UCB SA - BNP Paribas Fortis

and supply requirements substantially to mitigate the effect of any significant falls in revenue on profit.
The UCB Group’s profitability is therefore likely to be more significantly negatively affected by
decreases in revenue than would be the case for a company with a more flexible cost base. Any
decrease in profitability could have a material adverse effect on the UCB Group’s business, financial
condition and results of operations.
(j) Products, including products in development, cannot be marketed unless the UCB Group obtains
and maintains regulatory approval.
The activities of the UCB Group, including research, drug development, manufacturing and marketing
its products, are and will be subject to extensive regulation by numerous authorities in the European
Union, including the European Medicine Evaluation Agency, and in the United States, including the
Food and Drug Administration, and by other foreign regulatory authorities. Regulations are primarily
focused on drug quality, safety and efficacy. The regulatory authorities have substantial discretion to
require additional testing, to delay or withhold registration and marketing approval and to mandate
product recalls or withdrawals. Regulatory approval also extends to the supply and distribution of
products. If a situation occurs, as with the distribution of Neupro® during 2008, where a product is to
be recalled and removed from distribution for any length of time, this will have a material adverse effect
on the revenues of the UCB Group during this period.
Even if the UCB Group develops new products it will not be able to market any of those products
unless and until it has obtained the required regulatory approvals in each jurisdiction where it proposes
to market the new products. Once obtained, the UCB Group must maintain these market authorisations
as long as it plans to market its new products in each jurisdiction where approval is required. The
failure of the UCB Group to obtain approval, significant delays in the approval process, or its failure to
maintain approval in any jurisdiction will prevent it from selling the new products in that jurisdiction
until approval is obtained, if ever. The UCB Group will not be able to realise revenues for those new
products in any jurisdiction where it does not have approval.
(k) The UCB Group may not obtain acceptable price and reimbursement for its products.
In most markets, drug prices and reimbursement levels are regulated or influenced by governments,
public health trust assessment bodies, insurance companies or other third parties. Furthermore, the
overall cost to society regarding healthcare has increased considerably over the last decades and
governments and insurance companies all over the world are striving to control healthcare costs. There
can be no guarantee that the drugs of the UCB Group will obtain the anticipated selling prices or
reimbursement levels foreseen. If actual prices and reimbursement levels granted to the products of the
UCB Group are lower than anticipated, then this is likely to have a negative impact on the products’
profitability and/or marketability.
In the U.S. and in certain European markets, many of the UCB Group’s pharmaceutical products are
subject to increasing pricing pressures. Such pressures in the U.S. have increased as the result of the
U.S. Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “2003 Medicare
Modernization Act”) due to the enhanced purchasing power of the private sector plans that negotiate on
behalf of Medicare beneficiaries. If the 2003 Medicare Modernization Act were amended to impose
direct governmental price controls and access restrictions, it would have a significant adverse impact on
the UCB Group’s business. In addition, Managed Care Organizations (MCOs), as well as Medicaid and
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