UCB SA - BNP Paribas Fortis

The UCB Group relies upon third-party manufacturers and suppliers with regard to some of their
products and, like all pharmaceutical companies, may continue to look for other third party
manufacturers and suppliers for other products. Given the specialist nature of the industry, there are
certain products for which only one supplier exists. The UCB Group cannot be certain that it will be
able to enter into satisfactory agreements with third-party manufacturers and/or suppliers or that they
will continue to serve as reliable partners. Further, the limited number of suppliers may cause
escalation in the cost of supply of certain key products, which would damage the revenue streams of the
UCB Group. The failure of the UCB Group to enter into agreements with such manufacturers and/or
suppliers on reasonable terms, if at all, or poor manufacturing or supplying performance of the thirdparty
manufacturers and suppliers could have a material and adverse effect on the business, financial
condition and results of operations.
(h) The UCB Group is dependent on research and development partners and commercial partners.
The UCB Group relies on research and development partners, in particular in relation to its early stage
operations encompassed in UCB NewMedicines. Those partnerships depend upon efficient
collaboration and stable research strategies. Failure to retain key scientific personnel both internally
and in collaborations may have a negative impact on the success of a specific research program.
Separately, the Issuer has looked to joint ventures to divest some of its non-core products, such as
oncology therapies, and is therefore now reliant on the ability of the joint venture party to progress such
products to ensure that the joint venture is successful. The UCB Group may also rely on third parties to
fund or help fund research and development costs and expenses associated with supporting clinical
studies and regulatory filings to allow the UCB Group the opportunity to launch and maximixe the
potential of its products in the marketplace.
Existing and future commercial partnerships with third parties are of material importance for the UCB
Group. The UCB Group has acquired third parties’ products for further commercialisation in specific
geographical areas or therapeutic areas through licensing, co-promotion or co-marketing. The initiation
of such partnerships usually involves material up-front and royalty payments to such third parties based
on the evaluation of the potential success of the relevant product. Similarly, the UCB Group holds
licences in relation to a number of products which other parties distribute, with the UCB Group
receiving royalties in respect of sales by such distributors. In the event that these sales and therefore the
royalty payments were to decrease, this may have a significant negative impact on the UCB Group’s
revenue.
The failure of the UCB Group to enter into such kind of partnership agreements on reasonable terms, if
at all, or the poor performance of the third-party products could have a material and adverse effect on
the business, financial condition and results of operations of the UCB Group.
(i) The UCB Group’s relatively high fixed costs base, as a proportion of its total costs, means that
falls in revenue could have a significantly adverse effect on its profitability.
The UCB Group has a relatively high fixed cost base as a proportion of its total costs, consisting
primarily of costs of maintaining continued investment in the product pipeline and related
infrastructure, and the supply of products and equipment for the development of drugs. A decrease in
the UCB Group’s revenue is likely therefore to have a disproportionately material adverse impact on the
UCB Group’s profitability if the UCB Group is unable, in the short to medium term, to manage its costs
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