BUSINESS AND OPERATIONAL RISKS i need 2.5 pages on each risk. (use the 10K report for STRYKER CORP)
http://www.sec.gov/Archives/edgar/data/310764/000031076414000021/0000310764-14-000021-index.htm (use as reference) I need citations and sources , CHECK Grammar!
Some important factors that could cause the Company’s actual results to differ materially from those expressed or implied in the Company’s forward-looking statements are as follows:
• Economic factors, including inflation and fluctuations in interest rates and currency exchange rates and the potential effect of such fluctuations on revenues, expenses and resulting margins;
• Competitive factors, including technological advances achieved and patents attained by competitors as well as new products introduced by competitors;
• Challenges to the Company’s patents by competitors or allegations that the Company’s products infringe the patents of third parties, which could potentially affect the Company’s competitive position and ability to sell the products in question and require the payment of past damages and future royalties. In particular, generic drug firms have filed Abbreviated New Drug Applications with the FDA seeking to market generic forms of most of the Company’s key pharmaceutical products, prior to expiration of the applicable patents covering those products. In the event that the Company is not successful in defending the resulting lawsuits, generic versions of the product at issue will be introduced, resulting in very substantial market share and revenue losses;
• The impact of patent expirations on the Company's business and operating results. As patents expire, competitors may be able to legally produce and market similar products or technologies, including biosimilars, which would have a material adverse effect on the Company's sales and results of operations;
• Financial distress and bankruptcies experienced by significant customers and suppliers that could impair their ability, as the case may be, to purchase the Company’s products, pay for products previously purchased or meet their obligations to the Company under supply arrangements;
• Changes in the behavior and spending patterns of purchasers of health care products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing health care insurance coverage, as a result of a prolonged global economic downturn;
• The impact on international operations from financial instability in international economies, sovereign risk, possible imposition of governmental controls and unstable international governments and legal systems;
• Interruptions and breaches of computer and communications systems, including computer viruses, “hacking” and “cyber-attacks,” that could impair the Company's ability to conduct business and communicate internally and with its customers, or result in the theft of trade secrets or other misappropriation of assets, or otherwise compromise privacy of sensitive information belonging to the Company, its customers or other business partners;
• Health care changes in the U.S. and other countries resulting in pricing pressures, including the continued consolidation among health care providers, trends toward managed care and health care cost containment, the shift towards governments becoming the primary payers of health care expenses and government laws and regulations relating to sales and promotion, reimbursement and pricing generally;
• Government laws and regulations, affecting U.S. and international operations, including those relating to securities laws compliance, trade, monetary and fiscal policies, taxes, price controls, regulatory approval of new products, licensing and patent rights, environmental protection, conflict minerals and possible drug reimportation legislation;
• Competition in research, involving the development and the improvement of new and existing products and processes, is particularly significant and results from time to time in product and process obsolescence. The development of new and improved products is important to the Company’s success in all areas of its business;
• Challenges and difficulties inherent in product development, including the potential inability to successfully continue technological innovation, complete clinical trials, obtain regulatory approvals in the United States and internationally, gain and maintain market approval of products and the possibility of encountering infringement claims by competitors with respect to patent or other intellectual property rights which can preclude or delay commercialization of a product;
• Significant litigation or government action adverse to the Company including product liability claims, patent infringement claims and antitrust claims;
• Increased scrutiny of the health care industry by government agencies and state attorneys general resulting in investigations and prosecutions carry the risk of significant civil and criminal penalties, including, but not limited to, debarment from government business;
• Difficulties and delays in manufacturing, internally or within the supply chain, that cause voluntary or involuntary business interruptions or shutdowns, product shortages, substantial modifications to our business practices and operations, withdrawals or suspensions of current products from the market, or possible civil penalties and criminal prosecution;
• Product liability insurance for products may be limited, cost prohibitive or unavailable;
• Product efficacy or safety concerns, whether or not based on scientific evidence, resulting in product withdrawals, recalls, regulatory action on the part of the FDA (or international counterparts) or declining sales;
• The impact of business combinations, including acquisitions and divestitures, both by and for the Company, as well as externally in the pharmaceutical, medical devices and diagnostics and consumer industries;
• Changes to global climate, extreme weather and natural disasters that could affect demand for the Company's products and services, cause disruptions in manufacturing and distribution networks, alter the availability of goods and services within the supply chain, and affect the overall design and integrity of the Company's products and operations;
• Reliance on global supply chains and production and distribution processes that are complex, subject to increasing regulatory requirements that may adversely affect sourcing, supply and pricing of materials used in our products, and which may involve multiple third parties, require significant capital expenditures, and be subject to lengthy regulatory approvals;
• The possibility that the Internal Revenue Service could assert one or more contrary positions to challenge the transactions consummated in connection with the acquisition of Synthes, Inc. from a tax perspective. If challenged, an amount up to the total purchase price for the Synthes shares could be treated as subject to applicable U.S. tax at approximately the statutory rate to the Company, plus interest;
• The impact on political and economic conditions due to terrorist attacks in the U.S. and other parts of the world or U.S. military action overseas, as well as instability in the financial markets which could result from such terrorism or military actions; and
• Issuance of new or revised accounting standards by the Financial Accounting Standards Board and the Securities and Exchange Commission.
Compliance-Related Risks & Health Care Compliance Risk
Financial Risk - The lawsuits and acquisitions could be included here.
Market Risk - Competition
Reputational Risk - Acquiring Stryker may be of concern due to the bribery charges, etc. and lawsuits.
“Since the target and acquiring companies are in the same industry, in many cases the risk for each company will be the similar.”
2 sections of the report should be 3-5 pages each
Below is some guidance on how to approach this week’s assignment.
1. First thing to note is that there are 2 parts to this assignment,
Notice that the key is not only to identify the risk but also how it can be mitigated (managed).
2. Before writing, each team needs to identify the risks and assign the risks for writing. Since the target and acquiring companies are in the same industry, in many cases the risk for each company will be the similar. So your approach might be to identify a risk and have one team member evaluate the risk for each company to put in the separate company sections.
EXAMPLES I WAS THINKING ABOUT
lawsuits for both companies
recent acquisitions - are they growing to fast
3. The logical place to look for risk factors is in the risk factor section of the 10-K’s. However, you might also look in the most recent 10-Q since that also identifies risks. However, this is more than an exercise in cutting and pasting those risks. First thing to note is the risk factors in these documents are very general. You need to take that general risk and be more specific with a detail explanation. In addition, look through the rest of the 10-K including the financial notes for risk information. Derivatives disclosure is an example of what you can find. Loss contingencies might reveal some risks. Also try the typical google searches of risks areas.
4. I also recommend reading the text chapter (CHAP 20) on risk management for approaches to writing about risk.
5. Remember that you need to fully understand how you company operates in order to identify risks.
6. The 2 sections of the report should be 3-5 pages each.