Bausch + Lomb (US:BLCO)2026-02-18 22:19Intellectual Property and Regulatory Exclusivity - The company owns or exclusively licenses approximately 2,499 granted patents worldwide, with about 476 being U.S. patents[50]. - Approximately 83% of the issued patents are set to expire within the next 10 years, with 22 patents expiring in 2026, 37 in 2027, and 26 in 2028[50]. - The company relies on a combination of regulatory and patent rights to protect the value of its product investments[49]. - The U.S. Hatch-Waxman Act provides five years of non-patent regulatory exclusivity from the first FDA approval of a new drug compound[52]. - In the EU, a similar data exclusivity scheme allows the pioneer drug company to use data obtained at its expense for up to eight years from the first approval[53]. - The Biologics Price Competition and Innovation Act grants 12 years of market exclusivity for reference biological products[55]. - The Orphan Drug Act allows for seven years of marketing exclusivity for the first approved orphan drug for a rare disease[56]. - Canada provides an eight-year data exclusivity period for innovative drugs from the date of market approval[58]. Compliance and Regulatory Challenges - Compliance with extensive government regulations is required for the research, development, and marketing of pharmaceutical products and medical devices[61]. - The company is subject to extensive U.S. federal and state health care marketing regulations, including the federal False Claims Act, which imposes civil and criminal liability for false claims[68]. - The Physician Payment Sunshine Act requires pharmaceutical companies to report any "transfer of value" to prescribers, with significant penalties for non-compliance[69]. - The company must comply with the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws, which could result in criminal or civil penalties for violations[70]. - Compliance with the Health Insurance Portability and Accountability Act (HIPAA) is mandatory, requiring safeguards for the protection of sensitive health information[71]. - The California Consumer Privacy Act (CCPA) imposes stringent data privacy requirements, including civil penalties for violations and a private right of action for data breaches[73]. - The General Data Protection Regulation (GDPR) allows for fines of up to 4% of global annual revenue or €20 million for certain violations, significantly impacting data processing practices[75]. - The company faces compliance challenges due to differing interpretations of data protection laws in the EU and the UK, which may lead to increased operational costs[76]. - The Personal Information Protection Law (PIPL) in China imposes specific requirements for transferring personal data outside the country, affecting international operations[81]. - The company must navigate various state and federal laws regulating artificial intelligence (AI), which could require substantial changes to AI practices and incur compliance costs[78]. Market and Financial Considerations - Successful commercialization of products may depend on government and third-party payor reimbursement, with increasing pressures to limit or regulate prices in key markets[83]. - The Inflation Reduction Act (IRA) imposes financial penalties on drug price increases exceeding inflation rates, with Medicare Part D redesign starting in 2025, capping out-of-pocket costs at $2,000 for beneficiaries[87]. - Approximately 37% of the company's product sales for 2025 are produced, in total or in part, by third-party manufacturers under manufacturing arrangements[107]. - The company has a global commercial team of approximately 4,200 employees, with around 1,050 dedicated to the U.S. market for contact lenses, lens care, and pharmaceuticals[96][97]. - Customers accounting for 10% or more of total revenues include McKesson Corporation and Cardinal Health, each contributing 10% in 2025[100]. - The company operates 25 manufacturing facilities across 11 countries, focusing on specific product categories to meet regulatory requirements[103]. - As of December 31, 2025, the company employed approximately 13,000 individuals, with 7,000 in production and 900 in R&D[110]. - Legislative efforts at both federal and state levels continue to propose changes affecting drug pricing and reimbursement methodologies, potentially impacting the company's operations[88]. Employee Relations and Corporate Initiatives - The company is developing an integrated ESG program to comply with evolving regulations, including the EU's Corporate Sustainability Reporting Directive[94]. - The company has not experienced significant labor disruptions, maintaining good relations with employees and collective bargaining in some regions[111]. - The company anticipates ongoing macroeconomic challenges affecting inflation and supply chains, which its global supply team is actively managing[109]. - In 2025, the company achieved an annual Days Away Rate (DAR) of 5.5, meeting its goal of not exceeding 6, significantly lower than the industry standard DAR of 22[113]. - The company launched the Bausch + Lomb AI Academy in 2025, providing employees with access to world-class AI courses tailored for all experience levels[119]. - The company implemented a women's health program in the United States in 2025, providing comprehensive support for various health-related issues[121]. - The ONE by ONE Recycling Program has collected over 114 million used contact lenses and related items since its launch in November 2016[123]. - The company’s revenues are historically weighted toward the second half of the year, with first-quarter sales typically lower due to patient co-pays and deductibles resetting[124]. - The company has a robust global succession planning process to identify and develop talent for critical leadership positions[120]. - The company’s total rewards philosophy includes base pay, short-term and long-term incentives, aimed at attracting and retaining employees[121]. Financial Position and Risk Management - As of December 31, 2025, the company had $3,695 million in variable rate debt and $1,412 million in fixed rate debt, with a €675 million principal amount requiring repayment in Euros[599]. - A 100 basis-point change in interest rates would have an annualized pre-tax effect of approximately $37 million on the company's earnings and cash flows[599]. - A 1% change in foreign currency exchange rates would have impacted the company's shareholders' equity by approximately $23 million as of December 31, 2025[598].