ogn-20251231
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 10-K
_____________________
(Mark One)
For the fiscal year ended December 31, 2025
OR
For the transition period from ______ to ______
Commission File No. 001-40235
Organon & Co.
(Exact name of registrant as specified in its charter)
30 Hudson Street, Floor 33
Jersey City New Jersey 07302
(Address of principal executive offices) (zip code)
(Registrant’s telephone number, including area code)(551)430-6900
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock ($0.01 par value) OGN New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting common equity held by non-affiliates of the registrant, computed by reference to the closing price at which the Common Stock was sold as of the end of the second fiscal quarter ended June 30, 2025, was approximately $2.5 billion.
The number of shares of Common Stock outstanding as of the close of business on February 17, 2026: 260,315,650
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III will be incorporated by reference from the Registrant’s definitive proxy statement for its 2026 Annual Meeting of Stockholders (the “2026 Proxy Statement”), which will be filed pursuant to Regulation 14A with the United States Securities and Exchange Commission (“SEC”) within 120 days after the end of the fiscal year to which this report relates.
Table of Contents
Page
Part I
Item 1. Business 3
Item 1A. Risk Factors 17
Item 1B. Unresolved Staff Comments 38
Item 1C. Cybersecurity 39
Item 2. Properties 40
Item 3. Legal Proceedings 40
Item 4. Mine Safety Disclosures 40
Item 6. [ Reserved ] 41
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 57
Item 8. Financial Statements and Supplementary Data 57
Item 9A. Controls and Procedures 106
Item 9B. Other Information 108
Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections 108
Item 10. Directors, Executive Officers and Corporate Governance 109
Item 11. Executive Compensation 109
Item 14. Principal Accounting Fees and Services 109
Item 15. Exhibits, Financial Statement Schedules 109
The following notations in this Annual Report on Form 10-K (this “2025 Form 10-K”) have the meanings as set forth below:
1 Indicates, in this 2025 Form 10-K, brand names of products, which are not available in the United States.
2 Indicates brand names of products that are trademarks not owned by Organon. Specific trademark ownership information is included in the Exhibit Index at the end of this 2025 Form 10-K.
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PART I
Item 1. Business
Overview
Organon & Co. (“Organon,” the “Company,” “we,” “our,” or “us”) is a global healthcare company with a mission to deliver impactful medicines and solutions for a healthier every day. With a portfolio of over 70 products across women’s health and general medicines, which includes biosimilars, Organon focuses on addressing health needs that uniquely, disproportionately or differently affect women, while expanding access to essential treatments in over 140 countries and territories. We sell these products through various channels including drug wholesalers and retailers, hospitals, government agencies and managed healthcare providers such as health maintenance organizations, pharmacy benefit managers and other institutions. We operate six manufacturing facilities, which are located in Belgium, Brazil, Indonesia, Mexico, the Netherlands and the United Kingdom (“UK”). Unless otherwise indicated, trademarks appearing in italics throughout this document are trademarks of, or are used under license by, the Organon group of companies.
Our operations include the following product portfolios:
•Women’s Health: Our women’s health portfolio of products is sold by prescription primarily in two therapeutic areas: contraception, with key brands such as Nexplanon® (etonogestrel implant) (sold as Implanon NXTTM 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 PuregonTM). Nexplanon is a long-acting reversible contraceptive in a class recognized as one of the most effective types of hormonal contraception available to patients with a low long-term average cost. 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. In January 2026, we divested the Jada System to Laborie Medical Technologies Corporation (“Laborie”).
•General Medicines: Our general medicines portfolio includes biosimilars and established brands.
•Biosimilars: Our current biosimilars portfolio spans across immunology and oncology-related treatments. Our oncology biosimilars: Ontruzant® (trastuzumab-dttb), AybintioTM1 (bevacizumab), Bildyos® (denosumab-nxxp) and Bilprevda® (denosumab-nxxp), have been launched in more than 20 countries. Our immunology biosimilars consist of: BrenzysTM1 (etanercept), Renflexis® (infliximab-abda), Hadlima® (adalimumab-bwwd) and Tofidence® (tocilizumab-bavi). Brenzys, Renflexis, and Hadlima have been launched in five countries. In 2025, we launched Bildyos injection 60 mg/mL and Bilprevda injection 120 mg/1.7 mL, biosimilars to Prolia2 (denosumab) and Xgeva2 (denosumab), respectively, in the United States. In 2025, Poherdy® (pertuzumab-dpzb) was approved by the U.S. Food and Drug Administration (“FDA”), and the Company is assessing the future commercial launch of this product.
•Established Brands: We have a portfolio of established brands, which includes brands in cardiovascular, respiratory, dermatology and non-opioid pain management, including Emgality®2 (galcanezumab-gnlm) and Vtama® (tapinarof) cream 1%. Many brands in our established brands portfolio lost exclusivity years ago and have faced generic competition for some time.
Our portfolio of products generates sufficient cash flows to support the Company’s strategic initiatives and future growth opportunities. In addition, we are pursuing opportunities to collaborate with biopharmaceutical innovators looking to commercialize their products by leveraging our scale and presence.
Recent Developments
Debt Reduction: In 2025, we took actions to improve cash available for debt repayment with the goal of accelerating an improvement in our net leverage, including: (i) reducing our dividend payout ratio, (ii) pursuing product divestiture transactions that will strengthen our balance sheet and create future growth opportunities and (iii) decreasing our cost structure. Our efforts included implementing restructuring initiatives aimed at driving operational efficiencies and cost savings initiatives and reducing our outstanding long-term debt. In pursuit of our strategy, in January 2026, we divested the Jada System to Laborie for an aggregate payment of up to $465 million, comprised of consideration of $440 million, subject to certain closing adjustments, plus potential earnout payments of up to $25 million based on the achievement of certain 2026 net sales targets.
In connection with the matters described in Item 9A. “Controls and Procedures”, we experienced changes in our senior leadership. Our business strategy is currently being executed under the leadership of Joseph Morrissey (our former Executive Vice President and Head of Manufacturing & Supply), who now serves as our Interim Chief Executive Officer (“CEO”), and
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Carrie S. Cox (the former Chairman of our Board of Directors (the “Board”)), who assumed the role of Executive Chair for an interim period until a permanent Chief Executive Officer is appointed. We also formed a Search Committee for a new permanent Chief Executive Officer and are currently evaluating candidates for the position.
Products
We are engaged in delivering innovative health solutions through a diverse portfolio of products. These products serve patient needs across multiple therapeutic areas and product categories of women’s health and general medicines. These portfolios are further described below, together with select details for products within each group. Our sales for each of our product groups are as follows:
Year Ended December 31,
General Medicines
In 2025, we recorded revenues of $6.2 billion. 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 74% of our 2025 revenues, or $4.6 billion, generated outside the United States.
The following highlights key products in our portfolios:
Women’s Health General Medicines: General Medicines:
Biosimilars Established Brands
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Women’s Health Portfolio
In 2025, our women’s health portfolio accounted for $1.8 billion, or approximately 28% of our total revenues, with $861 million, or approximately 49%, generated outside the United States. 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 ElonvaTM1 (corifolitropina alfa)). Additionally, we continue to assess commercialization opportunities in conditions that are either unique to women, disproportionally affect women, or impact women differently than men. 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.
Contraception
Our contraception portfolio currently consists of the following products, which work to prevent pregnancy primarily by suppressing ovulation:
Nexplanon is a prescription medication for the prevention of pregnancy in women. It consists of a small, thin and flexible arm implant that is placed discreetly under the skin of the inner, upper non-dominant arm by a healthcare provider. It is a progestin-only, radiopaque, removable implant, containing 68 mg of etonogestrel that is pre-loaded into an applicator. 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. It is reversible, meaning that a woman can have it removed at any time after insertion. Prior to January 16, 2026, the product was indicated for a period of up to three years of use (at which point the implant needed to be removed). An application for a five-year duration-of-use indication was approved by the FDA in January 2026. As a result, we could receive an additional three years of clinical investigation exclusivity for Nexplanon in the United States for the five-year indication. In 2025, we submitted a similar application for a five-year duration period of use to the EU and UK Health Authorities. This application is currently under review, with an expected outcome in 2026. We expect to submit applications for marketing exclusivity in certain parts of the world, including Latin America, in 2026. Notwithstanding the foregoing, there can be no assurance that the additional periods of market exclusivity referred to above will be granted.
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 seeking a monthly contraceptive option.
CerazetteTM1 (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.
MarvelonTM1(desogestrel and ethinyl estradiol pill) and MercilonTM1 (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. These medicinesare not approved or marketed in the United States but are available in certain countries outside the United States. Mercilon is being evaluated for treatment of dysmenorrhea (lower abdominal pain immediately prior to or during menstruation), and we made a regulatory submission for the same indication to Japan’s Pharmaceutical and Medical Device Agency (the “PMDA”) in July 2025. Subject to such review, we currently expect that any potential Japanese PMDA approval could occur as early as June 2026; however, there can be no assurance that such approval will be granted.
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. 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. 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 gonadotropin
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preparation in an ovarian stimulation treatment cycle. 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 OrgalutranTM) is an injectable GnRH antagonist used to prevent luteinizing hormone surges. Ganirelix acetate injection is used in fertility treatments in combination with FSH.
Postpartum Hemorrhage
Jada is intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted. Jada uses a low-level vacuum to encourage the physiologic contraction of the uterus to control bleeding. Jada is currently available in the United States at a majority of hospitals that offer labor and delivery services and is also available in several markets outside of the United States. As discussed above, in January 2026, we divested the Jada System to Laborie.
Bacterial Vaginosis (“BV”)
Xaciato® (clindamycin phosphate) vaginal gel is an FDA-approved medication for the treatment of BV in females 12 years of age and older, which is licensed through an agreement with Daré Biosciences. Xaciato is currently available in the United States; however, we plan to assess opportunities to seek potential further marketing authorizations for countries outside the United States.
General Medicines Portfolio
Biosimilars
A biosimilar is a biological medicine that is highly similar to another biological medicine that has already been approved by the FDA. In 2025, our biosimilars portfolio accounted for $691 million, or approximately 11% of our total revenues, with $310 million, or approximately 45%, generated outside the United States. The assets in our biosimilars portfolio, coupled with our commercial experience in biosimilars, provide an opportunity to benefit from future growth anticipated in this area.
Our biosimilars portfolio consists of therapies in immunology and oncology-related for which we have worldwide commercialization rights, with certain geographic exceptions specified on a product-by-product basis. Such exceptions are governed by agreements that we entered into with Samsung Bioepis Co., Ltd. (“Samsung Bioepis”) and Shanghai Henlius Biotech, Inc. (“Henlius”). The marketed portfolio consists of four immunology products, Hadlima (Originator brand name: Humira2; generic name: adalimumab), Brenzys (Originator brand name: Enbrel2; generic name: etanercept), Renflexis (Originator brand name: Remicade2; generic name: infliximab) and Tofidence (Originator brand name: Actemra2; generic name: tocilizumab), the rights to which were recently acquired from Biogen Inc. (“Biogen”). The marketed portfolio also consists of four oncology-related products, Ontruzant (Originator brand name: Herceptin2; generic name: trastuzumab), Aybintio (Originator brand name: Avastin2; generic name: bevacizumab), Bildyos and Bilprevda.
•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, hidradenitis suppurativa and uveitis. We have worldwide commercialization rights to Hadlima in countries outside the EU, South Korea, China, Turkey, and Russia. Samsung Bioepis reached a global settlement with AbbVie permitting us to launch Hadlima outside of the United States starting in 2021 and in the United States in July 2023. 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. As of May 27, 2025, the FDA has approved interchangeability designations (which enables a pharmacist to substitute the reference product with a biosimilar without the need to consult the prescriber, depending on state pharmacy laws) for all presentations of the reference product, which facilitates increased access to patients.
•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. We have commercialization rights to Brenzys in countries outside the EU, South Korea, China, Japan and the United States, and Brenzys is currently approved in Australia, Canada, Brazil, Israel, Ukraine, New Zealand, the United Arab Emirates, Qatar, and Kuwait. It is also commercialized in Australia, Canada, Brazil and Israel.
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•Renflexis (SB2): Renflexis (infliximab-abda) is a TNF blocker biosimilar to Johnson & Johnson’s Remicade (infliximab) product. It is approved for use in certain patients for the treatmentof Crohn’s disease, pediatric Crohn’s disease, ulcerative colitis, pediatric ulcerative colitis, rheumatoid arthritis in combination with methotrexate, ankylosing spondylitis, psoriatic arthritis and plaque psoriasis. We have worldwide commercialization rights to Renflexis in countries outside the EU, South Korea, China, Turkey and Russia. 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.
•Tofidence: Tofidence (tocilizumab-bavi) is a biosimilar to Roche’s Actemra (tocilizumab), for intravenous infusion. Tofidence is indicated in certain patients for the treatment of moderately to severely active rheumatoid arthritis, giant cell arteritis, polyarticular juvenile idiopathic arthritis, systemic juvenile idiopathic arthritis, and COVID-19. We acquired certain rights related to Tofidence in the United States, including Puerto Rico.
•Aybintio (SB8): Aybintio (bevacizumab) is a vascular endothelial growth factor inhibitor biosimilar to Roche’s Avastin (bevacizumab) product. Aybintio is currently approved and commercialized in the EU and Canada for use in certain patients with metastatic carcinoma of the colon or rectum, metastatic non-squamous, non-small cell lung cancer, metastatic renal cell carcinoma, metastatic cervical cancer, epithelial ovarian, fallopian tube, or primary peritoneal cancer and metastatic breast cancer. 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. We have worldwide commercialization rights to Ontruzant in countries outside of South Korea and China. Ontruzant is approved in the United States, Canada, Australia, New Zealand, EU member states, the UK, Brazil, Ukraine, Saudi Arabia, Qatar and Kuwait and marketed in the United States (including Puerto Rico), Canada, EU member states, Ukraine and Brazil.
•Bildyos and Bilprevda (HLX14): Bildyos (denosumab-nxxp) and Bilprevda (denosumab-nxxp) are recombinant anti-RANKL human monoclonal antibodies and biosimilars to Amgen’s Prolia and Xgeva (denosumab), respectively. Bildyos is indicated for the treatment of postmenopausal women with osteoporosis at high risk for fracture, to increase bone mass in men with osteoporosis, glucocorticoid-induced osteoporosis, bone loss in men receiving androgen deprivation therapy for prostate cancer, and for bone loss in women receiving adjuvant aromatase inhibitor therapy for breast cancer. Bilprevda is indicated for the prevention of skeletal-related events in patients with multiple myeloma and in patients with bone metastases from solid tumors, for the treatment of adults and skeletally mature adolescents with certain giant cell tumor of bone, and the treatment of hypercalcemia of malignancy refractory to bisphosphonate therapy. We have worldwide commercialization rights to HLX14 in countries except for China (including Hong Kong, Macau and Taiwan).
•Poherdy(HLX11): Poherdy (pertuzumab-dpzb), a biosimilar to Roche’s Perjeta2 (pertuzumab), is a HER2/neu receptor antagonist, indicated for the treatment of adults with certain HER2-positive metastatic breast cancer, as well as (in combinations with trastuzumab and chemotherapy) as neoadjuvant or adjuvant treatment of adults with certain HER2-positive breast cancer. The FDA approved our BLA for HLX11 in November 2025. We have worldwide commercialization rights to HLX11 in countries except for China (including Hong Kong, Macau and Taiwan). In accordance with a settlement and license agreement with Genentech, Inc. and related parties (“Genentech”) that grants license rights under Genentech’s intellectual property to commercialize HLX11, the Company intends to launch HLX11 in the United States in late 2028.
Established Brands
Our established brands portfolio includes leading brands in cardiovascular, respiratory, dermatology and non-opioid pain management. Most brands in this portfolio (with the exception of Emgality, Vtama and AtozetTM1 (ezetimibe and atorvastatin)) lost exclusivity and have faced generic competition. In 2025, this portfolio contributed approximately $3.7 billion, or approximately 59% of our total revenues, with approximately 91%, or $3.4 billion, generated outside the United States. Generic competition varies significantly across geographies.
•Cardiovascular: In 2025, our cardiovascular portfolio accounted for $1.1 billion, or approximately 18% of our total revenues, nearly all of which were generated outside the United States. Our cardiovascular portfolio consists of several cholesterol-modifying medicines, including: Zetia® (ezetimibe), which is marketed as EzetrolTM in most countries
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outside the United States; Vytorin® (ezetimibe / simvastatin), which is marketed as InegyTM outside the United States; Atozet, which is marketed in certain countries outside the United States; RosuzetTM1 (ezetimibe and rosuvastatin), which is also marketed in certain countries outside the United States; and ZocorTM1 (simvastatin), which is also available in certain countries outside the United States, including China. Our cardiovascular portfolio also includes Cozaar® (losartan) and Hyzaar® (losartan / hydrochlorothiazide), which are cardiovascular drugs for the treatment of hypertension.
•Respiratory: In 2025, our respiratory portfolio accounted for $842 million, or approximately 14% of our total revenues, with approximately 80%, or $677 million, generated outside the United States. 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 ZenhaleTM, in certain markets outside the United States, and Asmanex® (mometasone furoate). Our respiratory portfolio also includes several products that treat seasonal allergic rhinitis, including: Singulair, Nasonex® (mometasone) and Clarinex®2 (desloratadine), which is marketed as AeriusTM outside of the United States.
•Dermatology, Bone Health and Non-Opioid Pain Management: In 2025, our dermatology, bone health and non-opioid pain management portfolios accounted for $987 million, or approximately 16% of our total revenues, with approximately 87%, or $858 million, 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 Sciences Ltd. (“Dermavant”) in October 2024; DiprosoneTM1 (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: ArcoxiaTM1 (etoricoxib), a selective cyclooxygenase-2 inhibitor used for acute and chronic treatment of conditions such as acute pain, osteoarthritis and rheumatoid arthritis, DiprospanTM1 (betamethasone), an injectable glucocorticoid drug approved for treatment of conditions such as bursitis, dermatological disorders and inflammatory conditions, and CelestoneTM (betamethasone injectable suspension), a sterile aqueous suspension approved for treatment of inflammation and conditions such as endocrine disorders and gastrointestinal diseases.
•Other Established Brands: In 2025, our other established brands portfolio accounted for $726 million, or approximately 12% of our total revenues, with approximately 98%, or $710 million, generated outside the United States. We are party to a distribution agreement with Eli Lilly (“Lilly”) for Emgality, a humanized monoclonal antibody calcitonin gene-related peptide (“CGRP”) antagonist, that is indicated for the preventive treatment of migraine in adults, and in some markets, the indication specifies prophylaxis for those with at least four migraine days per month. Emgality is also indicated in some markets for the treatment of episodic cluster headache in adults. Pursuant to this agreement, we distribute Emgality in Canada, Colombia, Europe, Israel, South Korea, Kuwait, Mexico, Qatar, Saudi Arabia, Taiwan, Turkey and the United Arab Emirates. 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.
Research and Development
As part of our growth strategy, we will opportunistically identify scientific collaborations and acquisitions to complement our women’s health portfolio and/or expand our general medicines portfolio with a focus on later-stage or currently marketed assets in women’s health and with transactions in new sectors that have synergies with our existing commercial capabilities and manufacturing capabilities in our general medicines portfolio, such as our acquisition of Dermavant in the dermatology space. Due to limited availability of such assets, we have also prioritized leverage reduction and debt repayment in our capital allocation strategy to enable us to later bring on clinical programs, especially women’s health programs in the preclinical or early stage, when we have more financial flexibility.
Despite financial conditions, which have led to a reduction in some of our in-house research and development programs, our research and development organization continues to support products through global registration, pharmacovigilance, medical affairs, and health economics and outcomes research activities. Our science spans the development lifecycle, with our focus on
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late-stage development, lifecycle management, and Phase 4 studies, and is driven by seasoned researchers, scientists, regulatory, pharmacovigilance, and medical affairs experts. OB/GYNs, PhDs, nurses and pharmacists are an invaluable part of our team, helping us to better understand women’s needs from the perspectives of clinicians, physicians and patients.
As of December 31, 2025, we had licenses to commercialize the following development stage products:
•OG-8012 (formerly known as OG-9489) is an investigational non-hormonal, on-demand contraceptive candidate. In the United States, approximately 65% of women aged 15–49 use some form of contraception, with a growing proportion seeking non-hormonal reliable contraception. On July 27, 2022, we entered into a research collaboration and exclusive license agreement with Cirqle Biomedical (“Cirqle”) that entitled us to exclusive worldwide rights to develop and commercialize the product. We delivered a notice of termination of this agreement to Cirqle on February 9, 2026, setting an effective date of termination for the agreement of May 10, 2026. The termination was not related to any safety or efficacy findings.
•OG-6219, a HSD17β1 inhibitor, an investigational agent being evaluated as a potential treatment for endometriosis, was acquired by Organon through its acquisition of Forendo Pharma in 2021. 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. On July 2, 2025, we announced that the Phase 2 ELENA proof-of-concept study evaluating OG-6219 in endometriosis-related pain did not meet its primary efficacy endpoint. In the study, OG-6219 did not demonstrate improvement in moderate-to-severe endometriosis-related overall pelvic pain compared to the placebo. Based on these results, we decided to discontinue the OG-6219 clinical development program.
•OG-7191, a HSD17β5 inhibitor targeting polycystic ovarian syndrome (“PCOS”), was acquired by Organon through its acquisition of Forendo Pharma in 2021. On December 15, 2025, we determined that the profile of OG-7191 was no longer suitable for development, and made the decision to discontinue all activities for this program.
•The Claria System is an investigational medical device being studied for use during minimally invasive laparoscopic hysterectomy. In 2023, we made a strategic investment in Claria Medical, Inc. (“Claria”). Under the terms of that agreement, Claria was responsible for conducting clinical studies according to the mutually agreed research plan. Although our agreement with Claria also gave us the option to acquire Claria, we elected not to exercise such option and terminated such agreement.
We rely on internal scientific expertise and close collaborations with partners, and expect to advance product development opportunities, data generation, product registration, and licensing on a global scale.
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. We believe our commercialization capabilities allow us to execute customer engagement strategies optimized across preferred channels and aimed at healthcare providers, patients and payors. Our global and local marketing employees focus on building an integrated digital ecosystem that coordinates engagement across all channels. These engagements include direct face-to-face engagement, virtual engagement, email, social media and our websites. In addition, we believe we have the knowledge, capabilities and resources to achieve optimal local market access for our portfolio in a changing external environment.
We have a trade channel strategy that provides a robust capability framework for our activities, including the selection of channel partners, commercial terms and supportive healthcare services that promote the efficient, safe and cost-effective delivery of our products. 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.
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Distribution
Our global network enables us to distribute products directly and indirectly to patients in more than 140 countries and territories, including through our regional distribution centers and partnerships. We sell our pharmaceutical products primarily to drug wholesalers and retailers, hospitals, clinics, government agencies, pharmacies and managed healthcare providers, such as health maintenance organizations, pharmacy benefit managers and other institutions. We also sell our pharmaceutical products through third-party distributors and agents for smaller markets. Our professional representatives communicate the effectiveness, safety and value of our pharmaceutical products to healthcare professionals in private practice, group practices, hospitals and managed care organizations.
Manufacturing Capabilities and Global Supply Chain
We maintain high quality manufacturing capabilities, including the development and improvement of manufacturing processes. Our principal manufacturing capabilities include formulation, fill-and-finishing of products, packaging of products, and worldwide distribution and supply capabilities.
Internal Manufacturing Capabilities
We own and operate six manufacturing sites, as shown in the table below, where we manufacture and package a range of pharmaceutical products, including hormonal products, sterile formulations, and certain medical device combinations.
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
Most 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. We also manufacture and package a range of products for third parties, including Merck & Co., Inc. (“Merck”) at each of our six manufacturing sites pursuant to third-party contract manufacturing agreements.
Global Supply Chain
We manage our global supply chain through a centralized end to end supply planning organization and regional supply operations responsible for demand management, trade compliance, distribution and logistics structured around North America, China, Europe, Middle East, Africa, Asia-Pacific and Latin America. We purchase certain raw materials, active pharmaceutical ingredients, components, devices and other supplies necessary for the commercial production of our products from a variety of third-party suppliers. We utilize third-party contract manufacturers for the majority of our drug substance manufacturing and for some of our packaging, formulation and fill-and-finish. We utilize 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. Certain of these sole-sourced materials are critical to our key products, including in our women’s health and general medicines portfolios. In particular, we rely heavily on one supplier for formulation and/or packaging as our gateway to sales in both Japan and China.
We work to manage the risk associated with such sole suppliers by means of inventory management, evaluation of alternative sources when feasible, and through relationship management. We have an internal function with operational, quality, technology and procurement capabilities that is focused on maintaining an external manufacturing network. 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.
The United States has imposed or is considering imposing trade protection measures and import or export licensing requirements, including the direct and indirect impacts of tariffs (including pharmaceutical sector tariffs), trade sanctions or similar restrictions that could significantly impact our cost of doing business.
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Quality Management
Our facilities and supporting functions, along with our external contractors, suppliers and partners, make up an integrated, interdependent global network. This network is dedicated to consistently delivering compliant, reliable product supply to healthcare providers and patients. We have one quality management system deployed globally that enables the development, manufacturing, packaging, labeling, handling, and distribution of our products, such that they conform to applicable regulatory requirements in every country we serve. Our quality management system is designed to promote and facilitate regulatory and operational excellence, anticipate risks, and prepare the network to effectively respond and adapt to emerging trends.
Human Capital
Our human resources organization is led by an experienced team that monitors our employee base and sets annual targets for managing our human capital. These include employee retention, engagement and training targets. The Talent Committee of our Board regularly reviews and discusses our diversity, inclusion and leadership development initiatives, objectives, and progress with management to ensure that we are appropriately investing in the well-being of every employee through our policies, practices, and benefits. We are committed to complying with state and federal anti-discrimination laws in the United States and applicable workplace laws and regulations in other jurisdictions. Globally, we expect and promote a culture of respect, equal opportunity and non-discrimination.
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.
As of December 31, 2025, we had over 10,000 employees worldwide with approximately 1,500 (15%) employees in the United States, including Puerto Rico. Approximately 8,900 of our employees work in key functional areas (Commercial, Research & Development, and Manufacturing/Supply) and approximately 1,400 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 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 for every employee at our core, believing that this is fundamental to our ability to attract and retain talent, as well as to innovate and succeed in a global market. More than 32% of our employees in the United States identify as part of an underrepresented ethnic group. We support our workforce through innovative talent and performance programs and have additionally founded ten Employee Resource Groups, each of which is open to all of our employees. 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.
Intellectual Property
We actively seek to secure and maintain patents that protect our products, product candidates and other inventions or improvements that we consider important to our business. Patents may cover products per se, pharmaceutical formulations, processes for, or intermediates useful in, the manufacture of products, devices for delivering products, or the uses of products. Protection for individual products extends for varying periods in accordance with the legal life of patents in the various countries, and may be extended in some jurisdictions based upon the period of time a patented product is under regulatory review by the relevant health authority. 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. 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. The relevant Nexplanon rod patents will expire in 2027 in the United States and have begun to expire 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. We are currently in litigation with Xiromed Pharma Espana, S.L. regarding its abbreviated new drug application seeking approval to market a generic version of Nexplanon in the United States prior to the expiration of the rod and applicator patents. As described above, an application for a five-year duration period of use was submitted to the FDA in December 2024, and was approved in January 2026. As a result,
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we could receive an additional three years of New Clinical Investigation exclusivity for Nexplanon in the United States for the five-year indication. In 2025, we submitted a similar application for a five-year duration period of use to the EU and UK Health Authorities, which is under review. However, there can be no assurance that the additional periods of clinical investigation exclusivity referred to above will be granted. See Note 18 “Contingencies” to the Consolidated Financial Statements in this 2025 Form 10-K.
Primary patent exclusivity for Vtama is provided by patents on topical formulations of tapinarof. These patents expire in May 2036 in the United States and other countries around the world. Additional patents on other aspects of Vtama expire later, and related patent applications are pending.
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. In addition, in the United States and certain other countries, an additional period of market or data exclusivity may be available under relevant law. The effect of product patent expiration on pharmaceutical products also depends upon many other factors, such as the nature of the market and the position of the product in it, the growth of the market, the complexities and economics of the process for manufacture of the active ingredient of the product and the requirements of drug provisions of the Federal Food, Drug and Cosmetic Act or similar laws and regulations in other countries.
We seek additions to market or data exclusivity in the United States and other countries through all relevant legal pathways, including laws increasing patent life. Additionally, improvements in intellectual property laws are sought in the United States and other countries through reform of patent and other relevant laws and implementation of international treaties. For further information with respect to our patents, see the sections entitled “Risk Factors” and Note 18 “Contingencies—Patent Litigation” to the Consolidated Financial Statements included in this 2025 Form 10-K.
Worldwide, all of our important products are sold under trademarks that we consider in the aggregate, to be of material importance. 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 2025 on patent and know-how licenses and other rights amounted to $20 million. We also incurred royalty expenses totaling $5 million in 2025 under patent and know-how licenses we hold.
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. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there are privacy and data protection frameworks with the potential to directly affect our business. These include, for instance, the EU General Data Protection Regulation (“GDPR”), which imposes penalties of up to 4% of global revenue, China's Personal Information Protection Law (“PIPL”) and U.S. state privacy laws. The data protection regulatory environment in China has been evolving quickly, including regulations regarding cross-border transfers of personal data. 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.
Competition
We conduct our business in highly competitive markets which mirror the equally competitive pharmaceutical industry. Our competitors include other worldwide research-based pharmaceutical companies, smaller research companies with more limited therapeutic focus and generic drug manufacturers. Our operations may be adversely affected by generic and biosimilar competition as our products mature, as well as technological advances of competitors, industry consolidation, patents granted to competitors, competitive combination products, new products of competitors, the generic availability of competitors’ branded products and new information from clinical trials of marketed products or post-marketing surveillance. In addition, patent rights are increasingly being challenged by competitors and the outcome can be highly uncertain. An adverse result in a patent dispute can preclude commercialization of products or negatively affect sales of existing products and could result in the payment of royalties or in the recognition of an impairment charge with respect to intangible assets associated with certain products. Competitive pressures continue to intensify as the industry grows.
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To remain competitive, we must dedicate resources to quality control, flexibility to meet buyer specifications, an efficient distribution system and a strong technical information service. We plan to continue to acquire and market products through external alliances, such as acquisitions, licensing agreements, and collaborations and have designed our sales and marketing efforts to address the changing industry environment.
United States
In the U.S. private sector, consolidation and integration among healthcare providers significantly affect the competitive marketplace for pharmaceutical products. Private third-party insurers, as well as federal and state governments, employ formularies to control costs by negotiating discounted prices in exchange for formulary inclusion. In addition to formulary tier co-pay or co-insurance differentials, private health insurance companies and self-insured employers have been raising co-payments and co-insurance required from beneficiaries, particularly for branded pharmaceuticals and biotechnology products. Private health insurance companies are also increasingly imposing utilization management tools, such as clinical protocols requiring prior authorization for a branded product if a generic product is available or requiring the patient to first fail on one or more generic products before permitting access to a branded medicine. These management tools are also used in treatment areas in which the payor has taken the position that multiple branded products are therapeutically comparable. As the U.S. payor market further concentrates, and as more drugs become available in generic form, pharmaceutical companies may face greater pricing pressure from private third-party payors. In addition, other proposals that allow international reference pricing or, under certain conditions, the international importation of medicines, may be considered.
We face increasing pricing pressure globally from managed care organizations and government agencies and programs. This pricing pressure could negatively affect our sales and profit margins. In the United States, these concerns include: (i) practices of managed care organizations, federal and state exchanges and institutional and governmental purchasers, and (ii) federal laws and regulations related to Medicare and Medicaid.
Effective January 1, 2024, the American Rescue Plan Act of 2021 eliminated the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single-source and innovator multiple source drugs. In addition, the Inflation Reduction Act of 2022 (“IRA”), among other things, allows Medicare to establish a “Maximum Fair Price” for certain pharmaceutical drug and biological products covered under Medicare Part D and Part B in 2028. The IRA also requires drug companies that raise prices for products covered under Medicare Parts B and D faster than inflation to pay rebates and implements changes to the Medicare Part D benefit that capped benefit annual out-of-pocket spending at $2,000, with new discount obligations for pharmaceutical manufacturers. The Centers for Medicare & Medicaid Services (“CMS”) has taken steps to implement the IRA, including, most notably, releasing the Maximum Fair Prices, which will be effective in 2026 and 2027, for the drugs that were selected as part of the first two rounds of the Medicare Drug Price Negotiation Program and releasing quarterly lists of Medicare Part B products that are subject to adjusted coinsurance rates based on the inflationary rebate provisions of the IRA. In April 2025, the U.S. presidential administration issued an executive order with multiple directives aimed at lowering drug prices, including directing changes to the Medicare Drug Price Negotiation Program established by the IRA; increasing competition for high-cost prescription drugs by accelerating approval of generics and biosimilars and facilitating the process for re-classifying prescription drugs as over-the-counter drugs; and increasing drug importation. The ultimate impact of these measures remains uncertain, and future regulatory actions to implement the IRA or other policy proposals could result in further pricing pressures.
In May 2025, the U.S. presidential administration issued another executive order that directed government agencies and officials to identify most-favored-nation (“MFN”) pricing targets for prescription drugs and looked to pharmaceutical manufacturers to make significant progress towards delivering target prices to patients; prevent foreign countries from disproportionately shifting the cost of global pharmaceutical research and development to the United States; and facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers to sell their products to patients at the MFN price. Since then, the U.S. presidential administration has entered into MFN agreements with several large pharmaceutical manufacturers, under which the manufacturers agreed to furnish MFN pricing on certain existing and future products across defined government and direct-to-consumer channels. The Center for Medicare & Medicaid Innovation also released a request for applications for a voluntary MFN payment model for state Medicaid programs. The potential for additional MFN-based policies could create additional pricing pressures.
In addition, in July 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law. The OBBBA includes significant corporate tax provisions such as modifications to interest deductibility, the option to fully expense U.S.-based research and development costs, and changes to the taxation of foreign earnings.
In October 2025, CMS finalized significant changes to Medicare Part B reimbursement and price reporting regulations as part of the Calendar Year 2026 Medicare Physician Fee Schedule rulemaking process. These changes, which take effect in 2026,
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include revisions to how we report pricing data for Medicare Part B drugs. For instance, the new rule requires that any units of a drug sold at the Maximum Fair Price be incorporated into Average Sales Price (“ASP”) calculations. The rule also establishes new obligations related to bona fide service fees by requiring manufacturers to obtain and submit certifications for certain contracts that such fees are not passed through as price concessions to downstream entities. These changes could influence our reported pricing metrics and increase our compliance and operational burdens.
On January 15, 2026, the U.S. President announced The Great Healthcare Plan, which continues to emphasize priorities laid out in his executive orders, including obtaining MFN pricing for U.S. consumers. We expect to see continued focus by the U.S. government and states on regulating drug pricing and access to medicine, any of which could impair our ability to compete and have a material adverse impact on our business, financial condition, and results of operations. Other proposed administrative actions may affect our government pricing responsibilities.
European Union
Pricing and reimbursement of medicinal products are not harmonized at the EU level, but rather controlled by individual EU Member States. These Member States have attempted to contain drug costs by engaging in reference pricing. Reference pricing allows authorities to examine pre-determined markets for published prices of drugs. The downward pressure on healthcare costs in general, particularly prescription drugs, has intensified. As a result, manufacturers are erecting increasingly high entry barriers to new products. 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. 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. Furthermore, the government can order re-pricings for specific products if it determines that use of such products will exceed certain thresholds defined under applicable re-pricing rules.
China
Despite experiencing multiple loss of exclusivity (“LOE”) events in our portfolio, our performance in China has remained consistent, largely due to the strength of our underlying business. As used in this 2025 Form 10-K, LOE refers to a loss of patent, regulatory data, or other marketing exclusivity that can result in direct competition for the product in a given market. 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. 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.
While pricing pressure has always existed in China, healthcare 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 ten rounds of VBP have had, on average, a price reduction of over 50%. In October 2025, R11 NVBP was launched. Though R11’s price cut has not been announced yet, publicly available information shows that the price cut shall be in the same range as the previous rounds.
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. There are approximately 450 molecules included under the first ten rounds of VBP. After the expiration of the national VBP period, the VBP products may be subject to further price reductions in the provincial-level VBP programs implemented by individual provinces or province alliances; such provincial-level VBP programs may also target molecules that are not qualified for national VBP. In addition, multiple Chinese provinces are piloting a Universal Reimbursement Payment Standard (“URPS”) program in their respective provinces. Under the URPS, the Chinese government may determine the reimbursement prices by referring to the prices of the lowest-priced VBP winning products, with any remaining costs then passed along to the patients in the form of a co-pay, which reduces the affordability of certain products with prices that exceed the lowest-priced VBP-winning products. The URPS policy will create additional
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pricing and volume pressure for pharmaceutical products that are subject to the program and currently being frozen by government in terms of scaling it up with additional products and geographies. We are closely monitoring the situation and in case the URPS will be reinitiated for expansion by the government then it may adversely affect our business and results of operations in China.
Other Markets
Governments in many other markets are also focused on constraining healthcare costs and have enacted price controls and measures impacting intellectual property, including in exceptional cases, threats of compulsory licenses that aim to put pressure on the price of innovative pharmaceuticals or result in constrained market access to innovative medicine. 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 healthcare. We advocate with government policymakers to encourage a long-term approach to sustainable healthcare financing that ensures access to innovative medicines and does not disproportionately target pharmaceuticals as a source of budget savings. In markets with historically low rates of healthcare spending, we encourage those governments to increase their investments and adopt market reforms to improve their citizens’ access to appropriate healthcare, including medicines.
Regulation of Our Products
The pharmaceutical and medical device industries are subject to regulation by regional, national, 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. In the United States, the FDA administers requirements covering the testing, approval, safety, effectiveness, manufacturing, labeling and marketing of pharmaceuticals and medical devices.
The EU has also adopted directives and other legislation concerning the classification, approval for marketing, labeling, advertising, manufacturing, wholesale distribution, integrity of the supply chain, pharmacovigilance and safety monitoring of medicinal products for human use. These provide mandatory standards throughout the EU, which may be supplemented or implemented with additional regulations by the EU Member States.
Industry practice and government regulations in the United States and most other countries provide for the determination of effectiveness and safety of new chemical compounds suitable for pharmaceutical use through pre-clinical tests and controlled clinical evaluation. Before a new drug may be marketed in the United States, recorded data on pre-clinical and clinical investigations are included in the new drug application for a drug or the BLA for a biologic, and submitted to the FDA for the required approval, which can be a phased process. Any regulatory approval we receive will be for particular conditions of use, and may come with post-approval requirements, including required post-approval clinical studies and/or risk evaluation and mitigation strategies or risk mitigation plans (known as “REMS” in the United States). As a manufacturer and distributor of drug products, our activities are regulated under various federal and state statutes and state manufacturer and wholesaler laws. Manufacturers and distributors of controlled substances must also maintain registration with the Drug Enforcement Administration (the “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.
The FDA imposes medical device regulations that govern requirements for design, development, testing, manufacturing, labeling, clinical trials, and pre-market clearance and approval, among other requirements. Marketed devices are also subject to ongoing FDA regulation. Requirements include those related to establishment registration and device listing, labeling and advertising, unique device identification, and good manufacturing practices.
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.
Failure by us or by any of our third-party partners, including suppliers, manufacturers and distributors, to comply with laws governing the conduct of clinical trials, manufacturing approval, marketing authorization of pharmaceutical products and marketing of such products, both before and after grant of marketing authorization, statutory health insurance, bribery and anti-corruption or other applicable regulatory requirements, may result in administrative, civil or criminal penalties. These penalties could include delays or refusal to authorize the conduct of clinical trials or to grant marketing authorization, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the marketing authorization, total or partial
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suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.
We and our third-party manufacturers are also subject to other good manufacturing practices, which are extensive regulations governing manufacturing processes, stability testing, record keeping and quality standards as defined by the regulatory authorities. Companies may be subject to civil, criminal or administrative sanctions if they fail to comply with these practices.
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 healthcare providers, misleading and comparative advertising and unfair commercial practices. Although physicians are permitted to use their medical judgment to use drug products and 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.
In the future, we will likely become subject to new laws and regulations. For additional information, please see “Risk Factors — 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.”
Climate and Environmental Matters
We believe that climate change will present some degree of risk to our business. Some of the potential effects of climate change to our business could include increased operating costs due to additional regulatory requirements, changes in supply and suppliers due to regulatory requirements, physical risks to our facilities, water limitations and disruptions to our supply chain. Some potential risks are integrated into our business planning, including investment in reducing energy, water use and greenhouse gas emissions. We do not believe these potential risks are material to our business at this time.
We are not aware of any compliance issues associated with applicable environmental laws and regulations that would have a material adverse effect on our business. Expenditures for remediation and environmental liabilities are estimated to be approximately $14 million in the aggregate for the years 2026 through 2030. 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 Consolidated Financial Statements included in this 2025 Form 10-K. Notwithstanding the foregoing, various legislation, regulations and international accords pertaining to climate change and environmental sustainability have been implemented or are under consideration, particularly as they relate to the reduction of greenhouse gas emissions, such as the EU’s Corporate Sustainability Reporting Directive (“CSRD”) and California’s Climate Corporate Data Accountability Act and Climate Related Financial Risk Act. For additional information, please see “Risk Factors — 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.”
Third-Party Collaboration
We are party to an agreement with Samsung Bioepis (the “Samsung Bioepis Agreement”) to develop and commercialize multiple pre-specified biosimilar candidates, which have since launched and are part of the Company's product portfolio. Pursuant to the Samsung Bioepis Agreement, we were granted an exclusive license to commercialize the following pre-specified biosimilars products (with reference products in parenthesis) developed by Samsung Bioepis: adalimumab (Humira), bevacizumab (Avastin), infliximab (Remicade), trastuzumab (Herceptin) and etanercept (Enbrel). See Item 1. “Business—General Medicines Portfolio—Biosimilars” 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. Our access rights to each product under the Samsung Bioepis Agreement last for ten years from such product’s launch date on a market-by-market basis. Unless the parties agree to extend the term, the agreement expires upon the expiration of the last such ten-year period. We may terminate the agreement with respect to a particular region or product if a product fails to meet certain milestones in such region. 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 may also terminate the agreement upon 60 days’ written notice in the event of a third-party infringement claim that Samsung Bioepis decides to litigate despite our opposition to such litigation.
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The agreement may also be terminated by either party upon written notice if the other party commits a material breach of its obligations by specified actions within its reasonable control and has not cured such breach within 90 calendar days after notice requesting cure of the breach.
The Samsung Bioepis Agreement provides that gross profits are shared equally in all markets except for certain markets in Brazil where gross profits are shared 65% to Samsung Bioepis and 35% to us. The Samsung Bioepis Agreement also provides for payment of certain milestone license fees associated with pre-specified clinical and regulatory milestones to Samsung Bioepis, payment of the supply price for each product to Samsung Bioepis, and an upfront payment to Samsung Bioepis that was completed by Merck at the commencement of the agreement. As of December 31, 2025, there was one remaining potential future regulatory milestone payment of $25 million that remained unpaid 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 2025 Form 10-K and the Samsung Bioepis Agreement, which is filed as an exhibit to this 2025 Form 10-K.
Additional Information
We are a Delaware corporation incorporated on March 11, 2020. Our corporate offices are located at 30 Hudson Street, 33rd Floor, Jersey City, New Jersey 07302.
We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy statements and other information with 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”), and may be accessed free of charge as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. 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. 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. Further, the information contained on our website is not, and should not be considered part of this 2025 Form 10-K, nor incorporated by reference into this 2025 Form 10-K.
Item 1A. Risk Factors
You should carefully consider the following risks and other information in this 2025 Form 10-K in evaluating the Company and deciding whether to invest in our Common Stock. Any of the following risks could materially and adversely affect our results of operations, financial condition and the price of our Common Stock.
Summary of Risk Factors
The following is a summary of the principal risks that could significantly and negatively affect our business, prospects, financial condition, or operating results. For a more complete discussion of the material risks facing our business, please see below:
Risks Related to Our Business
•We have significant global operations, which expose us to additional risks, and any adverse event could adversely affect our results of operations and financial condition.
•The imposition of tariffs on, or other trade restrictions or domestic sourcing requirements in, the territories and countries where we, our partners, suppliers, or customers do business, as well as any retaliatory actions with respect to such actions, could have a material adverse effect on our business, financial condition, results of operations, cash flows, ability to pay dividends or repurchase shares, or stock price.
•Adverse developments in the global economy or in one or more of our local markets could impact our ability to grow our business.
•Changes in tax laws or other tax guidance could adversely affect our effective tax rates, financial condition or results of operations.
•We are exposed to market risk from fluctuations in currency exchange rates and interest rates.
•The completion of the self-initiated Audit Committee (as defined below) internal investigation and the subsequent implementation of our remediation plan has been time-consuming and expensive and may result in significant additional expense and/or litigation.
•We identified material weaknesses in our internal control over financial reporting, which could impact our ability to report our results of operations and financial condition accurately and in a timely manner.
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•The use of artificial intelligence (“AI”) and its legislative and regulatory landscape continues to evolve and makes it difficult to fully understand and assess related risks.
•We depend on sophisticated software applications and computing infrastructure. 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 may not be able to successfully execute our plan to deleverage our business or otherwise reduce our debt level, which could adversely affect our operating flexibility, business, financial condition, results of operations, or cash flows.
•Our substantial indebtedness could adversely affect our financial condition and results of operations.
•We are subject to a number of restrictive covenants under our indebtedness, including customary operating restrictions and financial covenants, which could restrict our ability to pay dividends or adversely affect our financing options and liquidity position.
•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.
•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.
•Recent global healthcare reform initiatives and U.S., judicial decisions, laws, regulations, executive orders and political actions could adversely affect our future revenues and profitability.
•If we fail to appoint, hire and retain a permanent CEO, other members of our senior management, or other key employees, our business may suffer.
•An impairment of our Goodwill could materially impact our financial condition and results of operations.
•We may not realize benefits from our investments in China and emerging markets.
•We face intense competition from competitors’ products.
•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.
•We have limited in-house discovery and limited cash to pursue early research capabilities and any expansion of our innovative pipeline and early discovery and research capabilities through future external acquisitions, partnerships and collaborations, 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.
•Our growth could be limited by the scope of our intellectual property licenses.
•We rely on third parties for activities related to preclinical and clinical testing.
•We may experience difficulties in connection with future acquisitions, divestitures and other strategic actions. Even if completed, we may have difficulty integrating or otherwise realizing the benefits of such transactions.
•We may be unable to market our pharmaceutical products or medical devices if we do not obtain and maintain required regulatory approvals or marketing authorizations.
•Our research and development of new pharmaceutical product candidates or medical devices going forward will be limited, and for those development projects we elect to pursue we and/or our partners may fail to adequately demonstrate the safety and efficacy of any product in pre-clinical studies and clinical trials, which would prevent or delay development, regulatory approval or marketing authorization and commercialization of our product candidates.
•Developments following regulatory approval or marketing authorization may adversely affect sales of our pharmaceutical products or medical devices.
•Disruptions at the FDA, the SEC and other comparable foreign government agencies caused by funding shortages or other events could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner, or otherwise prevent those agencies from performing normal business functions, which could negatively impact 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.
•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 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 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 may experience difficulties or delays or incur unforeseen difficulties, delays and expenses in connection with the manufacturing of certain of our products.
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•We may be unable to obtain sufficient components or raw materials on a timely basis or for a cost-effective price, or we may experience other supply difficulties that could adversely affect both our ability to deliver our products and our results of operations and financial condition.
•Reliance on third-party relationships and outsourcing arrangements could materially adversely affect our business.
•If we or our third-party suppliers, logistics providers, and manufacturers do not comply with ethical business practices or with related laws and regulations, including relating to AI use, our reputation, business, financial condition, results of operations or prospects could be harmed. Our third-party suppliers’ use of AI that does not comply with ethical standards, industry recognized AI frameworks or related laws and regulations will expose us to various risks including those relating to privacy, cybersecurity, intellectual property, inaccuracy of data, exposure of our confidential information, producing bias outcomes and overreliance on AI by those third-party suppliers without human oversight.
•The markets for our products, including the women’s health market, may not develop as expected.
•Biosimilars carry unique regulatory risks and uncertainties, which could adversely affect our results of operations and financial condition.
•We rely on our commercialization agreements with Samsung Bioepis, Henlius and Biothera for the successful development and manufacture of our biosimilars products and expect to do so for the foreseeable future.
•The FDA’s shift toward “radical transparency,” including plans to release future complete response letters promptly after they are issued to sponsors and increase enforcement in advertising and promotion, could have an adverse impact on our business and adversely affect our commercial prospects.
•Our global business could be negatively impacted by corporate citizenship and sustainability matters, which are viewed differently by the U.S. presidential administration and certain U.S. states than under various EU frameworks.
•Our business and operations are subject to risks related to climate change and natural disasters.
Risks Related to Our Common Stock
•We cannot guarantee the timing, amount or payment of any dividends on 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 our Company.
•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, 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.
Risks Related to Our Business
We have significant global operations, which expose us to additional risks, and any adverse event could adversely affect our results of operations and financial condition.
The extent of our operations outside the United States is significant. For example, in 2025, we generated $4.6 billion in revenues outside the United States, representing approximately 74% of our total revenues. 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 and 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 business, financial condition, results of operations, or reputation could be materially and adversely impacted if we (or third parties upon which we rely) do not comply with applicable requirements and restrictions globally. In addition, our operations depend, in part, on our relationships and business arrangements with third parties that receive government funding. As the U.S. and foreign federal or local governments shift their pharmaceutical approval and regulatory priorities, including funding
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allocations, we may encounter challenges receiving key regulatory approvals or maintaining business relationships with third parties that depend on government funding, which could materially adversely affect our business, financial condition, results of operations, or reputation.
In addition, there may be changes to our business and strategic position if there is instability, disruption or destruction in a significant geographic region, regardless of cause, including health epidemics or pandemics, riot, civil insurrection or social unrest, and natural or man-made disasters, including famine, flood, fire, earthquake, storm or disease. In addition, our operations and performance may be affected by political or civil unrest or military action. As a result of global economic conditions, some parties may delay or be unable to satisfy their payment or reimbursement obligations. In addition, patients' ability to afford healthcare may also be affected by job losses or other economic hardships, increased co-pay or deductible obligations, greater cost sensitivity to existing co-pay or deductible obligations, and lost healthcare insurance coverage.
The imposition of tariffs on, or other trade restrictions or domestic sourcing requirements in, the territories and countries where we, our partners, suppliers, or customers do business, as well as any retaliatory actions with respect to such actions, could have a material adverse effect on our business, financial condition, results of operations, cash flows, ability to pay dividends or repurchase shares, or stock price.
The United States has imposed or is considering imposing trade protection measures and import or export licensing requirements, including the direct and indirect impacts of tariffs (including pharmaceutical sector tariffs), trade sanctions or similar restrictions that could significantly impact our cost of doing business.
The U.S. presidential administration has reached several bilateral trade agreements that seek to cap tariffs on imports into the U.S., including an agreement with the EU that would limit U.S. tariffs to 15% on certain brand pharmaceutical and to keep tariffs on generic medicines at 0%. The United States may reach additional trade agreements with other trading partners seeking to mitigate the impact of tariffs. In addition, the U.S. Department of Commerce has initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, to determine dependence on imported pharmaceuticals and pharmaceutical ingredients and the impact on national security. This investigation may lead to the imposition of additional tariffs on pharmaceutical imports in 2026.
The imposition of new, announced or proposed tariffs, trade restrictions or domestic sourcing requirements on pharmaceutical imports, including but not limited to products, ingredients, and other materials necessary for our business, could result in increased costs of goods and prices, disruptions to our supply chain, manufacturing delays, supply shortages, and adverse impacts to clinical trials. These measures could also result in decreased profit margins on certain of our products. In particular, any future tariffs on generic drugs, ingredients, or inputs, could significantly decrease profit margins on such products.
In addition, we may be restricted in our ability to adapt, or may be unable or unsuccessful in adapting, to these impacts and challenges due to, among other things, the terms of our current customer, wholesaler, supply or distribution agreements, or the need to obtain regulatory approval prior to making any changes to our manufacturing locations, processes or suppliers. Existing, announced, and future tariffs, trade agreements, or domestic sourcing requirements, as well as potential exemptions, could also provide our competitors with an advantage to the extent such future impacts disproportionately affect us compared to them.
The impact of any announced, new or proposed tariffs, trade restrictions or domestic sourcing requirements on our business continues to be subject to a number of factors that we cannot predict, including, but not limited to, the scope, nature, amount, effective date and duration of any such measures. Furthermore, general uncertainty related to announced, new or potential tariffs, trade restrictions and domestic sourcing requirements has in the past reduced and could in the future further reduce global economic activity, thereby resulting in additional adverse impacts to us.
Adverse developments in the global economy or in one or more of our local markets could impact our ability to grow our business.
Any negative impact on economic conditions and international markets, such as volatility or deterioration in the capital markets, recession, inflation, deflation or other adverse economic conditions, may negatively impact our business. For instance, we may be unable to replace maturing liabilities and to access the capital markets to meet liquidity needs. An inflationary environment has led, and may continue to lead, to increased raw material and other costs, negatively impacting our margins and operating results. In addition, ongoing uncertain economic and financial market conditions may also adversely affect the financial condition of our customers, suppliers and other business partners. 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. Any of the foregoing could have a material
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adverse effect on our financial condition and results of operations.
Changes in tax laws or other tax guidance could adversely affect our effective tax rates, financial condition or results of operations.
As noted above, in July 2025, the OBBBA was enacted into law, and includes significant corporate tax provisions such as modifications to interest deductibility, the option to fully expense U.S.-based research and development costs, and changes to the taxation of foreign earnings. We expect that the OBBBA and additional changes in tax laws around the world, including as led by the Organization for Economic Cooperation and Development, will negatively impact our effective tax rate and results of operations. Such changes could negatively impact our cash tax liability, and will likely have a negative impact on our effective tax rate, and results of operations and could lead to greater audit scrutiny.
We are exposed to market risk from fluctuations in currency exchange rates and interest rates.
We operate in multiple jurisdictions and virtually all of our sales outside the United States are denominated in currencies other than the U.S. 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. Since we cannot, with certainty, foresee and mitigate such adverse fluctuations in currency exchange rates, interest rates and inflation could negatively affect our business, cash flow, results of operations, financial condition or prospects.
In order to mitigate the adverse impact of these market fluctuations, we enter into hedging agreements from time to time. While hedging agreements, such as currency options and forwards and interest rate swaps, may limit some of the exposure to exchange rate and interest rate fluctuations, such attempts to mitigate these risks may be costly and not always successful. 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.
The completion of the self-initiated Audit Committee internal investigation and the subsequent implementation of our remediation plan has been time-consuming and expensive and may result in significant additional expense and/or litigation.
As discussed in Item 9A. “Controls and Procedures”, after concerns regarding our sales practices for wholesalers for Nexplanon were brought to the attention of the Board, the Audit Committee (the “Audit Committee”) of our Board oversaw an independent, internal investigation into these sales practices. The Audit Committee’s investigation focused on our sales of Nexplanon to wholesalers in the United States. The investigation found that we asked two wholesalers in the United States to purchase greater quantities of Nexplanon during the Relevant Periods than they otherwise would have purchased based on wholesaler demand. While we have taken certain actions aimed at preventing the use of such improper sales practices with such wholesalers (including the appointment of a new Interim CEO, the termination and appointment of a new Interim Head of U.S. Commercial & Government Affairs, the appointment of an Executive Chair and the appointment of a Lead Independent Director) and are in the process of implementing additional measures, there is no assurance that these actions and procedures will continue to be effective over time.
Additionally, while the Audit Committee’s investigation is complete, we identified material weaknesses in our internal control over financial reporting and, as a result, our management has determined that our disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2024 or as of December 31, 2025. To address the ineffective disclosure controls and procedures and internal control over financial reporting due to the material weaknesses, we, with the oversight of our Audit Committee, developed a remediation plan, which is described in Item 9A. “Controls and Procedures”. As we execute on our remediation plan, there can be no assurance that we will not discover additional matters that we will need to address that could have an adverse impact on us, our business and/or our results of operations, including determining that further changes to our internal controls are required. We have incurred significant expenses, including audit, legal, forensic accounting, consulting and other professional fees, in connection with the Audit Committee investigation and related matters, and we may incur additional time and expense as a result of the investigation and our efforts to address the investigation results. The incurrence of significant additional expense, or the requirement that management and the Board continue to devote significant time that could reduce the time available to execute on our business strategies, could have an adverse effect on our business, results of operations and financial condition.
On October 26, 2025, we made a voluntary self-disclosure to the SEC to advise it of the Audit Committee’s investigation, and the SEC subsequently opened an investigation into these matters. See Note 18 “Contingencies— Governmental Proceedings” to the Consolidated Financial Statements in this 2025 Form 10-K for additional information.
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We (or our directors or officers) may be subject to future inquiries, investigations, claims, actions, or proceedings, and we cannot predict the outcome of any of the foregoing; however, regardless of outcome, any inquiries, investigations, claims, actions, or proceedings relating to the Audit Committee’s investigation would likely consume a significant amount of our resources and result in considerable legal and accounting costs.
Any legal proceedings, if decided adversely to us, could result in significant monetary damages, penalties and reputational harm, and will likely involve significant defense costs and other costs. We have previously entered into indemnification agreements with each of our directors and certain of our officers, and our Amended and Restated Bylaws require us to indemnify each of our directors and officers. Further, our insurance may not cover all claims that have been or may be brought against us, and insurance coverage may not continue to be available to us at a reasonable cost. As a result, we may be exposed to substantial uninsured liabilities, including pursuant to our indemnification obligations, which could adversely affect our business, prospects, results of operations or financial condition.
We identified material weaknesses in our internal control over financial reporting, which could impact our ability to report our results of operations and financial condition accurately and in a timely manner.
In connection with the Audit Committee investigation described in Item 9A. “Controls and Procedures”, we identified material weaknesses in our internal control over financial reporting. For a description of these material weaknesses, see “Controls and Procedures” in Part II, Item 9A. “Controls and Procedures” of this 2025 Form 10-K. While we developed a remediation plan, our material weaknesses cannot be considered remediated until the applicable remedial control is implemented and operates for a sufficient period of time to allow management to conclude, through testing, that this remediation plan has been implemented and the control is operating effectively. Our material weaknesses, if not fully addressed, could result in a material misstatement of our annual or interim financial statements, and we may be unable to remediate these material weaknesses in a timely manner, which could adversely impact the accuracy and timeliness of future reports and filings we make with the SEC. Any such failure could result in litigation or regulatory actions by the SEC or other regulatory authorities, which could further result in loss of investor confidence, a decline in the price of our Common Stock, delisting of our securities, harm to our reputation and financial condition and/or diversion of financial and management resources from the operation of our business.
The use of AI and its legislative and regulatory landscape continues to evolve and makes it difficult to fully understand and assess related risks.
AI-based solutions, including generative AI, are increasingly being used in the pharmaceutical industry, including by us, and we expect to use other systems and tools that incorporate AI-based technologies in the future. The use of AI solutions by our employees or third parties on which we rely could lead to the public disclosure of confidential information (including personal data or proprietary information) in contravention of our internal policies, data protection or other applicable laws, or contractual requirements. The misuse of AI solutions could also result in unauthorized access and use of personal data of our employees, clinical trial participants, collaborators, or other third parties. In addition, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity, and privacy and data protection. Compliance with these new or changing laws, regulations or industry standards relating to AI may impose significant operational costs or otherwise negatively impact our business. The complexity and rapid evolution of AI may make it difficult to fully understand and assess related risks.
We depend on sophisticated software applications and computing infrastructure. 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. Certain of these systems are managed, hosted, provided or used by third parties, to assist in conducting our business. Disruption, degradation, destruction or manipulation of these IT systems through intentional or accidental means by our employees, third parties with authorized access or cyber threat actors could adversely affect key business processes. The size and complexity of our IT systems, and those of our third-party providers with whom we contract, make such systems potentially vulnerable to service interruptions. 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 computer environment. 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.
In the ordinary course of business, we and our third-party providers collect, store and transmit large amounts of confidential
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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. 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. 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.
While we have taken steps to protect such information, and to ensure that the third-party providers on which we rely have taken adequate steps to protect such information, there can be no assurance that our efforts to protect our data and IT systems or the efforts of third-party providers to protect their IT systems will be successful in preventing disruptions. A breach of our IT systems or our third-party providers’ IT systems, 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.
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 may not be able to successfully execute our plan to deleverage our business or otherwise reduce our debt level, which could adversely affect our operating flexibility, business, financial condition, results of operations, or cash flows.
As of December 31, 2025, we had approximately $8.6 billion of outstanding indebtedness, and as a result we have shifted our top capital allocation priority from acquiring businesses and assets to expand our portfolio of products, to deleveraging our business. In 2025, we reduced our regular quarterly dividend by 90%, and in January 2026, we sold the Jada System, with the capital preserved or received being used to repay outstanding debt; however, these efforts combined with our cash from operations may not be sufficient to reduce our net leverage ratio. Our ability to de-lever and the pace thereof will depend on our future financial and operating performance, which will be affected by the prevailing economic conditions and financial, business, regulatory and other factors described herein, many of which are beyond our control. If we are unable to successfully reduce our debt to a level we believe appropriate, our credit ratings may be lowered, we may further reduce or eliminate our quarterly dividend, sell additional assets or businesses, or reduce or delay our planned capital expenditures or investments.
Our substantial indebtedness could adversely affect our financial condition and results of operations.
Notwithstanding our current intent to deleverage our business, we have approximately $8.6 billion of outstanding indebtedness (including approximately $3.6 billion of notes that mature in 2028) and may incur additional debt from time to time in the future. Current or future levels of indebtedness may increase the possibility that we will be unable to generate cash sufficient to pay amounts due in respect of such indebtedness. Our business may not generate sufficient cash flows from operations to service or reduce our indebtedness and make the necessary capital expenditures and support our growth strategies (including business development transactions), particularly in light of our current capital allocation priority to use a substantial portion of our cash flow from operations to repay our debt. If we are unable to generate such cash flows, we may be required to pursue one or more financing alternatives, which could include obtaining equity capital on dilutive terms, selling assets or businesses, or refinancing our current debt. Our ability to refinance our indebtedness will depend on the capital and credit markets and our financial condition at such time. If prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, then the expense relating to the refinancing would increase. Any of the foregoing may also adversely affect our ability to obtain and maintain our credit ratings and materially affect our business, financial condition, cash flows, or results of operations.
We are subject to a number of restrictive covenants under our indebtedness, including customary operating restrictions and financial covenants, which could restrict our ability to pay dividends or adversely affect our financing options and liquidity position.
Our current indebtedness contains, and any future indebtedness may contain, customary operating restrictions and financial covenants. This indebtedness may adversely affect our ability to operate or grow our business or could have other material adverse consequences, including by:
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•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.
Any of these restrictions on our ability to operate our business in our discretion could adversely affect our business by, among other things, limiting our ability to adapt to changing economic, financial or industry conditions and to take advantage of corporate opportunities, including opportunities to obtain debt financing, repurchase stock, refinance or pay principal on our outstanding debt, dispose of property, complete acquisitions for cash or debt, or make other investments. In addition, events beyond our control, including prevailing economic, financial, and industry conditions, could affect our ability to satisfy applicable financial covenants, and we cannot assure you that we will satisfy them.
Any failure to comply with the restrictions of our current indebtedness, or any future financing agreements, including as a result of events beyond our control, may result in an event of default under these agreements, which in turn may result in defaults or acceleration of obligations under these agreements, giving our lenders and other debt holders the right to terminate any commitments they may have made to provide us with further funds and to require us to repay all amounts then outstanding.
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.
The legislative and regulatory landscape for privacy and, data protection continues to evolve.
The GDPR and related implementing laws in individual EU member states as well as similar legislation in the UK, govern the collection and use of personal health data and other personal data in the EU. 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. 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. There are also accountability requirements, such as maintaining a record of data processing, conducting data protection impact assessments and appointing data protection officers. Further, the GDPR prohibits the transfer of personal data to countries outside of the European Economic Area that are not considered by the European Commission to provide an adequate level of data protection, including to the United States, except if the data controller meets very specific requirements.
Failure to comply with the requirements of the GDPR and the related national data protection laws of the EU Member States may result in significant monetary fines and other administrative penalties as well as civil liability claims from individuals whose personal data was processed. Data protection authorities from the different EU Member States may still enforce the GDPR differently, reflecting variations that arise under national-level regulations and guidelines (e.g., labor laws, processing of national identification numbers), which adds to the complexity of processing personal data in the EU. Guidance at both the EU level and at the national level in individual EU Member States concerning implementation and compliance practices is often updated or otherwise revised, resulting in a challenging regulatory environment.
There is, moreover, a growing trend towards required public disclosure of clinical trial data in the EU, which adds to the complexity of obligations relating to processing health data from clinical trials. Failing to comply with these obligations could lead to government enforcement actions and significant penalties against us, harm to our reputation, and adversely impact our business and operating results. The uncertainty regarding the interplay between different regulatory frameworks further adds to the complexity that we face with regard to data protection regulation.
Additional laws and regulations enacted in the United States, Canada, the UK, Australia, Asia and Latin America have increased enforcement and litigation activity in the United States and other developed markets, as well as increased regulatory cooperation among privacy authorities globally. The data protection regulatory environment in China has been evolving quickly, including regulations regarding cross-border transfers of personal data (“CBDT”). These laws, including the PIPL, regulate the processing of personal information and increase obligations on companies to protect and safeguard personal
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information. These regulations also require organizations to evaluate CBDTs and may require localization of certain data. If we fail to effectively adjust to the changing regulatory landscape and comply with applicable laws and regulations in our operating regions, our business, prospects, financial condition or operating results would be materially and adversely affected.
We have adopted a comprehensive global privacy program to help manage these evolving risks, adjust to the changing regulatory landscape and facilitate CBDTs. Any failure by us, or our third-party vendors, to comply with applicable data privacy and security laws may lead to government enforcement actions and private litigation, which could result in financial, legal, business, or reputational harm to us and could have a material adverse effect on our business, results of operations, or financial condition.
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.
Our ability to generate profits and operating cash flow depends largely upon the continued profitability of our key products, such as Nexplanon, Vtama, Emgality, the ezetimibe family of products and our portfolio of biosimilars. As a result of our dependence on key products, any event that adversely affects any of these products or the markets for any of these products could adversely affect our sales, results of operations or cash flows. These adverse events could include increased costs associated with manufacturing, product shortages, increased generic or over-the-counter availability of our products or competitive products, the discovery of previously unknown side effects or the implementation of enhanced safety measures and/or warnings, results of post-approval trials, increased competition from the introduction of new, more effective treatments and discontinuation or removal from the market of these products for any reason. In addition, recent adverse market and political events could negatively impact our key products and/or our business, results of operations and financial condition as a whole. Such adverse events may include, among other things, U.S. and international tariffs or other protectionist trade measures, the recent changes to U.S. tax laws, healthcare and regulatory reforms, including those relating to insurance coverage, and other U.S. and international regulatory changes, including changes in the regulatory enforcement landscape. Our future sales of Nexplanon could be affected by a REMS, which FDA has required for the product in connection with the new five-year duration of use. The REMS seeks to reduce risks of improper insertion and removal of the product and requires, among other things, that healthcare providers enroll in the REMS program following specific training in order to maintain access to the product. We are seeking an additional period of exclusivity for Nexplanon, specifically the potential additional three years of New Clinical Investigation exclusivity for Nexplanon in the United States for the five-year duration of use indication, which is currently under FDA review. Sales may also be adversely affected if this exclusivity was not to be granted. We also expect that competition will continue to adversely affect the sales of our key products, this includes generic competition as a result of LOE in 2026 for Nexplanon in markets outside the US, although we have yet to see the commercial launches of generic Nexplanon.
To address these adverse effects and remain competitive, we will continue to adapt our business and sales practices, particularly for our key products. These practices may include strategies such as offering product discounts and adjusting inventory levels. We review available inventory information; however, there is a risk that our predictions may be inaccurate or that we may decide to increase inventory in anticipation of customer demand. If actual demand does not materialize as expected, inventory levels may exceed customer needs. This could result in elevated channel inventory for certain products in a given quarter, which may negatively impact product revenue, increase return rates, contribute to product expirations, or reduce future inventory purchases.
Recent global healthcare reform initiatives, and U.S. judicial decisions, laws, regulations, executive orders and political actions could adversely affect our future revenues and profitability.
We face continued pricing pressure in the United States and globally (particularly in the EU, the UK, China and Japan) from managed care organizations, government agencies and programs, as these governments and third-party payors are becoming increasingly aggressive in attempting to contain healthcare costs by strictly controlling, directly or indirectly, pricing and reimbursement and, in some cases, limiting or denying coverage altogether on the basis of a variety of justifications. We expect pressures on pricing and reimbursement from both governments and private payors inside and outside the United States to continue, which could adversely affect our sales and profit margins.
Outside the United States, numerous major markets, such as the EU, the UK, China and Japan, have active government involvement including extensive pricing and reimbursement mechanisms and processes for pharmaceutical products affecting our products. Cost containment efforts by governments and private organizations are described in greater detail in Item 1. “Business — Competition” above.
In the United States, there have been significant and wide-ranging federal policy and legislative reforms impacting drug pricing
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and reimbursement. Key developments related to the IRA, MFN pricing policies, the OBBBA, and the Calendar Year 2026 Medicare Physician Fee Schedule are discussed in greater detail in Item 1. “Business – Competition” above.
In addition, there have been legislative and judicial efforts to modify, repeal or otherwise invalidate all or certain aspects of the Affordable Care Act (the “ACA”) or its implementing regulations. While the ACA remains in effect in its current form, it is unclear how any such efforts in the future will impact the ACA or our business. Moreover, the U.S. presidential administration is prioritizing efforts to restructure the U.S. Department of Health and Human Services (“HHS”), including substantial reductions in workforce. It is not clear how this restructuring of HHS will impact our business.
The increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, private insurance programs and pharmacy benefit managers could result in further pricing pressures. 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. U.S. healthcare reform has already contributed to an increase in the number of patients in the Medicaid program under which sales of pharmaceutical products are subject to substantial rebates. There are also ongoing legal and policy developments relating to the 340B Drug Pricing Program, including ongoing litigation challenging state 340B laws that seek to limit manufacturer contract pharmacy policies. Additionally, the Health Resources and Services Administration’s new 340B Rebate Model Pilot Program could introduce a shift in how discounts are provided to 340B covered entities. While the implementation of this program was enjoined by a federal court prior to its effectiveness, such a rebate model could allow for greater transparency and improved program compliance. Any changes to the 340B Program could have a significant impact on our revenue from affected products.
We continue to experience incremental gross-to-net sales pressures driven by evolving payor requirements and heightened healthcare budget constraints. In certain market segments, payors have increased reliance on mandatory rebates, clawbacks, and other price concession mechanisms to manage overall drug spending and meet fiscal obligations. As a result, we may be required to provide higher levels of financial incentives to maintain formulary access, satisfy contractual commitments and sustain product competitiveness. These dynamics could adversely impact our net revenues, profitability and the predictability of future financial performance modeling.
Our sales of Nexplanon have already been impacted by unfavorable U.S. policies, budget constraints, and funding for Planned Parenthood and federally qualified health centers, where Nexplanon has a leading market share among long-acting reversible contraceptives. Going forward, we expect to see continued focus by the U.S. government and states, as well as non-U.S. governments and regulatory authorities, on regulating drug pricing and access to medicines and other healthcare products. While it is uncertain how such developments will affect our business, they could, at a minimum, introduce additional uncertainty into the regulatory process, result in legal challenges to actions taken by regulatory bodies, and subject us to additional pricing pressures.
If we fail to appoint, hire and retain a permanent CEO, other members of our senior management, or other key employees, our business may suffer.
Our ability to appoint, hire and engage key employees, including a permanent CEO and others in our executive and senior management, impacts our ability to compete effectively. Competition for leadership in our industry can be intense, especially for employees with relevant scientific and technical expertise. Our ability to manage such human capital depends on a number of factors, including hiring practices of our competitors, compensation and benefits (as may be impacted by any financial performance challenges, including any related impact on outstanding equity awards), work location, work environment (including our competitors’ policies regarding remote or hybrid work arrangements), employee engagement and satisfaction, the market’s perception of our strategic initiatives, and economic conditions. We strive to build a strong culture with inclusion and belonging at our core, believing that this is fundamental to success and future innovation.
Additionally, the departures of members of our senior management team or other key employees could delay or hinder achievement of our financial, operating or strategic objectives. On October 26, 2025, Kevin Ali resigned as our CEO and as a member of our Board in connection with the Audit Committee’s internal investigation, as discussed in Item 9A. “Controls and Procedures.” Concurrently, Joseph Morrissey was appointed our Interim CEO. We appointed our Chairman of the Board, Carrie S. Cox, as Executive Chair for the interim period while we engage in the search for a permanent CEO. The Board has formed a Search Committee and engaged a nationally recognized search firm to assist in selecting a permanent CEO. The timeline for identifying, retaining and integrating a new CEO is currently unknown. Any failure to timely identify and hire a new CEO and successfully integrate and transition that person into his or her new role within our Company could adversely impact our ability to achieve our long-term financial, operating or strategic objectives.
We have experienced, and may continue to experience, attrition among our senior management team and key employees. Our
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executive officers could terminate their employment with us at any time, and any such departure could be particularly disruptive in light of the other recent leadership changes. Any loss of services of key employees for any reason could significantly delay or prevent the achievement of our financial, operating or strategic objectives. If we are unable to mitigate these or other similar risks, our business, results of operations or financial condition may be adversely affected.
An impairment of our Goodwill could materially impact our financial condition and results of operations.
Our quantitative goodwill impairment analysis relies on projected cash flows and market assumptions. A significant decline in forecasted performance, whether due to external economic factors or internal operational challenges, could result in the fair value of either the U.S. or international reporting unit falling below its carrying amount. In such cases, we would be required to recognize a non-cash impairment charge, which could materially impact our financial condition and results of operations. For the year ended December 31, 2025, we recognized a $301 million impairment of goodwill which represents the amount by which the carrying value of goodwill exceeded its implied fair value. The goodwill impairment recorded reflects continued pressure on the U.S. reporting unit resulting from lower-than-expected financial performance, revised forward-looking projections, adverse geopolitical development market conditions, and uncertainty in the macroeconomic environment. As a result, the U.S. reporting unit is more susceptible to future impairment than the International reporting unit. We may be required to record impairment charges on goodwill related to a reporting unit if adverse macroeconomic or geopolitical developments materially affect our business outlook. These developments may include, but are not limited to, the implementation of tariffs or other trade restrictions, changes in trade policies, inflationary pressures, interest rates, supply chain disruptions, competitive pressures, or regulatory changes that reduce forecasts or increase operating costs. If we are unable to mitigate any such goodwill impairment, our business, results of operations or financial condition may be adversely affected.
We may not realize benefits from our investments in China and emerging markets.
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 healthcare. In order for us to successfully implement our strategy, we must attract and retain qualified personnel. We may also be required to increase our reliance on third-party agents within less developed markets. In addition, many of these countries have currencies that fluctuate substantially and, if such currencies devalue and we cannot offset the devaluations, our financial performance within such countries could be adversely affected.
China significantly contributes to our global pharmaceutical sales, and its continued growth depends on a favorable regulatory environment, sustained availability of our currently marketed products within China, and our ability to mitigate the impact of any trade impediments or adverse pricing controls.
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.
In addition, we currently rely on a third-party manufacturer to import, repackage and then sell a significant portion of our products in China. China’s drug regulatory system is regularly changing. If changes to the requirements for importation, registration, distribution, and/or manufacturing of our products disrupt our business model that would adversely affect our business in China.
Finally, we plan to pivot in China from a primary focus on the public tender market to growth opportunities in the private retail segment, which is less dependent on public funding. 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.
We face intense competition from competitors’ products.
Our products face intense competition from competitors’ products, including generic versions of our products that have lost market exclusivity. 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. 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.
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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.
We are subject to minimum purchase obligations under certain supply agreements, which requires us to purchase minimum amounts of materials critical to our product manufacturing over specified time periods. If we fail to meet these minimum purchase requirements, we may still be required to pay for the cost of the minimum inventory purchases. If we are unable to offset these payments, it could result in a lower margin. During 2025, we recognized $7 million in Cost of Sales pertaining to estimated unavoidable losses associated with a long-term vendor supply contract conveyed as part of our spinoff from Merck. We also have a limited number of other arrangements that have similar provisions which could result in these types of payments. We do not currently expect these payments to be material; however, in the aggregate they may become material if additional amounts are identified in the future, and they could have a material adverse effect on our financial condition, results of operations or cash flows.
We have limited in-house discovery and limited cash to pursue early research capabilities and any expansion of our innovative pipeline and early discovery and research capabilities through future external acquisitions, partnerships and collaborations, 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.
We have limited in-house discovery and early research staff and facilities, and we do not currently intend to extensively hire or acquire such staff or facilities in the near future. Any expansion of these functions will continue to rely on future acquisitions, partnerships and collaborations with third parties; however, our capital allocation priority at the present time is to reduce our net leverage ratio, which leaves limited cash available to pursue such transactions and relationships. In addition, we may be unable to establish any agreements with third-party developers or manufacturers to provide these services on favorable terms. Further, should we 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.
Our growth could be limited by the scope of our intellectual property licenses.
We believe that growth in our business will be driven through new indications or formulations of our existing products or expansion of existing products into new markets or new geographies. However, our ability to do so could be limited by the scope of our limited intellectual property licenses for certain health products. We may not be able to offset any sales losses for products that lose or do not have exclusivity by growing sales in other markets. If we cannot produce sufficient revenues from expansion into new products, new indications or formulations of our existing products or expansion of existing products into new markets or new geographies, then we may not be able to maintain our current levels of profitability, and this could adversely affect our business, cash flow, results of operations, financial condition or prospects.
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. Oversight of these third parties can require substantial resources and creates potential risks to us, including: we may be unable to establish agreements with third parties, including third party manufacturers, on acceptable terms or even at all; we may not have sufficient quantities of product; third parties may fail to perform delegated responsibilities to an acceptable level of quality, or may fail to comply with regulatory requirements; or third parties may misappropriate or disclose our proprietary information, including trade secrets and know-how. Our reliance on third parties for research and development activities will also reduce our control over these activities but does not relieve us of our responsibilities, including that we and the third parties must ensure that clinical trials are conducted in accordance with the general investigational plan and protocols for the trial; ensure compliance with regulatory standards like good clinical practices; and register ongoing clinical trials and results to government-sponsored databases. Our failures, or the failure of third parties, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocations, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions. Further, issues related to the manufacture of products, 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.
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We may experience difficulties in connection with future acquisitions, divestitures and other strategic actions. Even if completed, we may have difficulty integrating or otherwise realizing the benefits of such transactions.
Any expansion of our product offerings and geographic presence would likely rely on acquisitions of complementary businesses, licensing arrangements and strategic partnerships. In addition, our current strategy includes potential divestitures of certain products or business lines.
We may experience difficulties identifying future acquisition or disposition opportunities or completing such transactions, including in light of our current capital allocation priority of deploying excess cash to reduce our net leverage ratio. Many of our competitors for acquisition opportunities are well established, have greater available financial resources, 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.
Any acquisitions or divestitures would require significant investment of time and resources, may disrupt our business and distract management from other responsibilities and may result in losses on the disposition of, or continued financial involvement in, the divested business, including through indemnification or other financial arrangements, for a period following the transaction, which could adversely affect our business, financial condition or results of operations. Further, any future transactions may not be completed in a timely manner, on a cost-effective basis, or at all.
Even if completed, we may not realize the expected benefits of any acquisition, license arrangement or strategic partnership. For example, there are risks associated with regulatory approval of any product we may acquire, and even if approved, such approvals may not be secured in the timeframes we anticipate. See the risk factor below entitled “We may be unable to market our pharmaceutical products or medical devices if we do not obtain and maintain required regulatory approvals or marketing authorizations”. In addition, such acquisition opportunities may relate to products, technologies or operations with which we have limited or no historical experience. Even if we are successful in making acquisitions or entering into other business development arrangements, the products and technologies we acquire may not be successful or may require significantly greater resources and investments than we originally anticipate, including due to material issues that are not foreseen, identified or disclosed in connection with our due diligence of the counterparty and its products or product candidates. We could experience negative effects on our results of operations or financial condition from acquisition-related charges, amortization of intangible assets and asset impairment charges. Integrating acquired businesses could lead us to experience numerous risks related to combining geographically separated organizations, systems and facilities and personnel with diverse backgrounds, as well as encountering unforeseen cybersecurity risks and breaches from the businesses acquired or their manufacturers and vendors and unforeseen product liability matters.
Similarly, divestitures may adversely impact our business, operating results, or financial condition if we are unable to achieve the anticipated benefits from such divestitures, or if we are unable to offset impacts from the loss of revenue associated with the divested asset or business line. Even following a divestiture or other exit strategy, we may have certain continuing obligations to former employees, customers, suppliers, landlords or other third parties. We may also have continuing liabilities related to former employees, assets or businesses. Such obligations may have a material adverse impact on our results of operations or financial condition.
Our failure to achieve the long-term plan for acquired businesses, as well as any other adverse consequences associated with our acquisition, divestiture and strategic activities, could have a material adverse effect on our business, financial condition, or results of operations.
We may be unable to market our pharmaceutical products or medical devices if we do not obtain and maintain required regulatory approvals or marketing authorizations.
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. 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. In addition, regulatory authorities have increased their focus on safety when assessing the benefit/risk balance of pharmaceutical products.
These regulatory authorities, including in China and Japan, also have substantial discretion to require additional testing in local populations, to delay or withhold registration and marketing approval and to otherwise preclude distribution and sale of a product. We cannot market or sell our pharmaceutical products or medical devices or new indications or modifications to our
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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.
It is possible that the FDA or other regulators could issue complete response letters or analogous responses 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.
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. Our failure to obtain approval or marketing authorization, significant delays in the approval or marketing authorization process or our failure to maintain approval or marketing authorization in any jurisdiction will prevent us from selling the products in that jurisdiction. We would not be able to realize revenues for our pharmaceutical products or medical devices in any jurisdiction where we do not have required approval or marketing authorization.
Our research and development of new pharmaceutical product candidates or medical devices going forward will be limited, and for those development projects we elect to pursue we and/or our partners may fail to adequately demonstrate the safety and efficacy of any product in pre-clinical studies and clinical trials, which would prevent or delay development, regulatory approval or marketing authorization and commercialization of our product candidates.
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. 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. Accordingly, there is a high risk of failure, and we may never succeed in obtaining regulatory approval or marketing authorization of our product candidates.
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.