Read the Registration Document - Guerbet

• Sourcing risksGuerbet has an exposure with respect to the stability in sources for supplies and fluctuations in raw materialprices. Guerbet's multiple sources for supplies ensure the availability of satisfactory levels to meet itsproduction needs.Suppliers of raw materials must comply with strict production standards (cGMP for Active PharmaceuticalIngredients and cGMP for excipients). There are also declared in the US NDA regulatory files and may beinspected by the FDA.• Regulatory risksAs a designer, manufacturer and distributor of pharmaceutical products and medical devices, Guerbet issubject to a number of regulatory constraints in all its markets. In particular, Guerbet is required to complywith French public health laws (Code de la santé publique) as well as the good practices defined by theMinister of Health for laboratory work, clinical trials, the manufacture and distribution of pharmaceuticalproducts, information provided to clients and pharmacovigilance.For the production of active chemical ingredients for its products, the Group is subject to regulationsgoverning facilities designated as “Seveso” sites regularly inspected by regional environmental authorities(DREAL). These products are manufactured and controlled according to the conditions defined andapproved by the marketing authorisation (AMM) issued by the health authorities and their manufacture issubject to rules of good manufacturing practices for raw materials used for pharmaceutical applications.The Group is also subject to the European regulation (REACH or “Registration, Evaluation, Authorisationand Restriction of Chemical substances”) reinforcing requirements for the registration of chemicalsubstances manufactured or imported in the European Union.As a modification of these regulations, both in France and other countries could have a material effect onthe Group's business, it cannot in consequence guarantee that such changes, in particular those affectingthe key markets where it operates, will not have an adverse impact on its business and operatingperformance.b) Market risks• Interest rate riskThe Group carries a structural risk under liabilities concerning floating-rate bank debt not offset byequivalent positions under assets. The breakdown between fixed and floating rate debt is decided by theGroup's executive management and reviewed on a periodic basis according to expected trends for interestrates. Guerbet has hedged the total amount of its floating-rate debt through conventional instruments suchas swaps, caps and floors. Maintaining open positions on these financial instruments is prohibited.→ Information on the exposure to interest rate risks and hedging operations related to the period ispresented in the notes to the consolidated financial statements.• Foreign exchange riskBecause two thirds of Group sales and purchases are in euros, it does not have an exposure to foreignexchange risk. The Group's €/USD exposure is marginal as Group U.S. dollars purchases and sales offseteach other.However, because of its international operations, the Group is exposed to foreign exchange fluctuations forcertain currencies of its subsidiaries, and notably the Brazilian real, the South Korean won and the Turkishlira.The strategy is to hedge residual currency risks on assets and liabilities by concentrating resources incurrencies representing the greatest exposure in terms of amounts and volatility. Hedging instruments usedinclude swaps and forwards. Maintaining open positions on these financial instruments is prohibited.→ Information on the exposure to foreign exchange risks and hedging operations related to the period ispresented in the notes to the consolidated financial statements.53