Regeneron Pharmaceuticals Inc

Market position and competition · Patent expiration and generic competition

Following the expiration of the U.S. regulatory exclusivity period for EYLEA (i.e., the period during which no biosimilar product can be approved by the FDA) in May 2024, several biosimilar versions of EYLEA have been approved by the FDA, and one such product has launched in the United States. EYLEA and/or EYLEA HD net product sales recorded by us are likely to be negatively impacted by biosimilar competition in the United States, which may have a material adverse impact on our results of operations.

Strategic execution · Merger acquisition and divestiture risks

We have undertaken and may in the future undertake strategic acquisitions, and any difficulties from integrating such acquisitions or failure to realize the expected benefits from such acquisitions could adversely affect our business, operating results, and financial condition. Integrating any newly acquired business could be expensive and time consuming and could result in the disruption of our ongoing business.

Customer and revenue · Reimbursement and pricing pressure healthcare or insurance

Sales of our marketed products in the United States are dependent, in large part, on the availability and extent of reimbursement from third-party payors, including private payor healthcare and insurance programs, health maintenance organizations, pharmacy benefit management companies (PBMs), and government programs such as Medicare and Medicaid. If these entities do not provide coverage and reimbursement with respect to our marketed products or provide an insufficient level of coverage and reimbursement, such products may be too costly for many patients to afford them, and physicians may not prescribe them.

Customer and revenue · Customer concentration and key customer dependence

We are dependent upon a small number of customers for a significant portion of our revenue. For the years ended December 31, 2024 and 2023, our product sales to two distributor customers accounted on a combined basis for 74% and 76% of our total gross product revenue, respectively. The loss of any large distributor customer, a significant reduction in sales we make to them, or any failure to pay for the products we have shipped to them could adversely affect our results of operations.

Innovation and product development · Clinical trial and regulatory approval risks

Many of our products are intended to be used in combination with drug-delivery devices, which may result in additional regulatory, commercialization, and other risks. The success of our products and product candidates may depend to a significant extent on the performance of such devices, some of which may be novel or comprised of complex components.

Strategic execution · Merger acquisition and divestiture risks

We have undertaken and may in the future undertake strategic acquisitions, and any difficulties from integrating such acquisitions could adversely affect our business, operating results, and financial condition.

Market position and competition · Patent expiration and generic competition

In the United States, the regulatory exclusivity period for EYLEA (i.e., the period during which no biosimilar product can be approved by the FDA) will expire after May 17, 2024. As a result, we face the risk of lower EYLEA net product sales due to biosimilar competition following such expiration, which may have a material adverse impact on our results of operations.

Digital transformation and innovation · Artificial intelligence and automation

Increasing use of social media and artificial intelligence-based platforms could give rise to liability, breaches of data security and privacy laws, or reputational damage. The use of AI solutions by our employees or third parties on which we rely may lead to the impermissible use or public disclosure of confidential information (including personal data and proprietary information) in contravention of our internal policies, data protection laws, other applicable laws, or contractual requirements.

Cybersecurity and data protection · Data breaches and cyber attacks

Significant disruptions of information technology systems or breaches of data security could adversely affect our business. Our business is increasingly dependent on critical, complex, and interdependent information technology systems. The size and complexity of our computer systems make us potentially vulnerable to IT system breakdowns, internal and external malicious intrusion, and computer viruses and ransomware, which may impact product production and key business processes.

Cybersecurity and data protection · Data privacy and protection regulations

We face risks related to the personal data we collect, process, and share. Our ability to conduct our business is significantly dependent on the data that we collect, process, and share in discovering, developing, and commercializing drug products. These data are often considered personal data and are therefore regulated by privacy and data protection laws in and outside the United States.

Natural and catastrophic events · Pandemic and public health crises

Public health outbreaks, epidemics, or pandemics (such as the COVID-19 pandemic) have adversely affected and may in the future adversely affect our business. The COVID-19 pandemic previously adversely affected, and actual or threatened public health outbreaks, epidemics, or pandemics may in the future adversely affect, among other things, the economic and financial markets and labor resources of the countries in which we operate.

Industry regulation · Regulatory compliance and changes

We face risks from the improper conduct of our employees, agents, contractors, or collaborators, including those relating to potential non-compliance with relevant laws and regulations such as the Foreign Corrupt Practices Act and the U.K. Bribery Act. Our business activities outside the United States are subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate.

Legal and litigation · Product liability and warranty claims

If the testing or use of our products harms people, or is perceived to harm them even when such harm is unrelated to our products, we could be subject to costly and damaging product liability claims. The testing, manufacturing, marketing, and sale of drugs for use in people expose us to product liability risk.

Industry regulation · Safety and environmental regulations

Our operations are subject to environmental, health, and safety laws and regulations, including those governing the use of hazardous materials. As a fully integrated biotechnology company with significant research and development and manufacturing operations, we are subject to extensive environmental, health, and safety laws and regulations. The cost of compliance with environmental, health, and safety regulations is substantial.

Legal and litigation · Intellectual property disputes

We may not be able to protect the confidentiality of our trade secrets, and our patents or other means of defending our intellectual property may be insufficient to protect our proprietary rights. Patents or proprietary rights of others may restrict our development, manufacturing, and/or commercialization efforts and subject us to patent litigation and other proceedings that could find us liable for damages.

Industry regulation · Fda drug and device approval

Obtaining and maintaining regulatory approval for drug products is costly, time-consuming, and highly uncertain. If we or our collaborators do not maintain regulatory approval for our marketed products, and obtain regulatory approval for our product candidates or new indications for our marketed products, we will not be able to market or sell them, which would materially and negatively impact our business, prospects, operating results, and financial condition.

Credit and liquidity · Debt service and covenant compliance

Our indebtedness could adversely impact our business. As of December 31, 2024, we had an aggregate of $2.704 billion of outstanding indebtedness under our senior unsecured notes and the lease financing facility. Any such indebtedness could limit our ability to access capital markets and incur additional debt in the future, and require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness.

International and currency · Foreign exchange and currency exposure

Changes in foreign currency exchange rates could have a material adverse effect on our operating results. Our revenue from outside the United States will increase as our products gain marketing approval in such jurisdictions. Our primary foreign currency exposure relates to movements in the Japanese yen, euro, British pound sterling, Canadian dollar, Chinese yuan, and Australian dollar.

International and currency · International operations and emerging markets

We have operations and conduct business in many countries outside the United States and have been significantly expanding the scope of these activities. We are subject to risks related to operating in countries outside the United States, including unfamiliar foreign laws or regulatory requirements, changes in the political or economic condition of a specific country or region, including as a result of the Russia-Ukraine or Hamas-Israel armed conflict, and fluctuations in the value of foreign currency versus the U.S. dollar.

Human capital and workforce · Key personnel dependence and succession

Our business is dependent on our key personnel and will be harmed if we cannot recruit and retain key members of our senior management team, including leaders in our research, development, manufacturing, and commercial organizations. We are highly dependent on certain of our executive officers and other key members of our senior management team, including Leonard S. Schleifer, M.D., Ph.D., our Board co-Chair, President and Chief Executive Officer, and George D. Yancopoulos, M.D., Ph.D., our Board co-Chair, President and Chief Scientific Officer.