data scientists.
Sales, Marketing and Distribution Capabilities Sales and Marketing We have approximately 4,000 employees worldwide focused on commercialization activities, such as marketing, direct sales, digital and omni-channel and insight generation, data stewardship, data analytics and data science. We have a global team of experienced marketers, pricing and access professionals and data scientists.
Regulation of Our Products The pharmaceutical and medical device industries are also subject to regulation by regional, country, state and local authorities around the world, focused on standards and processes for determining drug and device safety and effectiveness, as well as conditions for sale or reimbursement.
Regulation of Our Products The pharmaceutical and medical device industries are subject to regulation by regional, country, state and local authorities around the world, focused on standards and processes for determining drug and device safety and effectiveness, as well as conditions for sale or reimbursement.
Manufacturers and distributors of controlled substances must also maintain registration with the Drug Enforcement Agency ("DEA"), and comply with various regulatory requirements, including maintaining records and inventory, reporting to the DEA, and meeting certain security and operational safeguards. Similar requirements exist in most states.
Manufacturers and distributors of controlled substances must also maintain registration with the Drug Enforcement Agency (“DEA”), and comply with various regulatory requirements, including maintaining records and inventory, reporting to the DEA, and meeting certain security and operational safeguards. Similar requirements exist in most states.
We utilize third-party contract manufacturers for packaging, formulation and fill-and-finish for our products, as well as a combination of logistics service providers as part of our global supply chain, primarily for storage and for shipping. A number of our materials and components are sole-sourced.
We utilize third-party contract manufacturers for packaging, formulation and fill-and-finish for some of our products, as well as a combination of logistics service providers as part of our global supply chain, primarily for storage and for shipping. A number of our materials and components are sole-sourced.
Our operations include the following product portfolios: • Women's Health : Our women's health products are sold by prescription primarily in two therapeutic areas, contraception, with key brands such as Nexplanon® (etonogestrel implant) (sold as Implanon NXT ™ in some countries outside the United States) and NuvaRing® (etonogestrel / ethinyl estradiol vaginal ring), and fertility, with key brands such as Follistim AQ® (follitropin beta injection) (marketed in most countries outside the United States as Puregon ™).
Our operations include the following product portfolios: • Women’s Health : Our women’s health portfolio of products are sold by prescription primarily in two therapeutic areas, contraception, with key brands such as Nexplanon® (etonogestrel implant) (sold as Implanon NXT ™ in some countries outside the United States) and NuvaRing® (etonogestrel / ethinyl estradiol vaginal ring), and fertility, with key brands such as Follistim AQ® (follitropin beta injection) (marketed in most countries outside the United States as Puregon ™).
Marvelon™ ¹ (desogestrel and ethinyl estradiol pill) and Mercilon™ ¹ (desogestrel and ethinyl estradiol pill) are both combinations of progestin and estrogen, and are used as daily pills to prevent pregnancy. Marvelon contains a higher daily dose of estrogen than Mercilon .
Marvelon™ ¹ (desogestrel and ethinyl estradiol pill) and Mercilon™ ¹ (desogestrel and ethinyl estradiol pill) are both combinations of progestin and estrogen that are used as daily pills to prevent pregnancy. Marvelon contains a higher daily dose of estrogen than Mercilon .
Approximately 900 employees are focused on clinical development, safety, and medical affairs and product registration. We strive to build a strong culture with inclusion and belonging at our core, believing that this is fundamental to success and future innovation. More than 30% of our employees in the United States identify as part of an underrepresented ethnic group.
Approximately 900 employees are focused on clinical development, safety, and medical affairs and product registration. We strive to build a strong culture with inclusion and belonging at our core, believing that this is fundamental to success and future innovation. More than 31% of our employees in the United States identify as part of an underrepresented ethnic group.
Notwithstanding the foregoing, various legislation, regulations and international accords pertaining to climate change have been implemented or are being considered for implementation, particularly as they relate to the reduction of greenhouse gas emissions, such as the EU's Corporate Sustainability Reporting Directive ("CSRD"), California's Climate Corporate Data Accountability Act and Climate Related Financial Risk Act, and similar regulations under consideration by the SEC.
Notwithstanding the foregoing, various legislation, regulations and international accords pertaining to climate change have been implemented or are being considered for implementation, particularly as they relate to the reduction of greenhouse gas emissions, such as the EU’s Corporate Sustainability Reporting Directive (“CSRD”), California’s Climate Corporate Data Accountability Act and Climate Related Financial Risk Act, and similar regulations under consideration by the SEC.
Site Predominant Area of Focus Campinas, Brazil Women's health, cardiovascular and respiratory Cramlington, UK Cardiovascular and respiratory Heist, Belgium Respiratory, dermatology and pain Oss, Netherlands Women's health Pandaan, Indonesia Cardiovascular, respiratory and dermatology Xochimilco, Mexico Cardiovascular and respiratory A majority of our internal manufacturing sites have long-standing, deep technical capabilities across the broad base of manufacturing platforms that are required to support our product portfolio.
Site Predominant Area of Focus Campinas, Brazil Women’s health, cardiovascular and respiratory Cramlington, UK Cardiovascular and respiratory Heist, Belgium Respiratory, dermatology and pain Oss, Netherlands Women's health Pandaan, Indonesia Cardiovascular, respiratory and dermatology Xochimilco, Mexico Cardiovascular and respiratory A majority of our internal manufacturing sites have long-standing, deep technical capabilities across the broad base of manufacturing platforms that are required to support our product portfolios.
Continued growth of our business in China depends upon ongoing development of a favorable environment for innovative pharmaceutical products, sustained access for our current in-line products, and the absence of trade impediments or adverse pricing controls. In recent years, the Chinese government has introduced and implemented several structural reforms to accelerate the shift to innovative products and reduce costs.
Continued growth of our business in China depends upon ongoing development of a favorable environment for innovative pharmaceutical products, sustained access for our current in-line products, and the minimization of trade impediments or adverse pricing controls. In recent years, the Chinese government has introduced and implemented several structural reforms to accelerate the shift to innovative products and reduce costs.
To mitigate supply risk, we maintain a conservative inventory posture and keeps an internal function focused on maintaining an external manufacturing network with operational, quality, technology and procurement capabilities. Our manufacturing network and supply chains are designed to provide us with a flexible and scalable global platform for continued expansion, including in emerging markets.
To mitigate supply risk, we maintain a conservative inventory posture and keep an internal function focused on maintaining an external manufacturing network with operational, quality, technology and procurement capabilities. Our manufacturing network and supply chains are designed to provide us with a flexible and scalable global platform for continued expansion, including in emerging markets.
Hadlima (SB5) Hadlima (adalimumab-bwwd) is a tumor necrosis factor ("TNF") antagonist biosimilar to AbbVie's Humira (adalimumab) product, approved for use in certain patients for the treatment of rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, adult Crohn's disease, ulcerative colitis, plaque psoriasis, suppurativa and uveitis.
Hadlima (SB5) Hadlima (adalimumab-bwwd) is a tumor necrosis factor (“TNF”) antagonist biosimilar to AbbVie’s Humira (adalimumab) product, approved for use in certain patients for the treatment of rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, adult Crohn’s disease, ulcerative colitis, plaque psoriasis, suppurativa and uveitis.
We have a portfolio of more than 60 medicines and products across a range of therapeutic areas. We sell these products through various channels including drug wholesalers and retailers, hospitals, government agencies and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions.
We have a portfolio of more than 70 medicines and products across a range of therapeutic areas. We sell these products through various channels including drug wholesalers and retailers, hospitals, government agencies and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions.
Before a new drug may be marketed in the United States, recorded data on pre-clinical and clinical investigations are included in the NDA for a drug or the Biologics License Application ("BLA") for a biologic, and submitted to the FDA for the required approval, which can be a phased process.
Before a new drug may be marketed in the United States, recorded data on pre-clinical and clinical investigations are included in the NDA for a drug or the Biologics License Application (“BLA”) for a biologic, and submitted to the FDA for the required approval, which can be a phased process.
Our women's health products are sold in over 90 markets worldwide, including the United States, China, Canada, Australia, Brazil, and Mexico as well as many other countries in the European Union ("EU"), South America, Asia, and Africa.
Our women’s health products are sold in over 90 markets worldwide, including the United States, China, Canada, Australia, Brazil, and Mexico as well as many other countries in the European Union (the “EU”), South America, Asia, and Africa.
We have significant insight into the use of newer technologies and the use of valuable patient services such as patient adherence programs that can further drive value in collaboration with our trade partners. We do not have any single customer that, if such customer were lost, would have a material adverse effect on our business.
We have significant insight into the use of newer technologies and the use of valuable patient services such as patient adherence programs that can further drive value in collaboration with our trade partners. We do not have any single customer that, if such customer were lost, would be likely to have a material adverse effect on our business.
Our oncology biosimilars; Ontruzant® (trastuzumab-dttb) and Aybintio TM 1 (bevacizumab), have been launched in more than 20 countries and our immunology biosimilars; Brenzys TM 1 (etarnarcept), Renflexi s ® (infliximab-abda) and Hadlima® (adalimumab-bwwd), have been launched in five countries.
Our oncology biosimilars; Ontruzant® (trastuzumab-dttb) and Aybintio TM 1 (bevacizumab), have been launched in more than 20 countries and our immunology biosimilars; Brenzys TM 1 (etanercept), Renflexi s ® (infliximab-abda) and Hadlima® (adalimumab-bwwd), have been launched in five countries.
While pricing pressure has always existed in China, health care reform has increased this pressure in part due to the acceleration of generic substitution through volume-based procurement ("VBP"). The Chinese VBP program operates through a tendering process for mature products that have generic substitutes with a Generic Quality Consistency Evaluation ("GQCE") approval.
While pricing pressure has always existed in China, health care reform has increased this pressure in part due to the acceleration of generic substitution through volume-based procurement (“VBP”). The Chinese VBP program operates through a tendering process for mature products that have generic substitutes with a Generic Quality Consistency Evaluation (“GQCE”) approval.
Mature products that have entered into the first nine rounds of VBP have had, on average, a price reduction of over 50%. VBP -13- Table of Contents has been a roughly semi-annual process that will have a significant impact on mature products moving forward, which we expect to increase pricing pressure on our products in China.
Mature products that have entered into the first nine rounds of VBP have had, on average, a price reduction of over 50%. VBP has been roughly a semi-annual process that will have a significant impact on mature products moving forward, which we expect to increase pricing pressure on our products in China.
We have worldwide commercialization rights to HXL14 in countries except for China (including Hong Kong, Macau and Taiwan). Henlius will be responsible for development and, if approved, will supply the products to us. • HLX11, a biosimilar candidate to Roche's Perjeta² (pertuzumab) , is an anti-HER2 domain II humanized monoclonal antibody.
We have worldwide commercialization rights to HXL14 in countries except for China (including Hong Kong, Macau and Taiwan). Henlius is responsible for development of this product and, if approved, will supply the products to us. • HLX11, a biosimilar candidate to Roche's Perjeta² (pertuzumab) , is an anti-HER2 domain II humanized monoclonal antibody.
Our women's health products are sold by prescription primarily in two therapeutic areas, contraception, with key brands such as Nexplanon and NuvaRing , and fertility, with key brands such as Follistim AQ and Elonva TM 1 (corifolitropina alfa) .
Our women’s health products are sold by prescription primarily in two therapeutic areas: contraception (which includes key brands such as Nexplanon and NuvaRing ), and fertility (which includes key brands such as Follistim AQ and Elonva TM 1 (corifolitropina alfa) ).
While the expiration of a product patent normally results in a loss of market exclusivity for the covered pharmaceutical product, commercial benefits may continue to be derived from, for example: (i) later-granted patents on processes and intermediates related to the most economical method of manufacture of the active ingredient of such product; (ii) patents relating to the use or delivery of such product; and (iii) patents relating to novel compositions and formulations.
While the expiration of a product patent normally results in generic competition for the covered pharmaceutical product, commercial benefits may continue to be derived from, for example: (i) later-granted patents on processes and intermediates related to the most economical method of manufacture of the active ingredient of such product; (ii) patents relating to the use or delivery of such product; and (iii) patents relating to novel compositions and formulations.
We support our workforce through innovative talent and performance programs and has additionally founded ten Employee Resource Groups. We also regularly assesses our employees' experience, including measures of engagement, well-being, inclusion, and core cultural values through annual surveys and regular check-ins.
We support our workforce through innovative talent and performance programs and have additionally founded ten Employee Resource Groups. We also regularly assess our employees’ experience, including measures of engagement, well-being, inclusion, and core cultural values through annual surveys and regular check-ins.
See "Business—Biosimilars Portfolio" for a description of each product and the geographic areas in which we have an exclusive license for commercialization activities. Under the Samsung Bioepis Agreement, Samsung Bioepis is responsible for pre-clinical and clinical development, process development and manufacturing, clinical trials and registration of product candidates.
See “Business—Biosimilars Portfolio” for a description of each product and the geographic areas in which we have an exclusive license for commercialization activities. Under the Samsung Bioepis Agreement, Samsung Bioepis is responsible for pre-clinical and clinical development, process development and manufacturing, clinical trials and registration of product candidates.
We maintain an investor relations page on our website ( www.organon.com ) where such filings made pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), may be accessed free of charge as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
We maintain an investor relations page on our website ( www.organon.com ) where documents are furnished or filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), may be accessed free of charge as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
Approximately 85% of our employees work in key functional areas (Commercial, Research & Development, and Manufacturing/Supply) and 15% are in support functions. We have approximately 4,000 employees worldwide focused on commercialization activities, such as marketing, direct sales, digital and omni-channel and insight generation, covering data stewardship, data analytics and data science.
Approximately 8,900 of our employees work in key functional areas (Commercial, Research & Development, and Manufacturing/Supply) and approximately 1,600 are in support functions. We have approximately 4,000 employees worldwide focused on commercialization activities, such as marketing, direct sales, digital and omni-channel and insight generation, covering data stewardship, data analytics and data science.
As of December 31, 2023, there were $25 million in potential future regulatory milestone payments remaining under the agreement. For further information related to the Samsung Bioepis collaboration, see Note 18 "Samsung Collaboration" to the Consolidated Financial Statements included in this report and the Samsung Bioepis Agreement, which is filed as an exhibit to this report.
As of December 31, 2024, there were $25 million in potential future regulatory milestone payments remaining under the agreement. For further information related to the Samsung Bioepis collaboration, see Note 16 “Samsung Collaboration” to the Consolidated Financial Statements included in this report and the Samsung Bioepis Agreement, which is filed as an exhibit to this report.
As a manufacturer and distributor of drug products, our activities are regulated under various federal and state statutes and state manufacturer and wholesaler laws.
As a manufacturer and distributor of drug products, our -15- Table of Contents activities are regulated under various federal and state statutes and state manufacturer and wholesaler laws.
Due to its ability to initiate and sustain growth of multiple ovarian follicles for an entire week, a single subcutaneous injection of the recommended dose of Elonva may replace the first seven injections of any daily recombinant FSH preparation in an ovarian stimulation treatment cycle.
Due to its ability to initiate and sustain growth of multiple ovarian follicles for an entire week, a single -5- Table of Contents subcutaneous injection of the recommended dose of Elonva may replace the first seven injections of any daily gonadotropin preparation in an ovarian stimulation treatment cycle.
We may terminate the agreement upon 60 days' written notice to Samsung Bioepis for a particular presentation of a product in a region if Samsung Bioepis's revenue share for such product presentation in such region exceeds a certain -15- Table of Contents contractual threshold.
We may terminate the agreement upon 60 days’ written notice to Samsung Bioepis for a particular presentation of a product in a region if Samsung Bioepis’ revenue share for such product presentation in such region exceeds a certain contractual threshold.
We operate on a global scale and our global network enables us to distribute products to patients in more than 140 countries and territories, with approximately 76% of 2023 revenues, or $4.8 billion, generated outside the United States.
We operate on a global scale through a global network that enables us to distribute products to patients in more than 140 countries and territories, with approximately 75% of our 2024 revenues, or $4.8 billion, generated outside the United States.
Our other women's health products include the Jada ® System, which is intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted, and a license from Daré Biosciences for the global commercial rights to Xaciato ® (clindamycin phosphate vaginal gel, 2%), an FDA-approved medication for the treatment of bacterial vaginosis ("BV") in females 12 years of age and older.
Our other women’s health products include the Jada ® System, which is intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted, and a license from Daré Biosciences for the global commercial rights to Xaciato ® (clindamycin phosphate vaginal gel, 2%), an FDA-approved medication for the treatment of bacterial vaginosis (“BV”) in females 12 years of age and older. • Biosimilars : Our current biosimilars portfolio spans across immunology and oncology treatments.
Cerazette™ ¹ (desogestrel) is a progestin-only, daily pill used to prevent pregnancy in women. Progestin-only products, like Cerazette, are typically used by women who want hormonal contraception but for whom estrogen-containing contraceptives may not be medically appropriate. Cerazette is not approved or marketed in the United States but is available in certain countries outside the United States.
Progestin-only products, like Cerazette, are typically used by women who want hormonal contraception but for whom estrogen-containing contraceptives may not be medically appropriate. Cerazette is not approved or marketed in the United States but is available in certain countries outside the United States.
Our established brands portfolio contributed approximately $3.8 billion of our total revenues in 2023, with approximately 93%, or $3.6 billion, generated outside the United States. Generic competition varies significantly across geographies. Cardiovascular In 2023, our cardiovascular portfolio accounted for $1.5 billion, or approximately 23%, of our total revenues, nearly all of which were generated outside the United States.
In 2024, our established brands portfolio contributed approximately $3.8 billion of our total revenues, with approximately 92%, or $3.6 billion, generated outside the United States. Generic competition varies significantly across geographies. Cardiovascular In 2024, our cardiovascular portfolio accounted for $1.3 billion, or approximately 21% of our total revenues, nearly all of which were generated outside the United States.
Fertility Our fertility brands include the following products, which are primarily used for in vitro fertilization ("IVF") treatment cycles: Follistim AQ, which is marketed as Puregon in most countries outside the United States, contains human follicle-stimulating hormone ("FSH") and is used to promote the development of multiple ovarian follicles in assisted reproduction technology procedures.
Fertility Our fertility brands include the following products, which are primarily used for medically-assisted reproduction (“MAR”) and/or in vitro fertilization (“IVF”) treatment cycles: Follistim AQ, which is marketed as Puregon in most countries outside the United States, contains human follicle-stimulating hormone (“FSH”) and is used to promote the development of multiple ovarian follicles in MAR procedures.
We have established benefit and incentive compensation plans, including comprehensive medical and life insurance coverage, 401(k) matching programs and other incentive compensation programs that we believe aligns employee incentives directly with our future performance. -10- Table of Contents As of December 31, 2023, we had approximately 10,000 employees worldwide with approximately 1,700 (16%) employees in the United States (including Puerto Rico).
We have established benefit and incentive compensation plans, including comprehensive medical and life insurance coverage, 401(k) matching programs and other incentive compensation programs that we believe align employee incentives directly with our future performance. -11- Table of Contents As of December 31, 2024, we had over 10,000 employees worldwide with approximately 1,800 (17%) employees in the United States, including Puerto Rico.
Privacy and Data Protection We are subject to a significant number of privacy and data protection laws and regulations globally, many of which place restrictions on our ability to transfer, access and use personal data across our business.
Privacy and Data Protection We are subject to a significant number of privacy and data protection laws and regulations globally, many of which place restrictions on our ability to transfer, access and use personal data across our business including healthcare provider information and clinical trial data.
Our sales for each of our product groups are as follows: Year Ended December 31, ($ in millions) 2023 2022 2021 Women's Health $ 1,702 $ 1,673 $ 1,612 Biosimilars 593 481 424 Established Brands 3,847 3,874 4,068 In 2023, we recorded revenues of $6.3 billion.
Our sales for each of our product groups are as follows: Year Ended December 31, ($ in millions) 2024 2023 2022 Women’s Health $ 1,777 $ 1,702 $ 1,673 Biosimilars 662 593 481 Established Brands 3,849 3,847 3,874 In 2024, we recorded revenues of $6.4 billion.
Our principal manufacturing capabilities include formulation, fill-and-finishing of products, packaging of products, and distribution and supply to patients in more than 140 countries and territories. -9- Table of Contents Internal Manufacturing Capabilities We own and operate six manufacturing sites, as shown in the table below, where we manufacture a range of pharmaceutical products, including hormonal products, sterile formulations, certain medical device combination and standalone medical device products .
Our principal manufacturing capabilities include formulation, fill-and-finishing of products, packaging of products, and worldwide distribution and supply capabilities. -10- Table of Contents Internal Manufacturing Capabilities We own and operate six manufacturing sites, as shown in the table below, where we manufacture a range of pharmaceutical products, including hormonal products, sterile formulations, certain medical device combination and standalone medical device products .
We intend to use our Investor Relations website and our corporate website located at www.organon.com as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
We intend to use our Investor Relations website and our corporate website located at www.organon.com as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. In addition, we may also use social media to disclose material information to the public.
All five biosimilars in our portfolio have launched in Canada, and three biosimilars; Ontruzant , Renflexis and Hadlima have been launched in the United States. • Established Brands : We have a portfolio of established brands, which generally are beyond market exclusivity, including leading brands in cardiovascular, respiratory, dermatology and non-opioid pain management.
All five biosimilars in our portfolio have launched in Canada, and three biosimilars; Ontruzant , Renflexis and Hadlima have launched in the United States. • Established Brands : We have a portfolio of established brands, which includes leading brands in cardiovascular, respiratory, dermatology and non-opioid pain management.
Item 1. Business Overview Organon & Co. ("Organon," the "Company," "we," "our," or "us") is a global health care company with a focus on improving the health of women throughout their lives. We develop and deliver innovative health solutions through a portfolio of prescription therapies and medical devices within women's health, biosimilars and established brands.
Item 1. Business Overview Organon & Co. (“Organon,” the “Company,” “we,” “our,” or “us”) is a global healthcare company with a primary focus on improving the health of women throughout their lives. We develop and deliver innovative health solutions through a portfolio of prescription therapies and medical devices within women’s health, biosimilars and established brands.
The following highlights key products in our portfolios: Women's Health Biosimilars Established Brands -4- Table of Contents Women's Health Portfolio In 2023, our women's health portfolio accounted for $1.7 billion, or approximately 27%, of our total revenues, with $805 million, or approximately 47%, generated outside the United States.
The following highlights key products in our portfolios: Women’s Health Biosimilars Established Brands -4- Table of Contents Women’s Health Portfolio In 2024, our women’s health portfolio accounted for $1.8 billion, or approximately 28% of our total revenues, with $846 million, or approximately 48%, generated outside the United States.
Our employees are at the core of our mission to improve the health of women and, given our global nature, we have a strong focus on female representation. Globally, over 50% of our employees are female, and women comprise approximately 60% of our senior leadership (nearly 75% of our Board of Directors; 40% of our Executive Committee).
Our employees are at the core of our mission to improve the health of women and, given our global nature, we have a strong focus on female representation. Globally, over half of our employees are female, and women comprise nearly half of our senior leadership.
Court of Appeals for the Third Circuit recently ruled in favor of several manufacturers. To date, other challenges are still pending. We believe that our policy complies with the 340B statute. At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing.
Courts of Appeals for the District of Columbia Circuit and the Third Circuit recently ruled in favor of several manufacturers. To date, other challenges are still pending. At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing.
Our portfolio also includes several products that treat seasonal allergic rhinitis, including: Singulair , Nasonex ® (mometasone) and Clarinex ® ² (desloratadine), which is marketed as Aerius™ outside of the United States.
Our established brands portfolio also includes several products that treat seasonal allergic rhinitis, including: Singulair , Nasonex ® (mometasone) and Clarinex ® ² (desloratadine), which is marketed as Aerius™ outside of the United States. We currently own prescription rights for Clarinex in the United States and Aerius in markets around the world.
To obtain reimbursement or pricing approval in some EU Member States, we may be required to conduct studies that compare the cost-effectiveness of our product candidates to other therapies that are considered the local standard of care.
Additionally, EU Member States have the power to restrict the range of pharmaceutical products for which their national health insurance systems provide reimbursement. To obtain reimbursement or pricing approval in some EU Member States, we may be required to conduct studies that compare the cost-effectiveness of our product candidates to other therapies that are considered the local standard of care.
Expenditures for remediation and environmental liabilities are estimated to be approximately $15 million in the aggregate for the years 2024 through 2028. For additional information, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates" and Note 20 "Contingencies —Environmental Matters" to the Financial Statements included in this report.
Expenditures for remediation and environmental liabilities are estimated to be approximately $14 million in the aggregate for the years 2025 through 2029. For additional information, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” and Note 18 “Contingencies —Environmental Matters” to the Financial Statements included in this report.
The advertising and promotion of our products are also subject to laws, rules, regulations, and industry self-regulatory codes of conduct concerning promotion of pharmaceutical products, interactions with health care providers, misleading and comparative advertising and unfair commercial practices. Climate and Environmental Matters We believe that climate change will present some degree of risk to our business.
The advertising and promotion of our products are also subject to laws, rules, regulations, and industry self-regulatory codes of conduct concerning promotion of pharmaceutical products, interactions with health care providers, misleading and comparative advertising and unfair commercial practices. In the future, we will likely become subject to new laws and regulations.
We have been granted a license from Merck for Nexplanon / Implanon NXT that permits use of the underlying technology solely as a contraceptive implant containing only the active pharmaceutical ingredient currently used in the product.
The protection afforded, which may also vary from country to country, depends upon the type of patent and its scope of coverage. We have been granted a license from Merck for Nexplanon / Implanon NXT that permits use of the underlying technology solely as a contraceptive implant containing only the active pharmaceutical ingredient currently used in the product.
Each country has a separate and independent review process and timeline, which varies significantly between jurisdictions. In certain countries, the sales price of a product must also be approved by the applicable regulator.
Before our pharmaceutical products can be marketed outside the United States, they are also subject to regulatory approvals in those countries. Each country has a separate and independent review process and timeline, which varies significantly between jurisdictions. In certain countries, the sales price of a product must also be approved by the applicable regulator.
It is currently approved and commercialized in the United States, Australia and Canada. Aybintio (SB8) Aybintio (bevacizumab) is a vascular endothelial growth factor inhibitor biosimilar to Roche's Avastin (bevacizumab) product.
It is currently approved for commercialization in the United States, Australia, Canada, Ukraine, Saudi Arabia, New Zealand, the United Arab Emirates, Qatar and Kuwait and commercialized in the United States, Puerto Rico, Australia, Canada and Brazil. Aybintio (SB8) Aybintio (bevacizumab) is a vascular endothelial growth factor inhibitor biosimilar to Roche’s Avastin (bevacizumab) product.
Our respiratory portfolio is comprised of several treatments used to control and prevent asthma-induced symptoms including: Singulair ® (montelukast sodium), Dulera ® (formoterol/fumarate dihydrate), which is also marketed as Zenhale™ , in certain markets outside the United States, and Asmanex ® (mometesone furoate).
Respiratory In 2024, our respiratory portfolio accounted for $1.0 billion, or approximately 16% of our total revenues, with approximately 79%, or $806 million, generated outside the United States. -7- Table of Contents Our respiratory portfolio is comprised of several treatments used to control and prevent asthma-induced symptoms including: Singulair ® (montelukast sodium), Dulera ® (formoterol/fumarate dihydrate), which is also marketed as Zenhale™ , in certain markets outside the United States, and Asmanex ® (mometasone furoate).
Elonva belongs to the group of gonadotrophic hormones used by women trying to get pregnant using IVF. Ganirelix acetate injection (marketed in certain countries outside the United States as Orgalutran™ ) is an injectable ("GnRH") antagonist.
Elonva belongs to the group of gonadotropic hormones used by women trying to conceive using MAR and/or IVF. Ganirelix acetate injection (marketed in certain countries outside the United States as Orgalutran™ ) is an injectable GnRH antagonist used to prevent luteinizing hormone surges. Ganirelix acetate injection is used in fertility treatments in combination with FSH.
The condition causes abdominal pain and is associated with infertility. -8- Table of Contents • OG-7191 is a preclinical program targeting polycystic ovarian syndrome ("PCOS"), one of the most common women's health conditions often associated with metabolic disorders, hyperandrogenism and infertility. As there are currently no approved therapies for PCOS, this represents another priority disease area for us.
As there are currently limited treatment options for women with endometriosis, this represents a priority disease area for us. • OG-7191, a HSD17β5 inhibitor, is a preclinical program targeting polycystic ovarian syndrome (“PCOS”), one of the most common women's health conditions often associated with metabolic disorders, hyperandrogenism and infertility.
Such device patents will expire in 2027 in the United States and in 2025 in other countries around the world. There are currently no material contested proceedings or third-party claims that involve these patents.
The relevant Nexplanon rod patents will expire in 2027 in the United States and in 2025 in other countries around the world. Key aspects of the Nexplanon applicator are patented until 2030 in the United States and 2026 in certain other countries. There are currently no material contested proceedings or third-party claims that involve the patents that cover Nexplanon.
Such procedures include IVF, embryo transfer, gamete intrafallopian transfer and intracytoplasmic sperm injection. Follistim AQ belongs to the group of gonadotrophic hormones used by women trying to get pregnant using IVF. Elonva is an ovarian follicle stimulant with the same mechanism of action as recombinant FSH, but is characterized by a prolonged duration of FSH activity.
Such procedures include IVF, intracytoplasmic sperm injection, and embryo transfer. Follistim AQ belongs to the group of gonadotropic hormones used by women trying to conceive using IVF. Elonva (which is not available in the United States) is a sustained follicle stimulant with the same mechanism of action as recombinant FSH.
Registration is for fixed terms and can be renewed indefinitely. -11- Table of Contents Royalty income in 2023 on patent and know-how licenses and other rights amounted to $6 million. We also incurred royalty expenses totaling $6 million in 2023 under patent and know-how licenses we hold.
Trademark protection continues in some countries as long as used; in other countries, as long as registered. Registration is for fixed terms and can be renewed indefinitely. Royalty income in 2024 on patent and know-how licenses and other rights amounted to $8 million. We also incurred royalty expenses totaling $5 million in 2024 under patent and know-how licenses we hold.
It is typically prescribed to women who are not looking to become pregnant in the near future and do not want to take a daily contraceptive. NuvaRing is a monthly vaginal contraceptive ring with a combination of progestin and estrogen used to prevent pregnancy in women. NuvaRing typically is prescribed for women that want a monthly contraceptive option.
NuvaRing is a monthly vaginal contraceptive ring with a combination of progestin and estrogen used to prevent pregnancy in women. NuvaRing is typically prescribed for women that want a monthly contraceptive option. Cerazette™ ¹ (desogestrel) is a progestin-only, daily pill used to prevent pregnancy in women.
Certain of these regulations also require organizations to evaluate cross-border transfers of personal information and may require localization of certain data if specific conditions are met. Additional laws and regulations continue to be adopted in various jurisdictions.
These laws regulate the processing of personal information and increase the obligations of companies to protect and safeguard information. Certain of these regulations also require organizations to evaluate cross-border transfers of personal information and may require localization of certain data if specific conditions are met.
The URPS policy will create additional pricing and volume pressure for pharmaceutical products that are subject to the program and may adversely affect our business and results of operations. In July 2023, the Chinese government began an industry-wide anti-corruption campaign that increased scrutiny on the health care industry.
The URPS policy will create additional pricing and volume pressure for pharmaceutical products that are subject to the program and may adversely affect our business and results of operations.
The Chinese government updated the National Reimbursement Drug List ("NRDL") for the government-administered insurance plans; however, every two years regular access to the NRDL is coupled with significant price reductions and price reviews for NRDL products.
The Chinese government updates the National reimbursement Drug List (“NRDL”) for the government-administered insurance plans on a yearly basis; a drug's initial access to the NRDL is coupled with significant price reductions and is subject to further price reviews after two years.
Although physicians are permitted to use their medical judgment to use medical devices for indications other than those cleared or approved by the FDA, we may not promote our products for such "off-label" uses and can only market our products for cleared or approved uses. -14- Table of Contents Before our pharmaceutical products can be marketed outside the United States, they are also subject to regulatory approvals in those countries.
Although physicians are permitted to use their medical judgment to use medical devices for indications other than those cleared or approved by the FDA, we may not promote our products for such “off-label” uses and can only market our products for cleared or approved uses.
Henlius will be responsible for development and, if approved, will supply the products to us. • OG-6219 is an investigational agent being evaluated as a potential treatment for endometriosis. Endometriosis-related pain is a common and chronic condition that affects up to one in 10 women of reproductive age.
Clinical Pharmaceutical Development: • OG-6219, a HSD17β1 inhibitor, is an investigational agent being evaluated as a potential treatment for endometriosis. Endometriosis is a common and chronic condition that affects up to one in 10 women of reproductive age, causes abdominal pain and is associated with infertility.
Hadlima is currently approved in the United States, Australia, Canada, Israel, and Saudi Arabia, and was launched in Australia and Canada in 2021. Hadlima was approved by the FDA in July 2019 as a low-concentration (50mg/ml) formulation. In August 2022, the FDA approved the citrate-free, high-concentration (100 mg/mL) formulation of Hadlima .
Hadlima is currently approved in the United States, Australia, Canada, Brazil, Ukraine, New Zealand, Qatar, Israel, and Saudi Arabia, and marketed in the United States, Australia, Canada, Puerto Rico, Brazil and Saudi Arabia. Hadlima was approved by the FDA in July 2019 as a low-concentration (50mg/ml) formulation.
In addition, in the United States and certain other countries, an additional period of market or data exclusivity that may be available under relevant law. For example, Nexplanon may be eligible for an additional three years of market exclusivity on the five-year efficacy indication in the United States from the of FDA approval of this indication.
In addition, in the United States and certain other countries, an additional period of market or data exclusivity may be available under relevant law.
In December 2021, we also signed a supplemental license with Merck that provides a limited expansion of the fields in which it may use the underlying technology of Nexplanon / Implanon NXT beyond contraception in exchange for milestone payments.
We are also party to a separate licensing agreement with Merck that provides a limited expansion of the fields for which we may use the underlying technology of Nexplanon / Implanon NXT beyond contraception in exchange for milestone payments. We consider the patents that cover Nexplanon to be material to our business.
We have commercialization rights to Aybintio in the United States, Canada, Germany, Italy, France, the UK and Spain. We are seeking approval of Aybintio in the United States, however, the timing of any such approval is not yet determined. Ontruzant (SB3) Ontruzant (trastuzumab-dttb) is an HER2/neu receptor antagonist biosimilar to Roche's Herceptin (trastuzumab) product.
We have commercialization rights to Aybintio in the United States, Canada, Germany, Italy, France, the UK and Spain. Ontruzant (SB3) Ontruzant (trastuzumab-dttb) is an HER2/neu receptor antagonist biosimilar to Roche’s Herceptin (trastuzumab) product for the treatment of HER2 overexpressing breast cancer and HER2-overexpressing metastatic gastric or gastroesophageal junction adenocarcinoma consistent with Herceptin .
A number of our established brands lost exclusivity years ago and have faced generic competition for some time. Led by the women's health portfolio, coupled with an expanding biosimilars business and stable franchise of established medicines, our products produce sufficient cash flows to support investments in innovation and future growth opportunities in women's health.
Led by the women’s health portfolio, coupled with an expanding biosimilars business and a stable franchise of established brands medicines, our products produce sufficient cash flows to support investments in innovation and future growth opportunities in women’s health. In addition, we are pursuing opportunities to collaborate with biopharmaceutical innovators looking to commercialize their products by leveraging our scale and presence.
Other Established Brands This portfolio covers our other mature products, some of which remain significant to our product portfolio, including products such as Proscar ® (finasteride) and Propecia ® (finasteride). Proscar , used for the treatment of symptomatic benign prostatic hyperplasia ("BPH") in men with an enlarged prostate, accounted for $97 million of revenues in 2023.
Additionally, this category covers other mature products such as: Proscar ® (finasteride), used for the treatment of symptomatic benign prostatic hyperplasia in men with an enlarged prostate and Propecia ® (finasteride), used for the treatment of male pattern hair loss. In 2024, Proscar and Propecia , accounted for $95 million and $111 million of our revenues, respectively.
The marketed portfolio consists of three immunology products, Hadlima (Originator brand name: Humira ²; generic name: adalimumab), Brenzys (Originator brand name: Enbre l²; generic name: etanercept), and Renflexis (Originator brand name: Remicade ²; generic name: infliximab).
Such exceptions are governed by agreements that we entered into with Samsung Bioepis and Shanghai Henlius Biotech, Inc. (“Henlius”). The marketed portfolio consists of three immunology products, Hadlima (Originator brand name: Humira ²; generic name: adalimumab), Brenzys (Originator brand name: Enbre l²; generic name: etanercept), and Renflexis (Originator brand name: Remicade ²; generic name: infliximab).
We also manufacture a range of Merck & Co., Inc. ("Merck") products at each of our six manufacturing sites pursuant to agreements with Merck entered into at the time of our 2021 spinoff from Merck (the "spinoff").
We also manufacture a range of products for third parties including Merck & Co., Inc. (“Merck”) products at each of our six manufacturing sites pursuant to third-party contract manufacturing agreements.
Our website address is not intended to function as a hyperlink and the information contained on our website is not, and should not be considered part of, and is not incorporated by reference into, this Annual Report on Form 10-K.
Accordingly, investors should monitor these channels in addition to our press releases, SEC filings, and public conference calls and webcasts. Our website address is not intended to function as a hyperlink and the information contained on our website is not, and should not be considered part of, and is not incorporated by reference into, this report. -17- Table of Contents
In November 2023, the FDA accepted for review the Supplemental Biologics License Application (sBLA) for the interchangeability designation for Hadlima . Brenzys (SB4) Brenzys (etanercept) is a TNF antagonist biosimilar to Amgen / Pfizer's Enbrel (etanercept) product. It is approved for use in certain patients for the treatment of rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis and plaque psoriasis.
In August 2022, the FDA approved the citrate-free, high-concentration (100 mg/mL) formulation of Hadlima . In November 2023, the FDA accepted for review the Supplemental Biologics License Application (sBLA) for the interchangeability designation for Hadlima . -6- Table of Contents Brenzys (SB4) Brenzys (etanercept) is a TNF antagonist biosimilar to Amgen / Pfizer’s Enbrel (etanercept) product.
We have entered into a research collaboration and exclusive license agreement with Cirqle Biomedical ("Cirqle") for this novel investigational candidate. Under the terms of the agreement, Cirqle will be responsible for conducting preclinical studies according to the mutually agreed research plan.
We have entered into a research collaboration and exclusive license agreement with Cirqle Biomedical (“Cirqle”) for this novel investigational candidate.
In June 2023, we implemented a policy to reduce diversion and inappropriate claims for discounts and rebates by contract pharmacies that were affiliated with 340B-eligible entities.
For example, CMS has issued proposals to amend the existing Medicaid Drug Rebate Program regulations. In addition, we may also be affected by developments relating to the federal 340B Drug Pricing Program. In June 2023, we implemented a policy to reduce diversion and inappropriate claims for discounts and rebates by contract pharmacies that were affiliated with 340B-eligible entities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeExpiry of patent protection and market exclusivity for products that contribute significantly to our sales will adversely affect our business. • We depend on our patent rights for the marketing of certain of our products, and invalidation or circumvention of our patent rights would adversely affect our business. • We have incurred substantial indebtedness, which could adversely affect our financial condition and results of operations. • We are subject to minimum purchase obligations under certain supply agreements, and if we fail to meet those minimum purchase requirements, our financial results may be unfavorably impacted.
Biggest changeExpiry of patent protection and market exclusivity for products that contribute significantly to our sales will adversely affect our business. • We depend on our patent rights for the marketing of certain of our products, and invalidation or circumvention of our patent rights would adversely affect our business. • We have incurred substantial indebtedness, which could adversely affect our financial condition and results of operations. • We are subject to minimum purchase obligations under certain supply agreements, and if we fail to meet those minimum purchase requirements, our financial results may be unfavorably impacted. • The health care industry in the United States has been, and will continue to be, subject to judicial decisions and increasing laws, regulation, executive orders and political action. • We are subject to a variety of laws and regulations, and we may face serious consequences for violations if we fail to meet the applicable legal and regulatory requirements. • We or our third-party suppliers, logistics, and manufacturers may not comply with ethical business practices or with related laws and regulations, including relating to AI use. • Our business and operations are subject to risks related to climate change and natural disasters. • Our business could be negatively impacted by corporate citizenship and sustainability matters. -18- Table of Contents • Our corporate restructuring and the associated headcount reduction may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.
We rely on third parties for activities related to preclinical and clinical testing. We rely on third parties to manufacture and distribute and conduct certain preclinical and clinical testing activities for our products.
We rely on third parties for activities related to preclinical and clinical testing. We rely on third parties to manufacture, distribute and conduct certain preclinical and clinical testing activities for our products.
We or our partners may fail to adequately demonstrate the safety and efficacy of any of our pharmaceutical product candidates or medical devices in pre-clinical studies and clinical trials, which would prevent or delay development, regulatory approval or marketing authorization and commercialization of our product candidates.
We and/or our partners may fail to adequately demonstrate the safety and efficacy of any of our pharmaceutical product candidates or medical devices in pre-clinical studies and clinical trials, which would prevent or delay development, regulatory approval or marketing authorization and commercialization of our product candidates.
Further, issues related to manufacture of product, preclinical testing, and/or clinical testing may affect our ability to obtain or maintain marketing approval for our products in a timely manner, or at all. This may hinder or delay efforts to successfully commercialize our product candidates. We may experience difficulties identifying acquisition opportunities or completing such transactions.
Further, issues related to manufacture of product, preclinical testing, and/or clinical testing may affect our ability to obtain or maintain marketing approval for our products in a timely manner, or at all. This may hinder or delay efforts to successfully commercialize our product candidates. We may experience difficulties identifying future acquisition opportunities or completing such transactions.
We operate in multiple jurisdictions and virtually all of our sales outside the United States are denominated in currencies other than the United States dollar. Additionally, we have historically entered into, and will in the future enter into, business development transactions, borrowings or other financial transactions that may give rise to currency and interest rate exposure.
We operate in multiple jurisdictions and virtually all of our sales outside the United States are denominated in currencies other than the US dollar. Additionally, we have historically entered into, and will in the future enter into, business development transactions, borrowings or other financial transactions that may give rise to currency and interest rate exposure.
We expect recent changes in tax laws around the world, including as led by the Organization for Economic Cooperation and Development ("OECD"), such as the adoption by the EU and the enactment by additional countries of a global minimum tax, to negatively impact our effective tax rate and results of operations.
We expect recent changes in tax laws around the world, including as led by the Organization for Economic Cooperation and Development, such as the adoption by the EU and the enactment by additional countries of a global minimum tax, to negatively impact our effective tax rate and results of operations.
The FDA or other regulators may change their policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay regulatory approval or marketing authorization of our future products or impact our ability to modify our currently marketed products on a timely basis.
The FDA or other regulators may also change their policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay regulatory approval or marketing authorization of our future products or impact our ability to modify our currently marketed products on a timely basis.
We depend on third parties, including other suppliers, alliances with other pharmaceutical and biotechnology companies, (including Merck), and third-party service providers, for key aspects of our business, including development, manufacture and commercialization of our products (including supplying our products or key ingredients of our products) and support for our IT systems.
We depend on third parties, including other suppliers, alliances with other pharmaceutical and biotechnology companies, and third-party service providers, for key aspects of our business, including development, manufacture and commercialization of our products (including supplying our products or key ingredients of our products) and support for our IT systems.
This indebtedness may adversely affect our ability to operate or grow our business or could have other material adverse consequences, including by: • limiting our ability to obtain additional financing in the future for working capital, capital expenditures and acquisitions; • limiting our ability to refinance our indebtedness on terms acceptable to us or at all; -29- Table of Contents • restricting our operations or development plans; • requiring us to dedicate a significant portion of our cash flows from operations to paying amounts due under our indebtedness, thereby reducing funds available for other corporate purposes; • impeding our ability to pay dividends; • making us more vulnerable to economic downturns; or • limiting our ability to withstand competitive pressures.
This indebtedness may adversely affect our ability to operate or grow our business or could have other material adverse consequences, including by: • limiting our ability to obtain additional financing in the future for working capital, capital expenditures and acquisitions; • limiting our ability to refinance our indebtedness on terms acceptable to us or at all; • restricting our operations or development plans; • requiring us to dedicate a significant portion of our cash flows from operations to paying amounts due under our indebtedness, thereby reducing funds available for other corporate purposes; • impeding our ability to pay dividends; • making us more vulnerable to economic downturns; or • limiting our ability to withstand competitive pressures.
Further, any such interruption, security breach, or loss, misappropriation, and/or unauthorized access, use or disclosure of confidential information, including personal information regarding our patients and employees, or the modification of critical data, could result in financial, legal, business, and reputational harm to us, including loss of revenue, loss of critical or sensitive information from our or our third-party providers' databases or IT systems, and substantial remediation and recovery costs.
Further, any such interruption, security breach, or loss, misappropriation, and/or unauthorized access, use or disclosure of confidential information, including personal information regarding our consumers and employees, or the modification of critical data, could result in financial, legal, business, and reputational harm to us, including loss of revenue, loss of critical or sensitive information from our or our third-party providers’ databases or IT systems and substantial remediation and recovery costs.
We cannot market our pharmaceutical products or medical devices or new indications or modifications to our existing products unless and until we have obtained all required regulatory approvals or marketing authorizations in each relevant jurisdiction. Our applications or submissions for regulatory approval or marketing authorization may be rejected or otherwise delayed by the FDA or other foreign regulatory authorities.
We cannot market or sell our pharmaceutical products or medical devices or new indications or modifications to our existing products unless and until we have obtained all required regulatory approvals or marketing authorizations in each relevant jurisdiction. Our applications or submissions for regulatory approval or marketing authorization may be rejected or otherwise delayed by the FDA or other regulatory authorities.
The markets for our products, including the women's health market, may not develop as successfully as expected. Our focus on women's health is a key component of our strategy.
The markets for our products, including the women’s health market, may not develop as expected. Our focus on women’s health is a key component of our strategy.
Further, if we do seek recovery or damages from such supplier for any supply shortages or disruptions, such recovery or damages may be limited and not include indirect or consequential losses or any loss of revenue or lost profits. Our ability to achieve continuity of our supply may also be affected by public health crises and epidemics/pandemics.
Further, if we choose to seek recovery or damages from such supplier for any supply shortages or disruptions, such recovery or damages may be limited and not include indirect or consequential losses or any loss of revenue or lost profits. Our ability to achieve continuity of our supply may also be affected by public health crises and epidemics/pandemics.
Our ability to successfully commercialize products in our biosimilars portfolio may depend upon maintaining a successful relationship with Samsung Bioepis and Henlius. The success of our commercialization activities may also depend, in part, on the performance, operations and regulatory compliance of Samsung Bioepis and Henlius and their suppliers, over which we do not have control.
Our ability to successfully commercialize products in our biosimilars portfolio will depend upon maintaining a successful relationship with Samsung Bioepis and Henlius. The success of our commercialization activities may also depend, in part, on the performance, operations and regulatory and quality compliance of Samsung Bioepis and Henlius and their suppliers, over which we do not have control.
Failure of these third parties to meet their contractual, regulatory and other obligations to us or the development of factors that materially disrupt the relationships between us and these third parties could adversely affect our business. Please see the risk factor above entitled, "we depend on sophisticated software applications and computing infrastructure.
Failure of these third parties to meet their contractual, regulatory and other obligations to us or the development of factors that materially disrupt the relationships between us and these third parties could adversely affect our business. Please see the risk factor above entitled, “We depend on sophisticated software applications and computing infrastructure.
In the ordinary course of business, we and our third-party providers collect, store and transmit large amounts of confidential information (including trade secrets or other intellectual property, proprietary business information and personal information), and we must do so in a secure manner to maintain the confidentiality and integrity of such confidential information.
In the ordinary course of business, we and our third-party providers collect, store and transmit large amounts of confidential information (including trade secrets or other intellectual property, proprietary business information and personal information), and we must do so in a secure manner to maintain the confidentiality and integrity of such confidential information and safeguard personal data.
It is possible -33- Table of Contents that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
It is possible that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
Such attacks are increasingly sophisticated and are made by groups and individuals with a wide range of motives and expertise, including state and quasi-state actors, criminal groups, "hackers" and others. These attacks could lead to loss of confidentiality, integrity and/or availability of our data, applications or systems.
Such attacks are increasingly sophisticated and are made by groups and individuals with a wide range of motives and expertise, including state and quasi-state actors, criminal groups, “hackers” and others. These attacks could lead to loss of confidentiality, integrity and/or availability of our data, applications or systems.
We face continued pricing pressure in the United States and globally and, particularly in the EU, the UK, China and Japan, from managed care organizations, government agencies and programs that could adversely affect our sales and profit margins. We expect pricing pressure to continue in the future.
We face continued pricing pressure in the United States and globally and, particularly in the EU, the United Kingdom, China and Japan, from managed care organizations, government agencies and programs that could adversely affect our sales and profit margins. We expect pricing pressure to continue in the future.
If our customers' financial conditions are adversely affected, those customers may reduce their purchases of our products or we may not be able to collect accounts receivable, each of which could have a material adverse impact on our business operations or financial results, and we may not be able to fully absorb any such additional costs or revenue declines in the prices for our products and services.
If our customers' financial conditions are adversely affected, those customers may reduce their purchases of our products or we may not be able to collect accounts receivable, each of which -29- Table of Contents could have a material adverse impact on our business operations or financial results, and we may not be able to fully absorb any such additional costs or revenue declines in the prices for our products and services.
Our activities, including the manufacturing and marketing of our pharmaceutical products and medical devices, are subject to extensive regulation by numerous federal, state and local / provincial state governmental authorities in the United States, including the FDA, and by foreign regulatory authorities, including in the EU, the UK, China and Japan.
Our activities, including the manufacturing and marketing of our pharmaceutical products and medical devices, are subject to extensive regulation by numerous federal, state and local governmental authorities in the United States, including the FDA, and by regulatory authorities in the EU, the UK, China and Japan.
A reduction or interruption in supply and an inability to quickly develop acceptable alternative sources for such supply could adversely affect our ability to manufacture and distribute our products in a timely or cost-effective manner, negatively impacting our ability to sell our products. We may not realize benefits from our investments in China and emerging markets.
A reduction or interruption in supply and an inability to quickly develop acceptable alternative sources for such supply could adversely affect our ability to complete clinical trials, manufacture and distribute our products in a timely or cost-effective manner, negatively impacting our ability to sell our products. We may not realize benefits from our investments in China and emerging markets.
Risks inherent in conducting a global business include: • changes in medical reimbursement policies and programs and pricing restrictions in key markets; • multiple regulatory requirements that could restrict our ability to manufacture and sell our products in key markets; • multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, tariffs, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • trade protection measures and import or export licensing requirements, including the imposition of trade sanctions or similar restrictions by the United States or other governments; • financial risks, such as foreign currency exchange fluctuations, longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products; • volatility of commodity prices, fuel, shipping rates that impact the costs and/or ability to supply our products; • diminished protection of intellectual property in some countries; and • possible nationalization and expropriation.
Risks inherent in conducting a global business include: • changes in medical reimbursement policies and programs and pricing restrictions in key markets; • multiple regulatory requirements that could restrict our ability to manufacture and sell our products in key markets; • multiple, conflicting and changing laws, executive orders and directives, and regulations such as privacy regulations, tax laws, tariffs, employment laws, regulatory requirements, government funding allocation processes, and other governmental approvals, permits and licenses; • trade protection measures and import or export licensing requirements, including the imposition of tariffs, trade sanctions or similar restrictions by the United States or other governments; • financial risks, such as foreign currency exchange fluctuations, longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products; • volatility of commodity prices, fuel, shipping rates that impact the costs and/or ability to supply our products; • diminished protection of intellectual property in some countries; and • possible nationalization and expropriation.
Our ability to successfully execute our growth strategy in this area is subject to numerous risks, including: • uncertainty of the development of a market for such products; • trends relating to, or the introduction or existence of, competing products, technologies or alternative treatments or therapies that may be more effective, safer or easier to use than our products, technologies, treatments or therapies; • the perception of our products as compared to other products; • recommendation and support for the use of our products or treatments by influential customers, such as obstetricians, gynecologists, reproductive endocrinologists and treatment centers; • changes in government policy or regulations could impair or repeal contraception coverage mandates under the ACA or state laws, which may affect payments to us or impose additional coverage limitations or cost-sharing obligations on our patients; • the availability and extent of data demonstrating the clinical efficacy of our products or treatments; • competition, including the presence of competing products sold by companies with longer operating histories, more recognizable names and more established distribution networks; and • other technological developments.
Our ability to successfully execute our growth strategy in this area is subject to numerous risks, including: • uncertainty of the development of a market for such products; • trends relating to, or the introduction or existence of, competing products, technologies or alternative treatments or therapies that may be more effective, safer or easier to use than our products, technologies, treatments or therapies; • the perception of our products as compared to other products; • recommendation and support for the use of our products or treatments by influential customers, such as obstetricians, gynecologists, reproductive endocrinologists and treatment centers; • changes in judicial decisions, government policy or regulations could impair or repeal contraception coverage mandates under the ACA or patient access to contraception under state laws, which may affect our product sales, payments to us or impose additional coverage limitations or cost-sharing obligations on our consumers; • the availability and extent of data demonstrating the clinical efficacy of our products or treatments; • competition, including the presence of competing products sold by companies with longer operating histories, more recognizable names and more established distribution networks; and • other technological developments.
In the United States, the FDA administers requirements covering the laboratory testing, clinical trials, clearance, approval, safety, effectiveness, manufacturing, labeling and marketing of prescription pharmaceuticals and medical devices. Regulation of our pharmaceutical products outside the United States also is primarily focused on drug safety and effectiveness and, in many cases, reduction in the cost of drugs.
In the United States, the FDA administers requirements covering the laboratory testing, clinical trials, clearance, approval, safety, effectiveness, manufacturing, labeling and marketing of prescription pharmaceuticals and medical devices. Regulation of our pharmaceutical products outside the United States also is primarily focused on product safety and effectiveness and, in many cases, reduction in product cost.
Natural disasters, extreme weather and other conditions caused by or related to climate change could adversely impact our supply chain, including manufacturing and distribution networks, the availability and cost of raw materials and components, energy supply, transportation, or other inputs -28- Table of Contents necessary for the operation of our business.
Natural disasters, extreme weather and other conditions caused by or related to climate change could adversely impact our supply chain, including manufacturing and distribution networks, the availability and cost of raw materials and components, energy supply, transportation, or other inputs necessary for the operation of our business.
Issues with product quality could have an adverse effect on our business or cause a loss of customer confidence in us or our products, among other negative consequences. Our success also depends on our ability to maintain and routinely improve product quality and our quality management program.
Issues with product quality could have an adverse effect on our business or cause a loss of customer confidence in us or our products, among other negative consequences. Our success also depends on our ability to maintain and, when possible, improve product quality and our quality management program.
The GDPR also includes requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals prior to processing their personal data or personal health data, potential notification of personal data breaches to the national data protection authorities, potential consultation obligations to national data protection authorities for certain high-risk data processing, and the security and confidentiality of the personal data.
The GDPR also includes requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the -26- Table of Contents individuals prior to processing their personal data or personal health data, potential notification of personal data breaches to the national data protection authorities, potential consultation obligations to national data protection authorities for certain high-risk data processing, and the security and confidentiality of the personal data.
Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the war in Ukraine, and steps taken by governments and central banks, as well as other stimulus and spending programs, have led to higher inflation, which is likely to lead to an increase in costs and may cause changes in fiscal and monetary policy, including increased interest rates.
Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the conflicts in Ukraine and the Middle East, steps taken by governments and central banks, as well as other stimulus and spending programs, have led to higher inflation, which is likely to lead to an increase in costs and may cause changes in fiscal and monetary policy, including increased interest rates.
As a result, currency fluctuations among our reporting currency, the U.S. dollar, and other currencies in which we do business will affect our operating results, often in unpredictable ways. Reliance on third-party relationships and outsourcing arrangements could materially adversely affect our business.
As a result, currency fluctuations among our reporting currency, the US dollar, and other currencies in which we do business will affect our operating results, often in unpredictable ways. Reliance on third-party relationships and outsourcing arrangements could materially adversely affect our business.
Changes to the health care system enacted as part of health care reform in the United States, as well as increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, and private sector beneficiaries, could result in further pricing pressures.
For instance, changes to the health care system enacted as part of health care reform in the United States and increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid and private sector beneficiaries could result in further pricing pressures.
When the patent protection and market exclusivity periods for such products expire, a significant and rapid loss of sales from those products is generally experienced. Expiry of patent protection and market exclusivity for products that contribute significantly to our sales will adversely affect our business.
Certain of our products currently benefit from patent protection and market exclusivity. When the patent protection and market exclusivity periods for such products expire, a significant and rapid loss of sales from those products is generally experienced. Expiry of patent protection and market exclusivity for products that contribute significantly to our sales will adversely affect our business.
We cannot guarantee the timing, amount or payment of any dividends on our Common Stock. We currently expect that we will continue to pay quarterly cash dividends. The timing, declaration, amount and payment of any future dividends to stockholders will fall within the discretion of our Board of Directors.
We cannot guarantee the timing, amount or payment of any dividends on our Common Stock. We currently expect that we will continue to pay quarterly cash dividends on our common stock. The timing, declaration, amount and payment of any future dividends to stockholders will fall within the discretion of our Board of Directors, subject to Delaware law.
Further, court decisions relating to other companies' patents, potential legislation in both the United States and certain foreign markets relating to patents, as well as regulatory initiatives, may result in a more general weakening of intellectual property protection.
Additionally, court decisions relating to other companies’ patents, potential legislation in both the United States and certain other markets relating to patents, as well as regulatory initiatives, may result in a more general weakening of intellectual property protection.
We are also aware of a limited number of other arrangements that have similar provisions which could result in these types of payments.
We also have a limited number of other arrangements that have similar provisions which could result in these types of payments.
The size -25- Table of Contents and complexity of we and our third-party providers' systems and the large amounts of confidential information present on them also makes them potentially vulnerable to security breaches from inadvertent or intentional actions by our employees, partners or vendors, or from attacks by malicious third parties.
The size and complexity of our and our third-party providers’ systems and the large amounts of confidential information present on them also makes them potentially vulnerable to security breaches from inadvertent or intentional actions by our employees, partners or vendors, or from attacks by malicious third parties.
If we are unable to successfully commercialize and create a significant market for our women's health products, our business or prospects could be harmed. Our business and operations are subject to risks related to climate change. We believe that global climate change will present some degree of risk to our business.
If we are unable to successfully commercialize a significant market for our women’s health products, our business or prospects could be harmed. Our business and operations are subject to risks related to climate change and natural disasters. We believe that global climate change will present a degree of risk to our business.
In addition, we are party to a license agreement with Henlius, whereby we have worldwide commercialization rights, in countries except for China (including Hong Kong, Macau, and Taiwan) for biosimilar candidates HLX11 referencing Perjeta , and HLX14, referencing Prolia / Xgeva . See "Business—Third-Party Agreements".
In addition, we are party to a license agreement with Henlius, whereby we have worldwide commercialization rights, in countries except for China (including Hong Kong, Macau and Taiwan) for biosimilar candidates HLX11 referencing Perjeta , and HLX14, referencing Prolia / Xgeva . See “Business—Third-Party Agreements”.
Even if we receive such approval, we may be more limited or restrictive than anticipated, or be subject to additional post-marketing testing requirements. -20- Table of Contents Developments following regulatory approval or marketing authorization may adversely affect sales of our pharmaceutical products or medical devices.
Even if we receive such approval, it may be more limited or restrictive than anticipated or be subject to additional post-marketing testing requirements. Developments following regulatory approval or marketing authorization may adversely affect sales of our pharmaceutical products or medical devices.
These conditions may adversely affect our ability to obtain and maintain our credit ratings. -22- Table of Contents We are subject to minimum purchase obligations under certain supply agreements, and if we fail to meet those minimum purchase requirements, our financial results may be unfavorably impacted.
These conditions may adversely affect our ability to obtain and maintain our credit ratings. We are subject to minimum purchase obligations under certain supply agreements, and if we fail to meet those minimum purchase requirements, our financial results may be unfavorably impacted.
In a higher inflationary environment, we may be unable to raise the prices of our products and services sufficiently to keep up with the rate of inflation. -27- Table of Contents We are exposed to market risk from fluctuations in currency exchange rates and interest rates.
In a higher inflationary environment, we may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation. We are exposed to market risk from fluctuations in currency exchange rates and interest rates.
Our ability to generate profits and operating cash flow depends largely upon the continued profitability of our key products, such as Nexplanon , Cozaar / Hyzaar , Singulair and the ezetimibe family of products.
Our ability to generate profits and operating cash flow depends largely upon the continued profitability of our key products, such as Nexplanon , Arcoxia , Singulair and the ezetimibe family of products.
We have incurred substantial indebtedness, which could adversely affect our financial condition and results of operations . At December 31, 2023, we had outstanding indebtedness of approximately $8.8 billion, as described more fully in the Notes to our financial statements.
We have incurred substantial indebtedness, which could adversely affect our financial condition and results of operations . As of December 31, 2024, we had outstanding indebtedness of approximately $8.9 billion, as described more fully in the Notes to our financial statements.
Cyberattacks affecting our IT systems could result in exposure of confidential information, the modification of critical data or the disruption of our worldwide operations, including manufacturing and sales operations. We depend on sophisticated software applications (including artificial intelligence), complex information technology systems, computing infrastructure and cloud service providers (collectively, "IT systems") to conduct critical operations.
Cyberattacks affecting our IT systems could result in exposure of confidential information, the modification of critical data or the disruption of our worldwide operations, including manufacturing and sales operations. We depend on sophisticated software applications (including AI), complex information technology systems, computing infrastructure and cloud service providers (collectively, “IT systems”) to conduct critical operations.
We acquire our components, materials and other requirements for manufacturing from many suppliers and vendors in various countries, including sometimes from itself for self-supplied requirements. We endeavor to achieve, either alone or by working closely with our suppliers, continuity of our inputs and supplies, but we cannot guarantee these efforts will always be successful.
We acquire our components, materials and other requirements for manufacturing from many suppliers and vendors in various countries. We endeavor to achieve, either alone or by working closely with our suppliers, continuity of our inputs and supplies, but we cannot guarantee these efforts will always be successful.
These exclusive provisions may limit a stockholder's ability to bring a claim in a judicial forum that he, she or it believes to be favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits.
These exclusive provisions may limit a stockholder’s ability to bring a claim in a judicial forum that they believes to be favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits.
Other changes in tax laws or regulations around the world, including in the United States, could negatively impact our cash tax liability, and will likely have a negative impact on our effective tax rate, and results of operations. Social media and mobile messaging platforms present risks and challenges.
Other changes in tax laws or regulations around the world, including in the United States, could negatively impact our cash tax liability, and will likely have a negative impact on our effective tax rate, and results of operations and lead to greater audit scrutiny. Social media and mobile messaging platforms present risks and challenges.
We are subject to a variety of laws and regulations, and we may face serious consequences for violations if we fail to meet the applicable legal and regulatory requirements. We are currently subject to a number of government laws and regulations and, in the future, could become subject to new government laws and regulations.
We are subject to a variety of laws and regulations, and we may face serious consequences for violations if we fail to meet the applicable legal and regulatory requirements. We are currently subject to a number of laws and regulations and, in the future, we will likely become subject to new laws and regulations.
As a result, changes in international trade policy, changes in trade agreements and the imposition of tariffs or sanctions by the U.S. or other countries could materially adversely affect our results of operations and financial condition.
As a result, changes in international trade policy, changes in trade agreements and the imposition of tariffs or sanctions by the United States or other countries could materially adversely affect our results of operations and financial condition.
This could lead to penalties that flow to us, require us to undertake costly corrective measures such as recalling product, interrupt our business plans such as by rendering clinical data not usable for regulatory submissions, or other adverse consequences on our business.
We could be subject to penalties that flow to us, require us to undertake costly corrective measures such as recalling product, interrupt our business plans such as by rendering clinical data not usable for regulatory submissions, or other adverse consequences on our business.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent receipt of regulatory approval or marketing authorization, or our ability to commercialize our product candidates, including for example, issues with study execution including timely access to study drugs; inability to recruit and enroll study subjects; failure of our product candidates in pre-clinical studies or clinical trials to demonstrate safety and efficacy; receipt of feedback from the FDA or other regulatory authorities that require us to modify the design of our clinical trials; and negative or inconclusive clinical trial results that may require us to conduct additional clinical trials or abandon certain research and/or development programs.
Accordingly, there is a high risk of failure, and we may never succeed in obtaining regulatory approval or marketing authorization of our product candidates. -21- Table of Contents We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent receipt of regulatory approval or marketing authorization, or our ability to commercialize our product candidates, including for example, issues with study execution including timely access to study drugs; inability to recruit and enroll study subjects; failure of our product candidates in pre-clinical studies or clinical trials to demonstrate safety and efficacy; receipt of feedback from the FDA or other regulatory authorities that require us to modify the design of our clinical trials; and negative or inconclusive clinical trial results that may require us to conduct additional clinical trials or abandon certain research and/or development programs.
We have been taking steps to increase our sales in China and emerging markets; however, our efforts to expand sales in these markets may not succeed. Some countries may be especially vulnerable to periods of global financial instability or may have -26- Table of Contents very limited resources to spend on health care.
We continue to take steps to increase our sales in China and emerging markets; however, our efforts to expand sales in these markets may not succeed. Some countries may be especially vulnerable to periods of global financial instability or may have very limited resources to spend on health care.
Some potential risks are integrated into our business planning, including investment in reducing energy, water use and greenhouse gas emissions. The extent and severity of climate change impacts are unknown, and therefore, the scope of potential impact on our business is difficult to predict, and it may be difficult to adequately prepare for such impact.
While certain potential risks are integrated into our business planning, including investment in reducing energy, water use and greenhouse gas emissions, the extent and severity of future natural disasters and/or other climate change impacts are unknown, and therefore, the scope of potential impact on our business is difficult to predict, and it may be difficult to adequately prepare for such impact.
If we are unable to offset these payments, it could result in a lower margin. During the year ended December 31, 2022 and 2021, we recognized $5 million and $24 million, respectively, in Cost of Sales pertaining to estimated unavoidable losses associated with a long-term vendor supply contract conveyed as part of the spinoff.
If we are unable to offset these payments, it could result in a lower margin. During 2022, we recognized $5 million in Cost of Sales pertaining to estimated unavoidable losses associated with a long-term vendor supply contract conveyed as part of the spinoff.
Many of our competitors for these opportunities are well established and have extensive experience identifying and effecting these types of strategic acquisitions. Moreover, some of these competitors may possess greater financial, technical, human and other resources than we do.
However, we may experience difficulties identifying future acquisition opportunities or completing such transactions. Many of our competitors for these opportunities are well established and have extensive experience identifying and effecting these types of strategic acquisitions. Moreover, some of these competitors may possess greater financial, technical, human and other resources than we do.
For example, concern over climate change continues to result in new legal or regulatory requirements designed to mitigate the effects of climate change on the environment, such as the EU's CSRD, California's Climate Corporate Data Accountability Act and Climate Related Financial Risk Act, and similar regulations under consideration by the SEC.
For example, concern over climate change continues to result in new legal or regulatory requirements designed to address the effects of climate change on the environment, such as the EU's CSRD and CSDDD, California’s Climate Corporate Data Accountability Act and Climate -31- Table of Contents Related Financial Risk Act, and similar regulations adopted or under consideration by the regulators globally.
We intend to grow our business through new indications or formulations of our existing products or expansion of existing products into new markets or new geographies. However, we expect that our ability to do so could be limited by the scope of our limited intellectual property licenses for certain women's health products.
Our growth could be limited by the scope of our intellectual property licenses for certain women’s health care products. We intend to grow our business through new indications or formulations of our existing products or expansion of existing products into new markets or new geographies.
Risks Related to Our Common Stock • The price and trading volume of our Common Stock may be volatile, and stockholders could lose all or part of their investment. • We cannot guarantee the timing, amount or payment of any dividends on our Common Stock. • Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, may prevent or delay an acquisition of Organon, which could decrease the trading price of our Common Stock. • Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and the United States federal district courts as the exclusive forum for claims under the Securities Act of 1933, as amended (the "Securities Act"), which could limit our stockholders' ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers or employees. -17- Table of Contents Risks Related to Our Business Key products generate a significant amount of our profits and cash flows, and any events that adversely affect the markets for our leading products could adversely affect our results of operations and financial condition.
Risks Related to Our Common Stock • The price and trading volume of our Common Stock may be volatile, and stockholders could lose all or part of their investment in us. • We cannot guarantee the timing, amount or payment of any dividends on our Common Stock. • Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, may prevent or delay an acquisition of us, which could decrease the trading price of our Common Stock. • Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and the United States federal district courts as the exclusive forum for claims under the Securities Act of 1933, as amended (the “Securities Act”), which could limit our stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers or employees.
Before obtaining regulatory approval from the FDA or other comparable foreign regulatory authorities for the sale of our pharmaceutical product candidates, we must demonstrate through pre-clinical studies and clinical trials that our product candidates are both safe and effective for use in each target indication and population. Obtaining marketing authorization for our devices may also require pre-clinical and clinical trials.
Before obtaining regulatory approval from the FDA or other comparable regulatory authorities outside the United States for the sale of our pharmaceutical product candidates, we must demonstrate through pre-clinical studies and clinical trials, that our product candidates are both safe and effective for use in each target indication and population.
The GDPR increased responsibility and liability in relation to personal data that we process. It also imposes several obligations and restrictions on the ability to process (which includes collection, storage and access, analysis, and transfer of) personal data, including health data from clinical trials and adverse event reporting.
It also imposes several obligations and restrictions on the ability to process (which includes collection, storage and access, analysis, and transfer of) personal data, including health data from clinical trials and adverse event reporting.
Failure to mitigate this threat could adversely impact our customers, potentially causing them harm. This, in turn, may result in the loss of confidence in our products' reputation and integrity, and potentially impact our business through lost sales, product recalls, and possible litigation. Inflation could materially adversely affect our business and operations.
This, in turn, may result in the loss of confidence in our products’ reputation and integrity, and potentially impact our business through lost sales, product recalls, and possible litigation. Inflation could materially adversely affect our business and operations.
In the future, we also plan to continue to sell our medical devices in additional major international markets and will be subject to the regulatory requirements imposed in those jurisdictions. For example, in order to sell medical devices in EU member countries, we will need to comply with the MDR.
In the future, we also plan to continue to sell Jada in additional major international markets and it will be subject to the regulatory requirements imposed in those jurisdictions. For example, in order to sell medical devices in the EU, we will need to comply with the EU’s Medical Device Regulation.
An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity or a loss of customer confidence in us or our current or future products, which may result in the loss of sales and difficulty in successfully launching new products. -21- Table of Contents Certain of our products currently benefit from patent protection and market exclusivity.
An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity or a loss of customer confidence in us or our current or future products, which may result in the loss of sales and difficulty in successfully launching new products.
Pre-clinical and clinical trials are difficult to design and implement, and can take many years to complete, and their ultimate outcome is uncertain. Failure can occur at any time during the pre-clinical study and clinical trial processes.
Obtaining marketing authorization for our devices may also require pre-clinical and clinical trials. Pre-clinical and clinical trials are difficult to design and implement, and can take many years to complete, and their ultimate outcome is uncertain. Failure can occur at any time during the pre-clinical study and clinical trial processes.
China has made reduction of costs and provision of affordable drugs to patients a key priority and has implemented reimbursement and procurement programs to achieve these goals, such as VBP and URPS. These programs regularly reduce the price and/or reimbursement rate for drugs by over 50%. These and other such programs could adversely affect our business in China.
China has made reduction of costs and provision of affordable pharmaceutical products to patients a key priority and has implemented reimbursement and procurement programs to achieve these goals, such as VBP and URPS. For example, the VBP program regularly reduces the prices for affected products by over 50%. These and other such programs could adversely affect our business in China.
A failure to make such pivot effectively, or a failure to develop and maintain a presence in China or emerging markets could adversely affect our business, cash flow, results of operations, financial condition or prospects. Current market conditions and recessionary pressures in one or more of our markets could impact our ability to grow our business.
A failure to make such pivot effectively, or a failure to develop and maintain a presence in China or emerging markets could adversely affect our business, cash flow, results of operations, financial condition or prospects. Adverse developments in the global economy or in one or more of our local markets could impact our ability to grow our business.
The costs of compliance and penalties for non-compliance may be particularly significant with respect to health care reform initiatives in the United States or in other countries, including additional mandatory discounts or fees; new laws, regulations and judicial or other governmental decisions affecting pricing, reimbursement, and market access or marketing within or across jurisdictions; new and increasing data privacy regulations and enforcement, particularly in the EU, the UK, the United States, and China; legislative mandates or preferences for local manufacturing of medical products; emerging and new global regulatory requirements for reporting payments and other value transfers to health care professionals and health care organizations; environmental regulations; and emerging and new regulations on human rights and environmental matters in the supply chain and importation restrictions, embargoes, trade sanctions and legislative or other regulatory changes.
The compliance-related costs and penalties may be particularly significant with respect to health care reform and related initiatives, including: additional mandatory discounts or fees; new laws, regulations and judicial decisions affecting pricing, reimbursement, and market access or marketing within or across jurisdictions; new and increasing data privacy regulations and enforcement, particularly in the EU, the United Kingdom, the United States and China; legislative mandates or preferences for local manufacturing of our products; and emerging and new global regulatory requirements for reporting payments and other value transfers to health care professionals and health care organizations.
Although there are internal Organon policies that guide employees on appropriate personal and professional use of these platforms for communication about us, it may not completely secure and protect information. Identifying new points of entry as new communication tools expand also presents new challenges.
Although there are internal Organon policies that guide employees on appropriate personal and professional use of these platforms for communication about us, it may not completely secure and protect information.
Further, should we be able to enter into such agreements, these agreements may pose risks, including that we would be reliant on and accountable for the third-party's knowledge and capabilities, data, quality of operations and compliance to regulations, and other systems to conduct clinical trials, prepare regulatory application submissions and required post-approval reports, manufacture or distribute product, or other activities. -18- Table of Contents Our growth could be limited by the scope of our intellectual property licenses for certain women's health care products.
Further, should we be able to enter into such agreements, these agreements may pose risks, including that we would be reliant on and accountable for the third-party’s knowledge and capabilities, data, quality of operations and compliance with regulations, and other systems to conduct clinical trials, prepare regulatory application submissions and required post-approval reports, manufacture or distribute product, or other activities.
Competitors' products may be equally safe and as effective as our products but sold at a substantially lower price than our products. Alternatively, our competitors' products may be safer or more effective, more convenient to use, have better insurance coverage or reimbursement levels or be more effectively marketed and sold than our products.
Alternatively, our competitors’ products may be safer or more effective, more convenient to use, have better insurance coverage or reimbursement levels or be more effectively marketed and sold than our products.
Maintaining the confidentiality, integrity, and availability of this confidential information (including trade secrets or other intellectual property, proprietary business information and personal information) is important to our competitive business position. However, such information can be difficult to protect and could be compromised.
Maintaining and safeguarding the confidentiality, privacy, integrity, and availability of this confidential information, including trade secrets or other intellectual property, proprietary business information and personal information, is important to our competitive business position.
Our ability to issue additional debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products, if our customers or suppliers are unable to pay amounts due to us or there are other significantly unfavorable changes in economic conditions.
Our ability to issue additional debt or enter into other financing arrangements on acceptable terms could be adversely affected if our operating results or financial condition decline (which could occur if, among other things, there is a material decline in the demand for our products, if our customers or suppliers are unable to pay amounts due to us or there are other significantly unfavorable changes in economic conditions.) Volatility in the world financial markets could increase borrowing costs or affect our ability to access the capital markets.
For example, the FDA may issue complete response letters indicating that our applications for our pharmaceutical products are not ready for approval. Once obtained, we must maintain approval or marketing authorization as long as we plan to market products in each jurisdiction where approval or marketing authorization is required.
It is possible that the FDA could issue complete response letters indicating that any of our applications for our pharmaceutical products are not ready for approval. Even if the requisite approvals are obtained, we must maintain such approvals or marketing authorizations as long as we plan to market products in each jurisdiction where approval or marketing authorization is required.
Climate change and natural disasters could also result in physical damage to our facilities as well as those of our suppliers, customers, and other business partners, which could cause disruption in our business and operations or increase costs to operate our business.
Climate change and natural disasters could also result in physical damage to our facilities as well as those of our suppliers, customers, and other business partners, which could cause disruption in our business and operations or increase costs to operate our business. For instance, California and Florida are two of our top five states in terms of annual U.S.
For example, our amended and restated certificate of incorporation and bylaws: • permit our Board of Directors to issue one or more series of preferred stock with such powers, rights and preferences as the Board of Directors shall determine; • subject to a three-year sunset starting with our first annual meeting of stockholders, provide for a classified Board of Directors, with each class serving a staggered three-year term, which could have the effect of making the replacement of incumbent directors more time consuming and difficult; • provide that as long as our Board of Directors is classified, our directors can be removed for cause only; • prohibit stockholder action by written consent; • provide that special meetings of stockholders can be called only by the Board of Directors; • provide that vacancies on the Board of Directors could be filled only by a majority vote of directors then in office, even if less than a quorum, or by a sole remaining director; and • establish advance notice requirements for stockholder proposals and nominations of candidates for election as directors.
For example, our amended and restated certificate of incorporation and bylaws: -34- Table of Contents • permit our Board of Directors to issue one or more series of preferred stock with such powers, rights and preferences as the Board of Directors shall determine; • prohibit stockholder action by written consent; • provide that special meetings of stockholders can be called only by the Board of Directors; • provide that vacancies on the Board of Directors could be filled only by a majority vote of directors then in office, even if less than a quorum, or by a sole remaining director; and • establish advance notice requirements for stockholder proposals and nominations of candidates for election as directors.
In addition, in the United States, larger customers have received higher rebates on drugs in certain highly competitive categories. We must also compete to be placed on formularies of managed care organizations and other payors. Exclusion of a product from a formulary can lead to reduced usage in the population covered by the managed care organization or other payor.
We must also compete to be placed on formularies of managed care organizations and other payors. Exclusion of a product from a formulary can lead to reduced usage in the population covered by the managed care organization or other payor.
We have limited in-house discovery and early research capabilities and will continue to rely on future acquisitions, partnerships and collaborations to expand our innovative pipeline and early discovery and research capabilities, which may limit our ability to discover or develop new products or expand our existing products into new markets to replace the sales of products that lose patent protection, and therefore we may not be able to maintain our current levels of profitability.
Our efforts to compete with other companies’ products or our failure to maintain the competitive position of our products could adversely affect our business, cash flow, results of operations, financial condition or prospects. -19- Table of Contents We have limited in-house discovery and early research capabilities and will continue to rely on future acquisitions, partnerships and collaborations to expand our innovative pipeline and early discovery and research capabilities, which may limit our ability to discover or develop new products or expand our existing products into new markets to replace the sales of products that lose patent protection, and therefore we may not be able to maintain our current levels of profitability.
As previously disclosed, we voluntarily initiated market actions, including recalls, in certain markets with respect to our suspension injections Diprospan , Celestone, Chronodose TM 1 (betamethasone), and Celestone Soluspan ® (betamethasone) related to a non-conforming component of a manufacturing line at our Heist, Belgium plant. We do not believe this development will materially impact us.
For example, in January 2023, we voluntarily initiated market actions, including recalls, in certain markets with respect to our suspension injections Diprospan , Celestone Chronodose TM 1 (betamethasone) and Celestone Soluspan ® (betamethasone) related to a non-conforming component of a manufacturing line at our Heist, Belgium plant.
We currently market one product in the United States regulated as a medical device, Jada (acquired through our acquisition of Alydia Health, as described elsewhere in this report). We currently market Jada outside of the United States in a number of international markets and is subject to the regulatory requirements imposed in those jurisdictions.
For instance, we currently market one product in the United States regulated as a medical device, Jada . We currently market Jada outside of the United States in a number of international markets and it is subject to the regulatory requirements imposed in those jurisdictions.
Changes to the health care system enacted as part of health care reform in the United States, as well as increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid and private sector beneficiaries, could result in further pricing pressures.
Changes to the health care system due to health care reform in the United States, as well as increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, and private sector beneficiaries, could result in further pricing pressures. In addition, in the United States, larger customers have received higher rebates on drugs in certain highly competitive categories.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Audit Committee receives periodic updates regarding our cybersecurity risk management program, and reports to the Board on the principal risks facing us and the steps -34- Table of Contents being taken to manage and mitigate these risks. Both the Board and the Audit Committee receive periodic reports on our cyber readiness, security controls and our cybersecurity investments.
Biggest changeThe Audit Committee receives regular briefings on both information security and data privacy from the Chief Information Security Officer and Chief Ethics and Compliance Officer, respectively. The Audit Committee receives periodic updates regarding our cybersecurity risk management program, and reports to the Board on the principal risks facing us and the steps being taken to manage and mitigate these risks.
Our information security and privacy programs provide that the Board receives annual reports from our Chief Information Security Officer and Chief Ethics and Compliance Officer to discuss our program for managing information security risks, including data security risks, the risk of cybersecurity incidents and, if applicable, remediation of any potential cybersecurity incidents.
Our information security and privacy programs provide that the Board receives annual reports from our Chief Information Security Officer and Chief Ethics and Compliance Officer to discuss our program for managing information security risks, including security risks, the risk of cybersecurity incidents and, if applicable, remediation of any potential cybersecurity incidents.
Further, any such interruption, security breach, or loss, misappropriation, and/or unauthorized access, use or disclosure of confidential information, including personal information regarding our patients and employees, or the modification of critical data, could result in financial, legal, business, and reputational harm to us, including loss of revenue, loss of critical or sensitive information from our or our third-party providers' databases or Information Systems, and substantial remediation and recovery costs.
Further, any such interruption, security breach, or loss, misappropriation, and/or unauthorized access, use or disclosure of confidential information, including personal information regarding our consumers and employees, or the modification of critical data, could result in financial, legal, business, and reputational harm to us, including loss of revenue, loss of critical or sensitive information from our or our third-party providers' databases or Information Systems, and substantial remediation and recovery costs.
Such attacks are increasingly sophisticated and are made by groups and individuals with a wide range of motives and expertise, including state and quasi-state actors, criminal groups, "hackers" and others. These attacks could lead to loss of confidentiality, integrity and/or availability of our data and Information Systems.
Such attacks are increasingly sophisticated and are made by groups and individuals with a wide range of motives and expertise, including state and quasi-state actors, criminal groups, “hackers” and others. These attacks could lead to loss of confidentiality, integrity and/or availability of our data and Information Systems.
We use multi-layered information security and data privacy programs and practices designed to foster the safe, secure, and responsible use of the information and data our stakeholders entrust to us. We work with our customers, governments, policymakers, and others to help develop and implement standards for safe and secure transactions, as well as privacy-centric data practices.
We use information security and data privacy programs and practices designed to foster the safe, secure, and responsible use of the information and data our stakeholders entrust to us. We work with our customers, governments, policymakers, and others to help develop and implement standards for safe and secure transactions, as well as privacy-centric data practices.
In addition, we and our third-party providers have experienced and expect to continue to experience phishing attempts, scanning attempts of our network, and other attempts of unauthorized access to our computers, digital systems, networks, or devices.
In addition, we and our third-party providers have -35- Table of Contents experienced and expect to continue to experience phishing attempts, scanning attempts of our network, and other attempts of unauthorized access to our computers, digital systems, networks, or devices.
While we have processes to protect such information, and to ensure that the third-party providers on which we rely have taken adequate steps to protect such information, a breach of our Information Systems or those of our third-party providers, such as cloud-based systems, or the accidental loss, inadvertent disclosure, unapproved dissemination, misappropriation or misuse of trade secrets, proprietary information, or other confidential information, whether as a result of theft, hacking, fraud, trickery, other forms of deception, or any other cause, could enable others to produce competing products, use our proprietary technology or information, and/or adversely affect our business position.
A breach of our Information Systems or those of our third-party providers, such as cloud-based systems, or the accidental loss, inadvertent disclosure, unapproved dissemination, misappropriation or misuse of trade secrets, proprietary information, or other confidential information, whether as a result of theft, hacking, fraud, trickery, other forms of deception, or any other cause, could enable others to produce competing products, use our proprietary technology or information, and/or adversely affect our business position.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy. We depend on sophisticated software applications, complex information technology systems, computing infrastructure and cloud service providers (collectively, "Information Systems") to conduct critical operations. Certain of these systems are managed, hosted, provided or used by third parties, including Merck pursuant to a transition services agreement, to assist in conducting our business.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy. We depend on sophisticated software applications, complex information technology systems, computing infrastructure and cloud service providers (collectively, “Information Systems”) to conduct critical operations. Certain of these systems are managed, hosted, provided, or used by third parties.
Independent third parties test our cyber capabilities and audit our cloud security. We regularly test our systems to discover and address any potential vulnerabilities. Cybersecurity Governance. Our Audit Committee has primary responsibility for overseeing our risk-management program relating to cybersecurity, although the Board participates in periodic reviews and discussion dedicated to cyber risks, threats, and protections.
Our Audit Committee has primary responsibility for overseeing our risk-management program relating to cybersecurity, although the Board participates in periodic reviews and discussion dedicated to cyber risks, threats, and protections.
In addition, our directors are apprised of incident simulations and response plans, including for cyber and data breaches.
Both the Board and the Audit Committee receive periodic reports on our cyber readiness, security controls and our cybersecurity investments. In addition, our directors are apprised of incident simulations and response plans, including for cyber and data breaches.
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The Audit Committee receives regular briefings on both information security and data privacy from the Chief Information Security Officer and Chief Ethics and Compliance Officer, respectively, and meets at least annually with our Chief Information Security Officer regarding our information technology.
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While we have controls to protect such information, and aim to ensure that the third-party providers on which we rely have taken steps to protect such information, such controls may not be adequate.
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Independent third parties test our cyber capabilities and audit our cloud security. We leverage third parties to test and assess our cyber capabilities. We regularly test our systems to discover and address any potential vulnerabilities. Cybersecurity Governance.
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Our information security program is managed by our Chief Information Security Officer (“CISO”), who leads our enterprise-wide cybersecurity risk management, strategy, policy, standards, architecture, and processes. Our CISO has over 30 years of experience in information technology, including over 10 years in information security. She holds a B.S. in Computer Science and a Master of Management.
Added
Additionally, she served as an executive committee member of the Health Sector Coordinating Council Cybersecurity Working Group and is a Certified Information Systems Security Professional (“CISSP”). Supporting our CISO is our Deputy CISO, who serves as the primary backup to the CISO and helps oversee our information security program.
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Our Deputy CISO has over 20 years of experience in information technology, including over 10 years in information security. He holds a BS in Electronics Engineering and has served as the chair of the risk and vulnerability working groups at the Health Information Sharing and Analysis Center.
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For additional information, see “Risk Factors — We are subject to a significant number of privacy and data protection laws and regulations globally, many of which place restrictions on our ability to transfer, access and use personal data across our business”; “— We depend on sophisticated software applications and computing infrastructure.
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Cyberattacks affecting our IT systems could result in exposure of confidential information, the modification of critical data or the disruption of our worldwide operations, including manufacturing and sales operations”; “— Reliance on third-party relationships and outsourcing arrangements could materially adversely affect our business” and “— We are subject to a significant number of privacy and data protection laws and regulations globally, many of which place restrictions on our ability to transfer, access and use personal data across our business.” -36- Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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We believe that our facilities are suitable and adequate for our operations and we anticipate that additional suitable space will be available when needed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor a discussion of legal matters as of December 31, 2023, please See Note 20 "Contingencies" to our financial statements included in this report, which is incorporated into this item by reference. Item 4. Mine Safety Disclosures Not applicable. PART II
Biggest changeFor a discussion of legal matters as of December 31, 2024, please See Note 18 “Contingencies” to our financial statements included in this report, which is incorporated into this item by reference. Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeEffective October 18, 2023, we were deleted from the S&P 500 index and added to the S&P SmallCap 600 index. Equity Compensation Plan Information See Part III, Item 12 "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."
Biggest changeEffective October 18, 2023, we were deleted from the S&P 500 index and added to the S&P SmallCap 600 index. Equity Compensation Plan Information See Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” Item 6. [ Reserved ]
The graph assumes an investment of $100 on June 2, 2021 through the last trading day of 2023. The calculation of cumulative stockholder return on our Common Stock, the S&P 500 Index, DRG and the S&P 600 Index include reinvestment of dividends. The performance shown is not necessarily indicative of future performance.
The graph assumes an investment of $100 on June 2, 2021 through the last trading day of 2024. The calculation of cumulative stockholder return on our Common Stock, the S&P 500 Index, DRG and the S&P 600 Index include reinvestment of dividends. The performance shown is not necessarily indicative of future performance.
For additional information, see "Risk Factors—We cannot guarantee the timing, amount or payment of any dividends on our Common Stock". -35- Table of Contents Performance Graph The following graph compares the cumulative total stockholder returns for the period from June 2, 2021 (the effective date of our Separation from Merck) to December 31, 2023 for (i) our Common Stock; (ii) the S&P 500 Index; (iii) the NYSE Arca Pharmaceutical Index ("DRG"); and the S&P 600 Index.
For additional information, see “Risk Factors—We cannot guarantee the timing, amount or payment of any dividends on our Common Stock”. -37- Table of Contents Performance Graph The following graph compares the cumulative total stockholder returns for the period from June 2, 2021 (the effective date of our Separation from Merck) to December 31, 2024 for (i) our Common Stock; (ii) the S&P 500 Index; (iii) the NYSE Arca Pharmaceutical Index (“DRG”); and the S&P 600 Index.
T he dividend is payable on March 14, 2024, to stockholders of record at the close of business on February 26, 2024. The declaration of dividends is subject to the discretion of our Board. Our Board is committed to continuing to pay regular cash dividends; however, there can be no assurance as to future dividends.
T he dividend is payable on March 13, 2025, to stockholders of record at the close of business on February 24, 2025 . The declaration of dividends is subject to the discretion of our Board. Our Board is committed to continuing to pay regular cash dividends; however, there can be no assurance as to future dividends.
This number does not include persons who hold our Common Stock in nominee or "street name" accounts through brokers or banks. Dividends During the fourth quarter of 2023, we paid cash dividends of $0.28 per share. On February 15, 2024, our Board of Directors declared a quarterly dividend of $0.28 for each issued and outstanding share of our Common Stock.
This number does not include persons who hold our Common Stock in nominee or “street name” accounts through brokers or banks. Dividends During the fourth quarter of 2024, we paid cash dividends of $0.28 per share. On February 13, 2025, our Board of Directors declared a quarterly dividend of $0.28 for each issued and outstanding share of our Common Stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common Stock is listed on the New York Stock Exchange under the symbol "OGN." As of February 20, 2024, there were 69,973 holders of record of our Common Stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common Stock is listed on the New York Stock Exchange under the symbol “OGN.” As of February 25, 2025, there were 64,928 holders of record of our Common Stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRisk Factors of this report or otherwise described in our filings with the SEC, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations expressed in our forward-looking statements, including, but not limited to: • expanded brand and class competition in the markets in which we operate; • difficulties with performance of third parties we rely on for our business growth; • the failure of any supplier to provide substances, materials, or services as agreed; • the increased cost of supply, manufacturing, packaging, and operations; • difficulties developing and sustaining relationships with commercial counterparties; • competition from generic products as our products lose patent protection; • any failure by us to obtain an additional period of market exclusivity in the United States for Nexplanon subsequent to the expiration of certain key patents in 2027; • difficulties and uncertainties inherent in the implementation of our acquisition strategy or failure to recognize the benefits of such acquisitions; • pricing pressures globally, including rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and health care reform, pharmaceutical reimbursement and pricing in general; • the impact of higher selling and promotional costs; • changes in government laws and regulations in the United States and other jurisdictions, including laws and regulations governing the research, development, approval, clearance, manufacturing, supply, distribution, and/or marketing of our products and related intellectual property, environmental regulations, and the enforcement thereof affecting our business; • efficacy, safety or other quality concerns with respect to our marketed products, whether or not scientifically justified, leading to product recalls, withdrawals or declining sales; • delays or failures to demonstrate adequate efficacy and safety of our product candidates in pre-clinical and clinical trials, which may prevent or delay the development, approval, clearance, or commercialization of our product candidates; • future actions of third-parties, including significant changes in customer relationships or changes in the behavior and spending patterns of purchasers of health care products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and forgoing health care insurance coverage; • legal factors, including product liability claims, antitrust litigation and governmental investigations, including tax disputes, environmental claims and patent disputes with branded and generic competitors, any of which could preclude commercialization of products or negatively affect the profitability of existing products; • lost market opportunity resulting from delays and uncertainties in clinical trials and the approval or clearance process of the U.S.
Biggest changeRisk Factors of this report or otherwise described in our filings -38- Table of Contents with the SEC, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations expressed in our forward-looking statements, including, but not limited to: • expanded brand and class competition in the markets in which we operate; • difficulties with performance of third parties we rely on for our business growth; • the failure of any supplier to provide substances, materials, or services as agreed; • the increased cost of supply, manufacturing, packaging, and operations; • difficulties developing and sustaining relationships with commercial counterparties; • competition from generic products as our products lose patent protection; • any failure by us to retain market exclusivity to Nexplanon or to obtain an additional period of exclusivity in the United States for Nexplanon subsequent to the expiration of the rod patents in 2027; • the continued impact of the September 2024 LOE for Atozet ; • disruptions at the FDA, the SEC and other U.S. and comparable government agencies; • difficulties and uncertainties inherent in the implementation of our acquisition strategy or failure to recognize the benefits of such acquisitions; • pricing pressures globally, including rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and health care reform, pharmaceutical reimbursement and pricing in general; • the impact of higher selling and promotional costs; • changes in government laws and regulations in the United States and other jurisdictions, including laws and regulations governing the research, development, approval, clearance, manufacturing, supply, distribution, and/or marketing of our products and related intellectual property, environmental regulations, and the enforcement thereof affecting our business; • efficacy, safety or other quality concerns with respect to our marketed products, whether or not scientifically justified, leading to product recalls, withdrawals or declining sales; • delays or failures to demonstrate adequate efficacy and safety of our product candidates in pre-clinical and clinical trials, which may prevent or delay the development, approval, clearance, or commercialization of our product candidates; • future actions of third-parties, including significant changes in customer relationships or changes in the behavior and spending patterns of purchasers of health care products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and forgoing health care insurance coverage; • legal factors, including product liability claims, antitrust litigation and governmental investigations, including tax disputes, environmental claims and patent disputes with branded and generic competitors, any of which could preclude commercialization of products or negatively affect the profitability of existing products; • lost market opportunity resulting from delays and uncertainties in clinical trials and the approval or clearance process of the US FDA and other regulatory authorities; • the failure by us or our third party collaborators and/or their suppliers to fulfill our or their regulatory or quality obligations, which could lead to a delay in regulatory approval or commercial marketing of our products; • cyberattacks on, or other failures, accidents, or security breaches of, our or third-party providers’ information technology systems, which could disrupt our operations and those of third parties upon which we rely; • increased focus on privacy issues in countries around the world, including the United States, the EU, and China, and a more difficult legislative and regulatory landscape for privacy and data protection that continues to evolve with the potential to directly affect our business, including recently enacted laws in a majority of states in the United States requiring security breach notification; • changes in tax laws including changes related to the taxation of foreign earnings; • the impact of any future pandemic, epidemic, or similar public health threat on our business, operations and financial performance; • loss of key employees or inability to identify and recruit new employees; • changes in accounting pronouncements promulgated by standard-setting or regulatory bodies, including the Financial Accounting Standards Board and the SEC, that are adverse to us; and • economic factors over which we have no control, including changes in inflation, interest rates, recessionary pressures, and foreign currency exchange rates.
Acquired intangible assets are initially recorded at fair value, assigned an estimated useful life, and amortized primarily on a straight-line basis over their estimated useful lives. When events or circumstances warrant a review, we will assess recoverability from future operations using pretax undiscounted cash flows derived from the lowest appropriate asset groupings.
Intangible assets are initially recorded at fair value, assigned an estimated useful life, and amortized primarily on a straight-line basis over their estimated useful lives. When events or circumstances warrant a review, we will assess recoverability from future operations using pretax undiscounted cash flows derived from the lowest appropriate asset groupings.
Management's Discussion and Analysis of Financial Condition and Results of Operations CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS We make statements in this Annual Report on Form 10-K, and we may from time to time make other written reports and oral statements, regarding our outlook or expectations for financial, business or strategic matters regarding or affecting us that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, all of which are based on management's current expectations and are subject to risks and uncertainties which change over time and may cause results to differ materially from those set forth in the statements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS We make statements in this Annual Report on Form 10-K, and we may from time to time make other written reports and oral statements, regarding our outlook or expectations for financial, business or strategic matters regarding or affecting us that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, all of which are based on management’s current expectations and are subject to risks and uncertainties which change over time and may cause results to differ materially from those set forth in the statements.
Additionally, this section should be read in connection with Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC and available on the SEC's website at www.sec.gov, which includes a discussion regarding our financial condition and results of operations for the years ended December 31, 2022 and 2021.
Additionally, this section should be read in connection with Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC and available on the SEC’s website at www.sec.gov, which includes a discussion regarding our financial condition and results of operations for the years ended December 31, 2023 and 2022.
Although it is not possible to predict with certainty the outcome of these matters, or the ultimate costs of remediation, we do not believe that any reasonably possible expenditures that may be incurred in excess of the liabilities accrued should exceed $24 million in the aggregate.
Although it is not possible to predict with certainty the outcome of these matters, or the ultimate costs of remediation, we do not believe that any reasonably possible expenditures that may be incurred in excess of the liabilities accrued should exceed $23 million in the aggregate.
These liabilities are undiscounted, do not consider potential recoveries from other parties and will be paid out over the periods of remediation for the applicable sites, which are expected to occur primarily over the next 15 years.
These liabilities are undiscounted, do not consider potential recoveries from other parties and will be paid out over the periods of remediation for the applicable sites, which are expected to occur primarily over the next 13 years.
In the United States, revenue is reduced by sales discounts issued to customers at the point-of-sale, through an intermediary wholesaler (known as chargebacks), or in the form of rebate amounts owed based upon definitive contractual agreements or -45- Table of Contents legal requirements with private sector (Managed Care) and public sector (Medicaid and Medicare Part D) customers.
In the United States, revenue is reduced by sales discounts issued to customers at the point-of-sale, through an intermediary wholesaler (known as chargebacks), or in the form of rebate amounts owed based upon definitive contractual agreements or legal requirements with private sector (Managed Care) and public sector (Medicaid and Medicare Part D) customers.
Potential risks leading to impairment could include loss of exclusivity occurring earlier than expected, competition, pricing reductions, and other macroeconomic changes. Impairments are recognized in operating results to the extent that the carrying value of the intangible asset exceeds its fair value, which is determined based on the net present value of estimated future cash flows.
Potential risks leading to impairment could include LOE occurring earlier than expected, competition, pricing reductions, and other macroeconomic changes. Impairments are recognized in operating results to the extent that the carrying value of the intangible asset exceeds its fair value, which is determined based on the net present value of estimated future cash flows.
Contingencies and Environmental Liabilities We are involved in various claims and legal proceedings of a nature considered normal to our business, including product liability, intellectual property, and commercial litigation, as well as certain additional matters including governmental and environmental matters. See Note 20 "Contingencies" to the Consolidated Financial Statements included in this report.
Contingencies and Environmental Liabilities We are involved in various claims and legal proceedings of a nature considered normal to our business, including product liability, intellectual property, and commercial litigation, as well as certain additional matters including governmental and environmental matters. See Note 18 “Contingencies” to the Consolidated Financial Statements included in this report.
We completed the annual qualitative goodwill impairment test as of October 1, 2023 and concluded that there was no impairment to goodwill as the fair value of the reporting unit was significantly in excess of the carrying value.
We completed the annual qualitative goodwill impairment test as of October 1, 2024 and concluded that there was no impairment to goodwill as the fair value of the reporting unit was significantly in excess of the carrying value.
Moreover, a -38- Table of Contents significant number of biologics are expected to lose exclusivity over the next decade, representing a large opportunity for more biosimilar approvals. • Increased Competitive Pressures : The markets in which we conduct our business and the pharmaceutical industry in general are highly competitive and highly regulated.
Moreover, a significant number of biologics are expected to lose exclusivity over the next decade, representing a large opportunity for more biosimilar approvals. • Increased Competitive Pressures : The markets in which we conduct our business and the pharmaceutical industry in general are highly competitive and highly regulated.
We record accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. -46- Table of Contents Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable.
We record accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable.
We are a global health care company with a focus on improving the health of women throughout their lives. We develop and deliver innovative health solutions through a portfolio of prescription therapies and medical devices within women's health, biosimilars and established brands. We have a portfolio of more than 60 medicines and products across a range of therapeutic areas.
We are a global healthcare company with a primary focus on improving the health of women throughout their lives. We develop and deliver innovative health solutions through a portfolio of prescription therapies and medical devices within women’s health, biosimilars and established brands. We have a portfolio of more than 70 medicines and products across a range of therapeutic areas.
These effective income tax rates reflect the beneficial impact of foreign earnings, offset by the impact of U.S. inclusions under the Global Intangible Low-Taxed Income regime and a partial valuation allowance recorded against non-deductible U.S. interest expense.
The effective income tax rate reflects the beneficial impact of foreign earnings, offset by the impact of U.S. inclusions under the Global Intangible Low-Taxed Income regime and a partial valuation allowance recorded against non-deductible U.S. interest expense.
Liabilities for all environmental matters that are probable and reasonably estimable have been accrued and totaled $19 million and $20 million at December 31, 2023 and 2022, respectively.
Liabilities for all environmental matters that are probable and reasonably estimable have been accrued and totaled $16 million and $19 million at December 31, 2024 and 2023, respectively.
Contractual Obligations Our contractual obligations as of December 31, 2023, which require material cash requirements in the future, consist of contractual milestones, purchase obligations, lease obligations and the settlement of certain tax matters. Contractual milestones are potential payments based upon the achievement of specified milestones associated with business development transactions.
Contractual Obligations Our contractual obligations as of December 31, 2024, which require material cash requirements in the future, consist of contractual milestones, purchase obligations and lease obligations. Contractual milestones are potential payments based upon the achievement of specified milestones associated with business development transactions.
Pension Our pension plans are calculated using actuarial assumptions including a discount rate for plan benefit obligations and an expected rate of return on plan assets. These significant assumptions are reviewed annually and are disclosed in Note 15 "Pension and Other Postretirement Benefit Plans" to the Consolidated Financial Statements.
Pension Our pension plans are calculated using actuarial assumptions including a discount rate for plan benefit obligations and an expected rate of return on plan assets. These significant assumptions are reviewed annually and are disclosed in Note 14 “Pension and Other Postretirement Benefit Plans” to the Consolidated Financial Statements included in this report.
As of December 31, 2023, total payments due for debt obligations are $8.8 billion and extend through 2031. Amounts due within the next twelve months are $9 million. Lease obligations exclude reasonably certain lease renewals that have not yet been executed. As of December 31, 2023, total payments due for lease obligations are $189 million and extend through 2041.
As of December 31, 2024, total payments due for debt obligations are $9.0 billion and extend through 2034. Amounts due within the next twelve months are $8 million. Lease obligations exclude reasonably certain lease renewals that have not yet been executed. As of December 31, 2024, total payments due for lease obligations are $177 million and extend through 2041.
The increase in accrued rebates in 2023 is attributable to a wholesaler buy-in in conjunction with the exit of the IOM with Merck for the Follistim product.
The increase in accrued rebates in 2023 is attributable to a wholesaler buy-in in conjunction with the exit of the interim operating model with Merck for the Follistim product.
We believe that there are no compliance issues associated with applicable environmental laws and regulations that would have a material adverse effect on us. Expenditures for remediation and environmental liabilities were $2 million in 2023, and are estimated at $15 million in the aggregate for the years 2024 through 2028.
We believe that there are no compliance issues associated with applicable environmental laws and regulations that would have a material adverse effect on us. Expenditures for remediation and environmental liabilities were $3 million in 2024, and are estimated at $14 million in the aggregate for the years 2025 through 2029.
In an asset acquisition, acquired IPR&D with no alternative future use is charged to expense and contingent consideration is not recognized at the acquisition date. Product development milestones are recognized upon achievement and sales-based milestones are recognized when the milestone is deemed probable of being achieved.
In an asset acquisition, acquired in-process research and development (“IPR&D”) with no alternative future use is charged to expense and contingent consideration is not recognized at the acquisition date. Product development milestones are recognized upon achievement and sales-based milestones are recognized when the milestone is deemed probable of being achieved. No goodwill is recorded in an asset acquisition.
VBP in China had a $95 million negative impact on our sales during the year ended December 31, 2023, compared to the year ended December 31, 2022. We expect VBP to impact our established brands product portfolio for the next several quarters. Our operations include a portfolio of products.
VBP in China had a $13 million negative impact on our sales during the year ended December 31, 2024. We expect VBP to continue to impact our established brands product portfolio for the next several quarters. Our operations include a portfolio of products.
We did not have impairment charges as of December 31, 2023. We recorded impairment charges of $9 million and $7 million as of December 31, 2022 and 2021 respectively. See Note 13 "Intangibles" to the Consolidated Financial Statements included in this report for additional details on Intangibles.
We did not have impairment charges as of December 31, 2024 and 2023. We recorded impairment charges of $9 million as of December 31, 2022. See Note 11 “Intangibles” to the Consolidated Financial Statements included in this report for additional details on Intangibles.
The accrued balances relative to these provisions included in accounts receivable and accrued and other current liabilities were $87 million and $417 million, respectively, at December 31, 2023, $78 million and $307 million, respectively, at December 31, 2022 and $54 million and $275 million, respectively, at December 31, 2021.
The accrued balances relative to these provisions included in accounts receivable and accrued and other current liabilities were $100 million and $380 million, respectively, at December 31, 2024, $87 million and $417 million, respectively, at December 31, 2023 and $78 million and $307 million, respectively, at December 31, 2022.
Unless otherwise indicated, trademarks appearing in italics throughout this document are trademarks of, or are used under license by our companies. Key Trends Affecting Our Results of Operations • Generic Competition : The majority of our established brands products are beyond market exclusivity.
Unless otherwise indicated, trademarks appearing in italics throughout this document are trademarks of, or are used under license by our companies. Key Trends Affecting Our Results of Operations • Generic Competition : Except for Emgality , Rayvow and Vtama , our established brands products are beyond market exclusivity.
Purchase obligations are enforceable and legally binding obligations for purchases of goods and services which include inventory purchase commitments. As of December 31, 2023, total payments due for purchase obligations are $1.2 billion and extend through 2031. Amounts due within the next twelve months are $376 million. Long-term debt consists of both fixed and variable-rate instruments.
Purchase obligations are enforceable and legally binding obligations for purchases of goods and services which include inventory purchase commitments. As of December 31, 2024, total payments due for purchase obligations are $850 million and extend through 2032. Amounts due within the next twelve months are $356 million. Long-term debt consists of both fixed and variable-rate instruments.
See Note 3 "Summary of Accounting Policies" to the Consolidated Financial Statements included in this report for additional details on our revenue recognition policy.
See Note 2 “Summary of Accounting Policies” to the Consolidated Financial Statements included in this report for additional details on our revenue recognition policy.
Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired. Goodwill is evaluated for impairment as of October 1 each year, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that fair value is less than carrying value.
Goodwill is evaluated for impairment as of October 1 each year, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that fair value is less than carrying value.
Sales of Diprospan , a corticosteroid approved for treatment of a wide range of inflammatory conditions, declined 25% for the year ended December 31, 2023, compared to 2022, due to manufacturing issues resulting from the Market Action. In the first quarter of 2023, we resolved the regulatory inspection findings. Sales have not yet recovered.
Sales of Diprospan , a corticosteroid approved for treatment of a wide range of inflammatory conditions, increased 52% for the year ended December 31, 2024, compared to 2023, due to recovery from the manufacturing issues resulting from the Market Action. In the first quarter of 2023, we resolved the regulatory inspection findings.
We recorded sales of $44 million during the year ended December 31, 2023, reflecting an increase from modest sales during 2022 in markets outside of the United States and the launch in the United States in July 2023. Hadlima is currently approved in the United States, Australia, Canada, and Israel.
We recorded sales of $142 million during the year ended December 31, 2024, reflecting an increase due to the launch in the United States in July 2023 and a modest increase in international markets. Hadlima is currently approved in the United States, Australia, Canada, and Israel.
The determination of events and the assumptions utilized in our quantification of valuation reserves may require judgment. No material adjustments have been required to our inventory reserve estimates for the periods presented. Adverse changes in assumptions utilized in our inventory reserve calculations could result in an increase to our inventory valuation reserves and higher cost of sales.
The determination of events and the assumptions utilized in our quantification of valuation reserves may require judgment. No material adjustments have been required to our inventory reserve estimates for the periods presented.
Ontruzant is a biosimilar to Herceptin (trastuzumab) for the treatment of HER2-overexpressing breast cancer and HER2-overexpressing metastatic gastric or gastroesophageal junction adenocarcinoma. Sales for the year ended December 31, 2023, compared to 2022, increased 28% driven by the timing of tenders in Brazil and increased demand partially offset by the competitive pressures in Europe.
Ontruzant is a biosimilar to Herceptin 2 (trastuzumab) for the treatment of HER2-overexpressing breast cancer and HER2-overexpressing metastatic gastric or gastroesophageal junction adenocarcinoma. Sales for the year ended December 31, 2024, compared to 2023, declined 9%, driven by lower demand in the United States and Europe partially offset by increased demand as a result of tenders in Brazil.
The LARC market is expected to continue to be an important and large segment of the overall contraception market as payors, providers and patients consider the benefits of long acting and highly effective options including Nexplanon. • Increased Access to Fertility Solutions : With the global trend toward declining birthrates, governments and payors are implementing favorable policies across major markets that, in turn, improve access to care and drives growth for infertility therapies. • Growing Acceptance of Biosimilars : Biologics continue to experience strong growth trends.
Despite an increasingly diverse market of contraception methods (including the over-the-counter birth control pill), payors, providers, and patients continue to believe in the benefits of long-acting and highly effective options such as Nexplanon . • Increased Access to Fertility Solutions : With the global trend toward declining birthrates, governments and payors are implementing favorable policies across major markets that, in turn, improve access to care and drives growth for infertility therapies. • Growing Acceptance of Biosimilars : The market for biologics continues to experience strong growth trends.
Hadlima is a biosimilar to Humira (adalimumab) for the treatment of certain inflammatory diseases. We have commercialization rights to Hadlima in countries outside of the EU, Korea, China, Turkey, and Russia.
We have commercialization rights to Brenzys in countries outside of the United States, Europe, Korea, China, and Japan. Hadlima is a biosimilar to Humira 2 (adalimumab) for the treatment of certain autoimmune and autoinflammatory conditions. We have commercialization rights to Hadlima in countries outside of the EU, Korea, China, Turkey, and Russia.
While we will continue to monitor the impacts of the Ukraine-Russia war and the Hamas-Israel war, as of December 31, 2023, our assets in Ukraine, Russia and Israel are not material.
For the year ended December 31, 2024 and 2023, our combined revenues from Ukraine, Russia and Israel were approximately 2% of total revenues. While we will continue to monitor the impacts of the Ukraine-Russia war and the Hamas-Israel conflict, as of December 31, 2024, our assets in Ukraine, Russia and Israel are not material.
Sales increased 23% for the year ended December 31, 2023, compared to 2022, driven primarily by continued demand growth in the United States and Canada. We have commercialization rights to Renflexis in countries outside Europe, Korea, China, Turkey, and Russia.
Sales declined 1% for the year ended December 31, 2024, compared to 2023, primarily due to unfavorable discount rates in the United States partially offset by demand growth in the United States and Canada. We have commercialization rights to Renflexis in countries outside of Europe, Korea, China, Turkey, and Russia.
Operating Results Sales Overview Year Ended December 31, % Change % Change Excluding Foreign Exchange % Change % Change Excluding Foreign Exchange ($ in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 United States $ 1,478 $ 1,437 $ 1,383 3 % 3 % 4 % 4 % International 4,785 4,737 4,921 1 4 (4) 4 Total $ 6,263 $ 6,174 $ 6,304 1 % 3 % (2) % 4 % Worldwide sales were $6.3 billion for the year ended December 31, 2023, an increase of 1% compared with 2022.
In January 2025, we paid $20 million related to the milestones. -41- Table of Contents Operating Results Sales Overview Year Ended December 31, % Change % Change Excluding Foreign Exchange % Change % Change Excluding Foreign Exchange ($ in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 United States $ 1,572 $ 1,478 $ 1,437 6 % 6 % 3 % 3 % International 4,831 4,785 4,737 1 3 1 4 Total $ 6,403 $ 6,263 $ 6,174 2 % 3 % 1 % 3 % Worldwide sales were $6.4 billion for the year ended December 31, 2024, an increase of 2%, compared to 2023.
If we determine that substantially all of the fair value of gross assets included in a transaction is concentrated in a single asset (or a group of similar assets), we account for the transaction as an asset acquisition.
We make certain judgments, which include assessment of the inputs, processes, and outputs associated with the acquired set of activities. If we determine that substantially all of the fair value of gross assets included in a transaction is concentrated in a single asset (or a group of similar assets), we account for the transaction as an asset acquisition.
Global sales of Dulera , a combination medicine for the treatment of asthma, increased 8% for the year ended December 31, 2023, compared to 2022, primarily due to the favorable impact from price and increased demand in the United States.
Global sales of Dulera , which is also marketed as Zenhale in certain markets outside of the United States, a combination medicine for the treatment of asthma, increased 5% for the year ended December 31, 2024, compared to 2023, primarily due to the favorable impact of increased demand in the United States and Canada.
This was partially offset by price increases. Worldwide sales of NuvaRing , a vaginal contraceptive product, declined 12% for the year ended December 31, 2023, compared to 2022, due to ongoing generic competition in the United States. We expect a continued decline in NuvaRing sales as a result of generic competition.
Worldwide sales of NuvaRing , a vaginal contraceptive product, declined 35% for the year ended December 31, 2024, compared to 2023, due to ongoing generic competition and the negative impact of increased government discount rates in the United States. We expect a continued decline in NuvaRing sales as a result of generic competition.
For tax positions that are not more likely than not of being sustained upon audit, we do not recognize any portion of the benefit in the financial statements.
For tax positions that are not more likely than not of being sustained upon audit, we do not recognize any portion of the benefit in the financial statements. We recognize interest and penalties associated with uncertain tax positions as a component of Taxes on Income in the consolidated statement of income.
Worldwide sales of ganirelix acetate injection, a fertility treatment, declined 10% for the year ended December 31, 2023, compared to 2022, primarily due to unfavorable discount rates in the United States and increased generic competition in Europe. -40- Table of Contents Other Women's Health Worldwide sales of Jada, a device intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted, increased 113% for the year ended December 31, 2023, compared to 2022.
Other Women’s Health Worldwide sales of Jada, a device intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted, increased 40% for the year ended December 31, 2024, compared to 2023.
We have commercialization rights to Ontruzant in countries outside of Korea and China. Brenzys is a biosimilar to Enbrel (etanercept) for the treatment of certain inflammatory diseases. Sales in the year ended December 31, 2023, compared to 2022, remained substantially consistent. We have commercialization rights to Brenzys in countries outside of the United States, Europe, Korea, China, and Japan.
We have commercialization rights to Ontruzant in all countries except in Korea and China. Brenzys is a biosimilar to Enbrel 2 (etanercept) for the treatment of certain inflammatory diseases. Sales for the year ended December 31, 2024, compared to 2023, increased 6%, driven by increased demand in Canada.
The timing of the payments of the contractual milestones cannot be estimated and the likelihood of achieving the milestones cannot be determined. As of December 31, 2023, total potential payments due for contractual milestones are $1.9 billion. Potential amounts due within the next twelve months are $98 million.
The timing of the payments of the contractual milestones are uncertain and the likelihood of achieving -48- Table of Contents the milestones cannot be determined. As of December 31, 2024, total potential payments for contractual milestones are $3.4 billion. Potential amounts to be paid within the next twelve months are $218 million.
Net cash used in financing activities was $569 million for the year ended December 31, 2023 compared to $433 million for the same period in the prior year. The increase in cash used in financing activities was driven by the $250 million voluntary prepayment on the U.S.
Net cash used in financing activities was $368 million for the year ended December 31, 2024, compared to $569 million for the same period in the prior year.
We anticipate we will incur costs associated with this separation, including but not limited to accelerated depreciation, exit premiums and fees, technology transfer costs, stability and qualification batch costs, one-time resourcing costs, regulatory and filing costs, capital investment, and inventory stock bridges. -44- Table of Contents For the year ended December 31, 2023 and 2022, our combined revenues from Ukraine, Russia and Israel were approximately 2% of total revenues.
We anticipate we will incur costs associated with this separation, including but not limited to accelerated depreciation, exit premiums and fees, technology transfer costs, stability and qualification batch costs, one-time resourcing costs, regulatory and filing costs, capital investment, and inventory stock bridges.
Any excess of the purchase price over the estimated fair values of the net assets acquired is recognized as goodwill. Business acquisition costs are expensed when incurred. The fair values of intangible assets are determined utilizing information available near the acquisition date based on expectations and assumptions that we deem reasonable.
Any excess of the purchase price over the estimated fair values of the net assets acquired is recognized as goodwill. Business acquisition costs are expensed when incurred.
As part of this initiative, we will continue to separate our supply chain through planned exits from supply agreements from Merck through 2031. This will enable us to redefine our appropriate sourcing strategy, and move to fit-for-purpose supply chains, while focusing on delivering efficiencies.
This will enable us to redefine our appropriate sourcing strategy, and move to fit-for-purpose supply chains, while focusing on delivering efficiencies.
Because of the uncertainty inherent in such estimates, actual results may differ from these estimates. Revenue Recognition Our accounting policy for revenue recognition has a substantial impact on reported results and relies on certain estimates.
Revenue Recognition Our accounting policy for revenue recognition has a substantial impact on reported results and relies on certain estimates.
Worldwide sales of Marvelon and Mercilon , combined oral hormonal daily contraceptive pills not approved or marketed in the United States but available in certain countries outside the United States, increased 22% for the year ended December 31, 2023, compared to 2022, as a result of the transaction with Bayer Healthcare where we gained rights in China during the second quarter of 2022 and in Vietnam during the third quarter of 2022.
Worldwide sales of Marvelon and Mercilon , combined oral hormonal daily contraceptive pills not approved or marketed in the United States, but available in certain countries outside the United States, remained consistent for the year ended December 31, 2024, compared to 2023, as a result of increased demand in various international markets offset by slight declines in China and Japan.
General The following Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to assist the reader in understanding our financial condition and results of operations for the years ended December 31, 2023 and 2022 and should be read in conjunction with our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K to enhance the understanding of our results of operations, financial condition and cash flows.
Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law. -39- Table of Contents General The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist the reader in understanding our financial condition and results of operations for the years ended December 31, 2024 and 2023 and should be read in conjunction with our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K to enhance the understanding of our results of operations, financial condition and cash flows.
These factors may be based on inaccurate assumptions and are subject to a broad variety of other risks and uncertainties. No forward-looking statement can be guaranteed and actual future results may vary materially. The factors described in Part I. Item 1A.
One must carefully consider any such statement and should understand that many factors could cause actual results to differ materially from our forward-looking statements. These factors may be based on inaccurate assumptions and are subject to a broad variety of other risks and uncertainties. No forward-looking statement can be guaranteed and actual future results may vary materially.
Net cash provided by operating activities was $799 million for the year ended December 31, 2023 compared to $858 million for the same period in the prior year. The decrease in cash provided by operating activities was primarily attributable to the changes in working capital balances, offset by an increase in net income.
Net cash provided by operating activities was $939 million for the year ended December 31, 2024, compared to $799 million for the same period in the prior year. The increase in cash provided by operating activities was primarily attributable to our favorable operating performance and cash cycle working capital, partially offset by higher cash taxes paid and higher severance-related payments.
Worldwide sales were negatively impacted by approximately 2%, or $117 million, due to unfavorable foreign exchange.
Worldwide sales during the year ended December 31, 2024 were negatively impacted by approximately 1%, or $77 million, due to unfavorable foreign exchange.
Biosimilars Year Ended December 31, % Change % Change Excluding Foreign Exchange % Change % Change Excluding Foreign Exchange ($ in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Renflexis $ 278 $ 226 $ 186 23 % 24 % 21 % 22 % Ontruzant 155 122 126 28 27 (4) — Brenzys 73 75 63 (2) 1 19 24 Hadlima 44 19 13 125 130 51 57 Renflexis is a biosimilar to Remicade (infliximab) for the treatment of certain inflammatory diseases.
The sales increase is due to continued uptake in the United States following the Jada launch in early 2022. -43- Table of Contents Biosimilars Year Ended December 31, % Change % Change Excluding Foreign Exchange % Change % Change Excluding Foreign Exchange ($ in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Renflexis $ 274 $ 278 $ 226 (1) % (1) % 23 % 24 % Ontruzant 141 155 122 (9) (9) 28 27 Brenzys 77 73 75 6 6 (2) 1 Hadlima 142 44 19 224 225 125 130 Renflexis is a biosimilar to Remicade 2 (infliximab) for the treatment of certain autoimmune conditions.
We periodically evaluate whether current facts or circumstances indicate that the carrying values of our long-lived assets to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of the undiscounted future cash flows of these assets, or appropriate asset groupings, is compared to the carrying value to determine whether an impairment exists.
If such circumstances are determined to exist, an estimate of the undiscounted future cash flows of these assets, or appropriate asset groupings, is compared to the carrying value to determine whether an impairment exists. If the asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value.
In developing the expected rate of return, we consider long-term compound annualized returns of historical market data, current market conditions and actual returns on our plan assets. Using this reference information, we develop forward-looking return expectations for each asset category and a weighted-average expected long-term rate of return for a target portfolio allocated across these investment categories.
Using this reference information, we develop forward-looking return expectations for each asset category and a weighted-average -52- Table of Contents expected long-term rate of return for a target portfolio allocated across these investment categories. The expected portfolio performance reflects the contribution of active management as appropriate.
Global sales of Nasonex , an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, increased 6% for the year ended December 31, 2023, compared to 2022, due to increased demand across several markets partially offset by a $10 million milestone related to a regulatory approval received during the first quarter of 2022.
Global sales of Nasonex , an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, increased 4% for the year ended December 31, 2024, compared to 2023, respectively, due to increased demand across international markets.
Lilly will remain the marketing authorization holder and will manufacture the products for sale. Under the terms of the agreement, we paid an upfront payment of $50 million, upon closing of the transaction in January 2024, and will pay sales-based milestone payments.
Under the terms of the agreement, we paid an upfront payment of $50 million upon closing of the transaction in January 2024, and will recognize sales-based milestones when the achievement is deemed probable.
Highlights of the sales of our products for the year ended December 31, 2023 and 2022 are provided below. See Note 6 "Product and Geographic Information" to the Consolidated Financial Statements for further details on sales of our products.
Highlights of the sales of our products for the year ended December 31, 2024 and 2023 are provided below.
Critical Accounting Estimates The audited annual consolidated financial statements are prepared in conformity with U.S. GAAP and, accordingly, include certain amounts that are based on management's best estimates and judgments. A discussion of accounting estimates considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates are disclosed below.
T he dividend is payable on March 13, 2025, to stockholders of record at the close of business on February 24, 2025 . Critical Accounting Estimates The audited annual consolidated financial statements are prepared in conformity with U.S. GAAP and, accordingly, include certain amounts that are based on management’s best estimates and judgments.
Impairments of Long-Lived Assets We assess changes in economic, regulatory and legal conditions and make assumptions regarding estimated future cash flows in evaluating the value of our property, plant and equipment, goodwill and intangible assets. The judgments made in evaluating impairment of long-lived intangibles can materially affect our results of operations.
We also do not believe that these expenditures should result in a material adverse effect on our financial condition, results of operations or liquidity for any year. -50- Table of Contents Impairments of Long-Lived Assets We assess changes in economic, regulatory and legal conditions and make assumptions regarding estimated future cash flows in evaluating the value of our property, plant and equipment, goodwill and intangible assets.
Summarized information about changes in the aggregate customer discount accrual related to sales in the United States is as follows: Year Ended December 31, ($ in millions) 2023 2022 2021 Balance January 1 $ 385 $ 329 $ 343 Provision 2,640 2,221 2,000 Payments (1) (2,521) (2,165) (2,014) Balance December 31 $ 504 $ 385 $ 329 (1) Includes 2021 payments made by Merck on behalf of us for the period prior to the Separation date.
There were no material adjustments to estimates associated with the aggregate customer discount provision in 2024, 2023, or 2022. -49- Table of Contents Summarized information about changes in the aggregate customer discount accrual related to sales in the United States is as follows: Year Ended December 31, ($ in millions) 2024 2023 2022 Balance January 1 $ 504 $ 385 $ 329 Provision 3,024 2,640 2,221 Payments (1) (3,048) (2,521) (2,165) Balance December 31 $ 480 $ 504 $ 385 (1) Includes $48 million of liabilities assumed as part of the Dermavant acquisition.
Other Year Ended December 31, % Change % Change Excluding Foreign Exchange % Change % Change Excluding Foreign Exchange ($ in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Proscar $ 97 $ 101 $ 117 (3) % 1 % (14) % (9) % Worldwide sales of Proscar , a medicine for the treatment of symptomatic benign prostate enlargement, for the year ended December 31, 2023, compared to 2022 were substantially consistent. -42- Table of Contents Costs, Expenses and Other Year Ended December 31, % Change ($ in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Cost of sales $ 2,515 $ 2,294 $ 2,382 10 % (4) % Selling, general and administrative 1,893 1,704 1,668 11 2 Research and development 528 471 339 12 39 Acquired in-process research and development and milestones 8 107 104 (93) 3 Restructuring costs 62 28 3 * * Interest expense 527 422 258 25 64 Exchange losses 42 11 4 * * Other expense, net 15 15 17 — (12) $ 5,590 $ 5,052 $ 4,775 11 % 6 % * Calculation not meaningful.
Gross Profit, Expenses and Other Year Ended December 31, % Change ($ in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Cost of sales $ 2,688 $ 2,515 $ 2,294 7 % 10 % Gross profit 3,715 3,748 3,880 (1) (3) Selling, general and administrative 1,760 1,893 1,704 (7) 11 Research and development 469 528 471 (11) 12 Acquired in-process research and development and milestones 81 8 107 * (93) Restructuring costs 31 62 28 (50) * Interest expense 520 527 422 (1) 25 Exchange losses 26 42 11 (38) * Other expense, net 21 15 15 40 — * Calculation not meaningful.
We will continue to assess future impacts of this legislation. Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $693 million. We have historically generated and expect to continue to generate positive cash flow from operations.
We have evaluated the impact of this for 2024 and it does not have a material effect on a full year basis. -47- Table of Contents Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $675 million. We have historically generated and expect to continue to generate positive cash flow from operations.
Acquired In-Process Research and Development and Milestones For the year ended December 31, 2023, acquired in-process research and development and milestones of $8 million related to the Claria transaction.
For the year ended December 31, 2023 acquired in-process research and development and milestones of $8 million represent the upfront and development milestones related to the Claria transaction. See Note 3 “Acquisitions and Licensing Arrangements” to the Consolidated Financial Statements included elsewhere in this report for further information regarding our agreements with Henlius and Cirqle.
The expected portfolio performance reflects the contribution of active management as appropriate. Stock-Based Compensation We expense all stock-based payment awards to employees, including grants of stock options, over the requisite service period based on the grant date fair value of the awards.
Stock-Based Compensation We expense all stock-based payment awards to employees, including grants of stock options, over the requisite service period based on the grant date fair value of the awards. The fair value of certain stock-based awards is determined using the Black-Scholes option-pricing model which uses both historical and current market data to estimate the fair value.
The loss of exclusivity negatively impacted sales of certain of our products by approximately $18 million during the year ended December 31, 2023, compared to the year ended December 31, 2022, due to the decrease in volume period over period, which mainly impacted NuvaRing in the United States.
LOE negatively impacted sales of certain of our products by approximately $57 million during the year ended December 31, 2024, based on the decrease in volume period over period, which was primarily driven by the LOE of Atozet in France, Spain, and Japan.
For the year ended December 31, 2022 acquired in-process research and development and milestones represents the upfront and development milestones related to our research collaboration and license agreement with Cirqle and our agreement with Henlius for the license of certain biosimilar candidates.
Acquired In-Process Research and Development and Milestones For the year ended December 31, 2024, acquired in-process research and development and milestones of $81 million primarily represent the research and development milestones of $70 million for our agreement with Henlius and $10 million for our agreement with Cirqle, which were determined to be probable of being achieved.
In addition, Nexplanon may be eligible for an additional three years of market exclusivity in the United States subsequent to the expiration of certain key patents in 2027, although there can be no assurance that such an additional term will be granted. • Historical Shift Towards Long-Acting Reversible Contraceptives: Daily contraceptive pills are by far the largest contraception market segment, with almost half of all women choosing a hormonal contraceptive electing this particular method.
See Note 18 “Contingencies—Other Matters” to the Consolidated Financial Statements in this report. • Historical Shift Towards Long-Acting Reversible Contraceptives: Daily contraceptive pills are by far the largest contraception market segment, with almost half of all women choosing a hormonal contraceptive electing this particular method.
Fertility Worldwide sales of Follistim AQ , a fertility treatment, increased 14% for the year ended December 31, 2023, compared to 2022, due to a one-time buy-in as a result of the exit of the IOM in the United States, increased patient demand in the United States and volume recovery in China related to the COVID-19 negative impact during the first half of the year.
Fertility Worldwide sales of Follistim AQ , a fertility treatment, declined 10% for the year ended December 31, 2024, compared to 2023, due to a one-time buy-in as a result of our exit from our interim operating model agreement in the United States with Merck, during the fourth quarter of 2023, and unfavorable discount rates in the United States, partially offset by increased demand in the United States and launches in various international markets.
Such forward-looking statements include, but are not limited to, statements relating to our growth and acquisition strategies, financial results, product development, product approvals, product potential and development programs. One must carefully consider any such statement and should understand that many factors could cause actual results to differ materially from our forward-looking statements.
One can also identify them by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements include, but are not limited to, statements relating to our growth and acquisition strategies, financial results, product development, product approvals, product potential and development programs.
Sales of Atozet , a medicine for lowering LDL cholesterol, increased 14% for the year ended December 31, 2023, compared to 2022, primarily due to increased demand in various international markets. -41- Table of Contents Combined global sales of Cozaar and Hyzaar , medicines for the treatment of hypertension, declined 13% for the year ended December 31, 2023, compared to 2022, primarily due to ongoing generic competition.
Worldwide sales of ganirelix acetate injection, a fertility treatment, declined 1% for the year ended December 31, 2024, compared to 2023, primarily due to generic competition, partially offset by increased demand in the United States and various international markets.
Recently Issued Accounting Standards For a discussion of recently issued accounting standards, see Note 3 "Summary of Accounting Policies" to the Consolidated Financial Statements included in this report.
This method incorporates various assumptions such as the risk-free interest rate, expected volatility, expected dividend yield and expected life of the options. Recently Issued Accounting Standards For a discussion of recently issued accounting standards, see Note 2 “Summary of Accounting Policies” to the Consolidated Financial Statements included in this report.
If the asset is determined to be impaired, the loss is measured based on the difference between the asset's fair value and its carrying value. If quoted market prices are not available, we estimate fair value using a discounted value of estimated future cash flows approach.
If quoted market prices are not available, we estimate fair value using a discounted value of estimated future cash flows approach. Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired.
Cost of Sales Cost of sales increased 10% for the year ended December 31, 2023, compared to 2022, primarily due to foreign exchange translation, higher employee-related and material and distribution related costs, which increased as a result of inflationary pressures, and product mix.
Cost of Sales Cost of sales increased 7% for the year ended December 31, 2024, compared to 2023, primarily due to higher sales volume, higher inflation impacts to material and distribution costs and amortization of $7 million associated with the inventory fair value adjustment related to the Dermavant acquisition purchase accounting, partially offset by foreign exchange translation.
Non-Opioid Pain, Bone and Dermatology Year Ended December 31, % Change % Change Excluding Foreign Exchange % Change % Change Excluding Foreign Exchange ($ in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Arcoxia $ 257 $ 241 $ 244 7 % 12 % (1) % 4 % Diprospan 91 122 125 (25) (22) (3) % 2 % Sales of Arcoxia , a medicine for the treatment of arthritis and pain, increased 7% for the year ended December 31, 2023, compared to 2022, primarily due to customers buying patterns and higher demand in various international markets.
Non-Opioid Pain, Bone and Dermatology Year Ended December 31, % Change % Change Excluding Foreign Exchange % Change % Change Excluding Foreign Exchange ($ in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Arcoxia $ 270 $ 257 $ 241 5 % 7 % 7 % 12 % Diprospan 139 91 122 52 55 (25) % (22) % Vtama 12 — — * * — % — % * Calculation not meaningful.
We estimate that we will continue to invest in new capital projects in 2024, for ongoing projects to stand up Organon, principally related to investments in information technology. As part of our post-spinoff plan, we have approved an initiative to further optimize our manufacturing and supply network.
As part of our post-spinoff plan, we have approved an initiative to further optimize our manufacturing and supply network. As part of this initiative, we will continue to separate our supply chain through planned exits from supply agreements from Merck through 2031.
Restructuring Costs For the year ended December 31, 2023, we incurred $62 million of headcount-related restructuring expense, of which $58 million is due to activities initiated in the fourth quarter related to the ongoing optimization of our internal operations.
Restructuring Costs For the year ended December 31, 2024, we incurred $31 million of headcount-related restructuring expense related to the ongoing optimization of our internal operations, primarily the research and development function. During the first quarter of 2025, we implemented additional restructuring initiatives that will drive operational efficiencies in 2025, and will result in an approximate 5% headcount reduction.
Cardiovascular Year Ended December 31, % Change % Change Excluding Foreign Exchange % Change % Change Excluding Foreign Exchange ($ in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Zetia/Vytorin $ 436 $ 488 $ 542 (11) % (9) % (10) % (3) % Atozet 519 457 458 14 13 — 11 Cozaar/Hyzaar 281 323 357 (13) (9) (10) (3) Combined global sales of Zetia and Vytorin , medicines for lowering LDL cholesterol, declined 11% for the year ended December 31, 2023, compared to 2022, primarily driven by the negative impact of VBP in China.
Cardiovascular Year Ended December 31, % Change % Change Excluding Foreign Exchange % Change % Change Excluding Foreign Exchange ($ in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Zetia/Vytorin (1) $ 425 $ 451 $ 500 (6) % (4) % (10) % (8) % Atozet 473 519 457 (9) (8) 14 13 Cozaar/Hyzaar 243 281 323 (14) (11) (13) (9) (1) Sales of the authorized generic version of Zetia were previously included in Other Cardiovascular.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed1 unchanged
Biggest changeWe are primarily exposed to foreign exchange risk with respect to forecasted transactions and net assets denominated in the euro, Swiss franc, and Japanese yen. We established a balance sheet risk management program and a net investment hedge to mitigate against volatility of changes in foreign exchange rates.
Biggest changeWe are primarily exposed to foreign exchange risk with respect to forecasted transactions and net assets denominated in the euro, Brazilian real, Japanese yen, and Swiss franc. We established a balance sheet risk management program and a net investment hedge to mitigate against volatility of changes in foreign exchange rates.
We do not hold any derivative contracts that hedge our interest rate risk; however, we may consider entering into such contracts in the future. We estimate a hypothetical 10% adverse movement in interest rates of our variable rate debt would not materially change annual interest expense. -49- Table of Contents
We do not hold any derivative contracts that hedge our interest rate risk; however, we may consider entering into such contracts in the future. We estimate a hypothetical 10% adverse movement in interest rates of our variable rate debt would not materially change annual interest expense. -53- Table of Contents
See Note 14 "Financial Instruments" to the Consolidated Financial Statements included in this report for further information on our risk management. Interest Rate Risk Our long-term debt portfolio consists of both fixed and variable-rate instruments. For any variable rate debt, interest rate changes in the underlying index rates will impact future interest expense.
See Note 13 “Financial Instruments” to the Consolidated Financial Statements included in this report for further information on our risk management. Interest Rate Risk Our long-term debt portfolio consists of both fixed and variable-rate instruments. For any variable rate debt, interest rate changes in the underlying index rates will impact future interest expense.

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