Gilead Sciences Inc

Customer and revenue · Revenue concentration in specific products or segments

We receive a substantial portion of our revenue from sales of our products for the treatment and prevention of HIV infection. We may be unable to sustain or increase sales of our HIV products for any number of reasons, including market share gains by competitive products, including generics, or the inability to introduce new HIV medications necessary to remain competitive.

Innovation and product development · Clinical trial and regulatory approval risks

We face numerous risks and uncertainties with our clinical trials that could result in delays or prevent completion of the development and approval of our product candidates, including challenges in clinical trial protocol design, our ability to enroll patients in clinical trials, the possibility of unfavorable or inadequate trial results to support further development of our product candidates, including failure to meet a trial's primary endpoint, safety issues arising from our clinical trials.

Customer and revenue · Reimbursement and pricing pressure healthcare or insurance

As our products mature, pricing pressures from private insurers and government payers often result in a reduction of the net product prices. Legislative and regulatory actions affecting government prescription drug procurement and reimbursement programs occur relatively frequently.

Market position and competition · Pricing pressure and margin compression

Our existing products are subject to pricing and reimbursement pressures from government agencies and other third parties, including required discounts and rebates. Successful commercialization of our products depends, in part, on the availability and amount of third-party payer reimbursement for our products and related treatments and medical services in the markets where we sell our products.

Customer and revenue · Customer concentration and key customer dependence

We sell and distribute most of our products in the U.S. exclusively through the wholesaler/distributor channel. Historically, approximately 90% of our gross product sales in the U.S. have been to three wholesalers—Cardinal Health, Inc., Cencora, Inc. and McKesson Corporation—and their specialty distributor affiliates.

Innovation and product development · Intellectual property protection and infringement

Our success depends to a significant degree on our ability to obtain patents and licenses to patent rights, enforce our patents and defend against infringement of our patents and efforts to invalidate them, operate without infringing on the intellectual property of others, and preserve trade secrets and internal know-how.

Strategic execution · Merger acquisition and divestiture risks

We are subject to risks associated with engaging in business acquisitions, licensing arrangements, collaborations, options, equity investments, asset divestitures and other strategic transactions. We may not identify suitable transactions in the future and, if we do, we may not complete such transactions in a timely manner, on a cost-effective basis, or at all.

Natural and catastrophic events · Pandemic and public health crises

Our business has been, and may in the future be, adversely affected by outbreaks of epidemic, pandemic or contagious diseases. Actual or threatened outbreaks of epidemic, pandemic or contagious diseases, or other public health emergencies, may significantly disrupt our global operations and adversely affect our business, financial condition and results of operations.

Economic and market conditions · Inflation and deflation pressures

Interest Rates and Inflation: We have interest-generating assets and interest-bearing liabilities, including our senior unsecured notes and credit facilities. In addition, high inflation, such as what we have seen in recent years, has adversely impacted and may in the future adversely impact our business and financial results.

Market and investment · Asset valuation and impairment

As required by U.S. generally accepted accounting principles, we conduct annual impairment testing of our goodwill and other indefinite-lived intangible assets in the fourth quarter or more frequently if events or changes in circumstances indicate that it is more likely than not that the assets are impaired. We have in the past and may in the future need to recognize impairment charges related to the products, intellectual property and technologies that are acquired or licensed.

International and currency · Foreign exchange and currency exposure

Because a significant percentage of our product sales is denominated in foreign currencies, primarily the Euro, we face exposure to adverse movements in foreign exchange exchange rates. Overall, we are a net receiver of foreign currencies, and therefore, we benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar.

Industry regulation · Regulatory compliance and changes

U.S. Congress has enacted the Inflation Reduction Act of 2022 ('IRA'), which, among other changes, (1) requires the Department of Health and Human Services to 'negotiate' Medicare prices for certain drugs (starting with 10 drugs in 2026, adding 15 drugs in 2027 and 2028, and adding 20 drugs in 2029 and subsequent years), which could also affect the Medicaid rebate obligations and the ceiling prices charged to covered entities under Section 340B.

Industry regulation · Fda drug and device approval

Our operations depend on compliance with complex FDA and comparable international regulations. Failure to obtain broad approvals on a timely basis or to maintain compliance, including if significant safety issues arise for our marketed products or our product candidates, could delay or halt commercialization of our products.

Tax and financial reporting · Transfer pricing and international tax

We are also subject to the examination of our tax returns and other tax matters by the U.S. Internal Revenue Service and tax authorities in various foreign jurisdictions. There are differing interpretations of tax laws and regulations and, as a result, significant disputes may arise with these tax authorities, including with respect to issues of the timing and amount of deductions and allocations of income among various tax jurisdictions.

Tax and financial reporting · Tax compliance and changes in tax law

Changes in our effective income tax rate could reduce our earnings. We are subject to income taxes in the U.S. and various foreign jurisdictions. Due to economic and political conditions, various countries are actively considering and have made changes to existing tax laws, and we cannot predict the form or timing of such changes.

Data and privacy · Data protection and privacy laws

Regulators globally are also imposing data privacy and security requirements, such as EU's General Data Protection Regulation ('GDPR') and other domestic data privacy and security laws, such as the California Consumer Privacy Act and the California Privacy Rights Act. Non-compliance with such laws may result in liability through private actions and government enforcement.

Human capital and workforce · Talent acquisition and retention

Due to the specialized and technical nature of our business, the failure to attract, develop and retain highly qualified personnel could adversely impact us. Our future success will depend in large part on our continued ability to attract, develop and retain highly qualified scientific, technical and management personnel, as well as personnel with expertise in clinical testing, governmental regulation and commercialization.

Supply chain and procurement · Raw material availability and cost volatility

A significant portion of the raw materials and intermediates in the manufacturing of our products and product candidates are supplied by third-party suppliers, manufacturers and corporate partners outside of the U.S. As a result, any geopolitical or economic factors in a specific country or region, including any new, or changes in or interpretations of existing law, trade regulations, or compliance requirements could adversely affect our ability to manufacture and supply our products to meet market needs.

Reputation and brand · Corporate social responsibility

Our aspirations, goals and disclosures related to corporate responsibility matters expose us to numerous risks, including risks to our reputation and stock price. We are subject to evolving and sometimes conflicting investor and other stakeholder expectations concerning corporate responsibility matters, such as environmental sustainability and climate change and related targets or performance.

Digital transformation and innovation · Technology implementation and upgrades

If our information systems or third-party information systems on which we rely suffer severe damage, disruption or shutdown, including during upgrades or new implementations, and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience delays in reporting our financial results.