Item 1A. Risk Factors.
Summary of Risk Factors
You should carefully consider the risks described below, together with all of the other information in this annual report on Form 10-K. The risks below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we believe to be immaterial may also adversely affect our business. If any of the following risks occur, our business, financial condition, and results of operations could be seriously harmed, our stock price might decline, and you could lose all or part of your investment.
Risks Related to our Company and Its Business
• We are subject to risks related to the manufacture and distribution of our products and must adhere to stringent manufacturing practices.
• We rely heavily on SUBLOCADE for a significant portion of our revenues.
• Our revenues may grow at a slower than expected rate or decrease due to many factors.
• We rely on third parties to manufacture commercial supplies of most of our products.
• Our ability to generate revenues from our products is subject to attaining significant market acceptance.
• We are subject to litigation.
• We must comply with the terms and conditions of various government agreements.
• We are subject to additional risks because we import, manufacture, and distribute controlled substances.
• Acquisitions, partnerships, joint ventures, dispositions, and other business combinations or strategic transactions involve several inherent risks.
• The clinical study or commercial use of our products may cause unintended side effects.
• We depend on third-party payors for reimbursement for our products.
• Congress may reduce spending on Medicaid funding.
• We operate in a highly competitive industry.
• Failure to retain key personnel or attract new personnel could have a material adverse effect on us.
• We are subject to a variety of laws and regulations related to fraud and abuse and transparency.
• We may be subject to adverse public opinion.
• We use hazardous materials in our manufacturing facilities.
• Actual costs to exit various businesses may differ materially from our estimates.
• Our product pipeline relies on collaborations with third parties.
• Clinical trials for the development of products may be unsuccessful.
Risks Related to Intellectual Property
• We may fail to obtain and maintain patents and protect other proprietary rights.
• We may incur substantial costs as a result of intellectual property litigation or other proceedings.
Risks Related to Regulatory or Legal Matters
• Regulatory agencies may impose limitations or post-approval requirements on our products.
• We are subject to ongoing obligations and continued regulatory inspection.
• Product liability and product recalls could have a material adverse effect on us.
• We are subject to federal, state, local, and foreign healthcare laws and regulations.
• Guidelines published by professional societies, insurance carriers, physician groups, science foundations, and other organizations may affect the use of the Company’s products.
• We may fail to comply with payment and reporting obligations under governmental pricing programs.
• Failure to comply with anti-corruption laws and regulations, anti-money laundering laws and regulations, and/or economic sanctions could result in us becoming subject to fines or penalties.
• The pharmaceutical industry faces significant government scrutiny regarding pricing and competition.
• The regulatory approval process is expensive, time-consuming, and uncertain.
Risks Related to our Financial Condition and Tax Matters
• Our balance sheet is leveraged, and any reduction in revenue may adversely affect our liquidity and profitability.
• Our business strategy may involve transactions which may dilute existing stockholders’ interests.
• Our effective tax rate may increase.
• Our deferred tax assets may not be realized.
• Tariffs on pharmaceutical products may adversely affect our revenues or profitability.
• We are subject to macroeconomic trends in the markets where we operate.
• Our operating results may fluctuate significantly.
• Any future pandemic, and governmental and societal responses thereto, may harm our business, results of operations, and financial condition.
• Our insurance coverage may not be adequate.
• Our term loan contains covenants that limit our ability to plan for or respond to changes in our business.
Risks Related to Our Common Stock
• Our common stock is subject to market price volatility.
• Securities or industry analysts may fail to publish research or may publish inaccurate or unfavorable research about our business.
• The Parent Company is a holding company with no business operations of its own and depends on its subsidiaries for cash, including in order to pay dividends or make share repurchases .
• We may not pay dividends in the future.
• We are subject to anti-takeover provisions in our certificate of incorporation, bylaws, and Note Purchase Agreement that could delay or prevent an acquisition of our company.
Risks Related to Information Security and Data Privacy
• We are at risk for business interruptions or breaches of data security.
• We are required to maintain the privacy and security of personal information.
• Artificial intelligence presents risks and challenges that can impact our business including posing security risks to our confidential information, proprietary information, and personal data.
Risks Related to Our International Status and Operations
• We are exposed to risks related to currency exchange rates.
Risks Related to Being a Publicly-Traded Company in the U.S.
• We are subject to risks related to changes in accounting standards, assumptions, and estimates.
Risks Related to our Company and Its Business
We are subject to risks related to the manufacture and distribution of our products globally and must meet stringent current Good Manufacturing Practices.
All facilities and manufacturing techniques used for the manufacture of our products must be operated in conformity with the mandatory manufacturing standards (often referred to as current good manufacturing practice (cGMP)) of the FDA, Health Canada, the Australian Therapeutic Goods Administration, and other regulatory authorities. Manufacturing facilities are subject to periodic unannounced inspections by the FDA, MHRA, HPRA, and other regulatory authorities. Failure to comply with applicable legal and regulatory requirements, and with the manufacturing details filed as part of our marketing authorization, subjects our manufacturing facilities or the facilities of our third-party manufacturers to possible legal or regulatory action, such as inspectional observations (e.g., Form FDA 483 notices), warning letters, suspension of manufacturing, product seizure, withdrawal of the product from the market, administrative, civil and criminal penalties, among other enforcement remedies. Therefore, such enforcement actions may adversely affect our ability to manufacture, or our third-party suppliers’ ability to supply, finished products.
Also, the manufacturing and distribution of our products globally are highly exacting and complex, due in part to strict regulatory and manufacturing requirements. Problems may arise during manufacturing and distribution for a variety of reasons, including but not limited to equipment malfunction, failure to follow specific protocols and procedures, testing nonconformities (e.g., sterility failure), failure to follow and provide oversight in cGMP, defective raw materials, product theft or diversion within our legal chain of custody, restricted supply of raw materials or components due to geopolitical disruption or pandemic, and environmental factors.
We have either a single or dual source of supply for the raw materials, product components, and drug products used in most of our marketed products, drug product candidates under development, and their respective APIs (including buprenorphine). Single sourcing puts us at risk of a potential interruption to supply in the event of manufacturing, quality or compliance difficulties. In the event of any supply chain disruption or product quality issues, our suppliers or third-party manufacturers may not have adequate contingency plans in place that enable them to continue to supply or manufacture our products within contractual deadlines or at all. If any of our suppliers or third-party manufacturers fails or refuses to supply us for any reason, it would take a significant amount of time and expense to implement and execute the necessary technology and design transfer to, and to qualify, a new supplier or manufacturer, as applicable. Often, as a general guide, this transfer time averages 36 months and is based on several factors. The FDA and similar international or national regulatory bodies must approve our filings which identify the manufacturers of the active and inactive pharmaceutical ingredients and certain packaging materials used in our products. If there are delays in qualifying new suppliers or facilities or a new supplier is unable to meet the FDA’s or similar international regulatory body’s requirements for approval, there could be a shortage of the affected products for the marketplace or for use in clinical studies, or both, which could negatively impact our anticipated revenues and could potentially cause us to breach contractual obligations with customers or to violate local laws requiring us to deliver the product to those in need. Any delay in supplying, or any failure or refusal to supply, products to, or delays in manufacturing by, our suppliers, or any catastrophe or natural or man-made disaster affecting such third-party manufacturing facilities or suppliers, could result in our inability to meet current and future state commercial demands for our products, which in turn could materially adversely affect our business, prospects, results of operations and financial condition. The Company’s supply monitoring and contingency planning processes include proactive management of inventories throughout the supply-to-patient delivery process and initiatives to identify and qualify alternative sites and/or suppliers. Despite these mitigating measures, if major delays, interruptions, or quality events occur at those contracted suppliers, contracted manufacturers, or packaging organizations, the delivery of products to our patients could be significantly disrupted, which could materially adversely affect the sales of our products and accompanying revenues. Further, any interruption in supply could result in delays in meeting our contractual obligations and could damage our relationships with our licensees, including the loss of manufacturing and supply rights and/or revenues.
We rely heavily on SUBLOCADE for a significant portion of our revenues.
Historically, our business has been dependent on the sale of products containing buprenorphine. We developed SUBUTEX Tablets, SUBOXONE Tablets, SUBOXONE Film and SUBLOCADE for the treatment of OUD. In the last three years, SUBLOCADE has become increasingly important to our revenue growth and financial results. SUBLOCADE accounted for 69%, 64%, and 58% of our total net revenues in 2025, 2024, and 2023, respectively.
Our oral buprenorphine products, including SUBOXONE Film, SUBOXONE Tablets, and SUBUTEX Tablets, are subject to substantial competition. Revenues from film and tablet products are declining. Further, in the Resolution Agreement we agreed not to employ a sales force to promote or sell SUBOXONE Film in the U.S., and in our settlement agreement with the States for Opioid MDL we agreed to restrictions that effectively prohibit marketing of SUBOXONE FILM through 2032. See generally, " We are currently, in the past have been, and in the future may be, subject to substantial litigation that could cause us to incur significant legal expenses, divert management’s attention, and result in harm to our business," above. Further, we do not sell SUBOXONE Tablets or SUBUTEX Tablets in the U.S. As a result, sales of SUBLOCADE are very important to our revenue growth and financial results.
Our operating plan assumes that SUBLOCADE, SUBOXONE Film, and SUBUTEX Tablets will remain the treatment of choice for OUD patients who can benefit from MAT in the countries where we sell these products. There is no guarantee that we can maintain sales at or near historical levels, or that sales will continue to grow. In this regard, our ability to maintain or increase sales are subject to a number of risks and uncertainties including (i) competition from the introduction of branded competition or generic versions of our products; (ii) pricing pressure from, changes in policies by, or restrictions on reimbursement imposed by, third-party payors, including governments, and our ability to maintain adequate coverage and reimbursement for our products; (iii) increased rebates required to maintain access to our products; (iv) challenges to our intellectual property around SUBLOCADE; and (v) continued acceptance of SUBLOCADE by physicians and patients. In addition, Congress continues to consider various policy proposals that may result in pressure on the prices of prescription drugs in government healthcare programs in efforts to decrease government spending. See " Congressional action to reduce spending may result in cuts to Medicaid which in turn might impair access to our products in the U.S., thereby adversely affecting our revenues and results of operations," above. Further, as organized health systems consolidate, in part due to private equity activity, we may be required to increase rebates, which would reduce the profitability of our products. Any significant negative developments relating to these risks could have a material adverse effect on our revenues from these products and, in turn, on our business, financial condition, cash flows and results of operations and the market price of our common stock.
Further, the biopharmaceutical and biotechnology industries are characterized by rapidly advancing technologies. Our future success will depend in part on our ability to maintain a competitive position. If we fail to stay at the forefront of technological change to create and develop product candidates, we may be unable to compete effectively. Our competitors or technological change may limit the commercial value of our products by advances in existing technological approaches or the development of new or different approaches, potentially eliminating the advantages of our proprietary products and product candidates.
Our revenues may grow at a slower than expected rate or decrease due to many factors.
Sales may not grow, and may decline. Risks to revenue growth include:
• potential changes to government funding at the federal, state, and local levels;
• the perception of physicians and other members of the healthcare community as to our products’ safety and efficacy relative to that of competing products and the willingness or ability of physicians and other members of the healthcare community to prescribe, dispense and/or administer, and patients to use, our products;
• unfavorable publicity concerning us, our products, similar classes of drugs or the industry generally;
• the cost-effectiveness of our products, the impact of price changes in the market, and the reimbursement policies of government and third-party payors;
• patient and physician satisfaction with our products;
• significant changes in the competitive landscape for our products, including any approval of generic versions of our products or other branded products that may compete with our products;
• adverse event information relating to our products or to similar classes of drugs;
• changes to the labels of our products, or of products within the same drug classes, to add significant warnings or restrictions on use;
• regulatory developments and actions related to the manufacture, commercialization or continued use of our products, including FDA actions such as required changes to our REMS or a warning letter, or conduct of an audit by the FDA or another regulatory authority in which a manufacturing or quality deficiency is identified;
• U.S. and global political changes and/or instability, including trade relations, and any related changes in applicable laws and regulations, that may impact resources and markets for our products; and
• the potential negative impact of current and future healthcare laws and legislation and regulation controlling the conditions of treatment and the distribution of the product including, with respect to OUD treatments, new governmental or regulatory guidelines or policies limiting the prescription of opioids to patients.
We rely on third parties to manufacture, package, test, and distribute our products and their facilities and processes must meet stringent regulatory requirements.
The Company relies almost exclusively on third parties, including contract manufacturing organizations, to manufacture, package, test, and distribute our products. The manufacturing of our products, which include terminally sterilized and aseptically filled injectables, film products, and oral solid dose tablet products, is subject to stringent global regulatory, quality, and safety standards, including current Good Manufacturing Practice (“cGMP”). Some of our products, including SUBLOCADE long-acting injectable and SUBOXONE Film, are significantly more complicated to manufacture than tablet products. We have limited control over the performance of our third-party manufacturers and are currently dependent on our third-party contract manufacturing partners whom we manage via supply and quality agreements.
We or our third-party manufacturers may encounter difficulties in production, such as issues with production costs and yields, process controls, quality control, and quality assurance, including testing of stability, impurities and impurity levels, sterility, and other product specifications by validated test methods, compliance with strictly enforced global and regional regulations, and disruptions or delays caused by man-made or natural disasters, pandemics or epidemics, or other business interruptions.
Similarly, the Company relies on a third-party logistics vendor and a network of specialty pharmacists and specialty distributors to fulfill orders and distribute our products in the U.S. and logistics and distribution partners to distribute our products worldwide. This process is complicated because our products contain controlled substances that require special handling, such as import and export permits, adherence to a risk evaluation and mitigation strategy (“REMS”) protocol, and import restrictions on controlled substances. See below, “ We are subject to additional risks because we import, manufacture, and distribute controlled substances.”
If we or any of our third-party manufacturers cannot successfully manufacture material that conforms to our specifications and the applicable regulatory authorities’ strict regulatory requirements or pass regulatory inspection, we or our third-party manufacturers will not be able to ensure an adequate supply of products and/or secure or maintain regulatory approval for the manufacturing facilities. In addition, we have no direct control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance
and qualified personnel. If the FDA does not approve these facilities for the manufacture of our products or if they withdraw any such approval in the future, or if the supply of our primary active ingredients or manufacture of our products is somehow interrupted, we may need to find alternative manufacturing facilities, which may significantly impact our ability to develop, obtain regulatory approval for or market our products. To the extent our manufacturing facility or that of any third-party manufacturers that we engage with respect to our products are different from those currently being used for commercial supply in the U.S., studies will have to be completed, and the FDA will need to approve such facilities prior to our sale of any product manufactured using these facilities. Any delay or interruption in our ability to meet commercial demand for our products will result in the loss of potential revenues and could adversely affect our ability to gain market acceptance for these products. In addition, any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trials, and, depending upon the period of delay, require us to commence new clinical trials at additional expense or terminate clinical trials completely, which in turn could have a material adverse effect on our business financial condition, and results of operations.
Our ability to generate revenues from our products is subject to attaining significant market acceptance among key healthcare stakeholders and our ability to successfully develop and execute commercialization strategies for each of our products. Failure to do so would adversely impact our financial condition and prospects.
A substantial majority of our resources are focused on the commercialization of our current products. Our current and future products may not achieve market acceptance. If any of our commercial strategies are unsuccessful or we fail to successfully modify our strategies over time due to changing market conditions, our ability to increase category share for our products, grow revenues and sustain profitability will be harmed.
For example, SUBLOCADE was approved in 2017 as the first once-monthly subcutaneous extended-release injectable suspension of buprenorphine. We initiated commercial sales of SUBLOCADE in 2018. It took until 2020 to reach $100 million in annual net revenues for SUBLOCADE. In the U.S., a competitor introduced its own subcutaneous extended-release injectable suspension of buprenorphine in 2023.
We believe the degree of market acceptance and our ability to generate revenues from our products depends on several factors, including:
• the timing of market introduction of our products as well as competitive products;
• our ability to manufacture in sufficient quantities in compliance with requirements of regulatory agencies and at acceptable quality and pricing levels in order to meet commercial demand and where applicable demand for samples;
• our ability to secure formulary approvals for products at a substantial number of targeted hospitals and Organized Health Systems (“OHSs”);
• our ability to implement and maintain agreements with wholesalers and distributors on commercially reasonable terms, and their performance, over which we have limited control;
• our ability to receive adequate levels of coverage and reimbursement for products from commercial health plans and government health programs;
• our ability to train, deploy and support qualified customer-facing field teams which include a sales force, a managed care team, account teams that target OHSs, as well as a channel team;
• market demand for our products through our marketing and sales activities and other arrangements established for their promotion;
• the efficacy and safety of our products;
• potential or perceived advantages or disadvantages of our products over alternative treatments, including the cost of treatment and relative convenience and ease of administration;
• the prevalence of the disease or condition for which the product is approved and the projected growth of the markets in which our products compete;
• the effect of current and future healthcare laws and legislation and regulation controlling the conditions of treatment and the distribution of the products for OUD;
• our ability to increase overall public awareness of the opioid epidemic and approved treatments, as well as increasing access to BMAT treatments for patients via regulatory and legislative actions to increase access;
• the extent to which physicians diagnose and treat the conditions that our products are approved to treat, physicians’ willingness to prescribe the product, and our ability to educate physicians with respect to new products;
• the prevalence and severity of any side effects;
• the price of our products, both in absolute terms and relative to alternative treatments, including the impact of past or expected future product price increases;
• product labeling or product insert requirements of the FDA or other regulatory authorities;
• the nature of any post-approval risk management plans mandated by regulatory authorities; see “ We are subject to additional risks because we import, manufacture, and distribute controlled substances, ” above,
• the convenience of prescribing, administrating and initiating patients on the product, and
• our ability to communicate the benefits of our products, including through direct-to-consumer advertising.
Any factors preventing or limiting the market acceptance or commercialization of our products could have a material adverse effect on their sales and hence our business, results of operations and financial condition.
We are currently, in the past have been, and in the future may be, subject to substantial litigation that could cause us to incur significant legal expenses, divert management’s attention, and result in harm to our business.
We are currently subject to several significant unresolved matters, including:
• The Company has been named as a defendant in numerous lawsuits alleging that SUBOXONE Film was defectively designed and caused dental injury, and that the Company failed to properly warn of the risks of such injuries. The plaintiffs generally seek compensatory damages, as well as punitive damages and attorneys’ fees and costs. These claims follow a June 2022 required revision to the Prescribing Information and Patient Medication Guide about dental problems reported in connection with buprenorphine medicines dissolved in the mouth to treat opioid use disorder. This revision was required by the FDA of all manufacturers of these products. Applications to file class actions based on similar allegations as in the Dental MDL, but also relating to SUBOXONE Tablets, were filed in Quebec and British Columbia against various subsidiaries of the Company, among other defendants, in April 2024, following a required label change by Health Canada. Product liability cases such as these typically involve issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual/provable injury, and other matters.
• On September 21, 2022, certain stockholders issued representative and multiparty claims against Indivior PLC in the High Court of Justice for the Business and Property Courts of England and
Wales, King’s Bench Division. The claims made in both the representative and multiparty actions generally allege that Indivior PLC violated the U.K. Financial Services and Markets Act 2000 (“FSMA 2000”) by making false or misleading statements or material omissions in public disclosures, including the 2014 Demerger Prospectus, regarding an alleged product-hopping scheme regarding the switch from SUBOXONE Tablets to SUBOXONE Film. The claims related to the multiparty are now proceeding in the High Court, although they remained pending while Indivior proceeded to successfully to strike out the representative action.
For a more detailed discussion involving the Company’s legal proceedings and associated accounting estimates, see Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies , especially at the captions "Dental Allegations" and "U.K. Stockholder Claims," which provide information regarding additional matters that we believe may be significant to the Company as of the date of the filing of this annual report.
In the past we were, and in the future may be, subject to litigation that could cause us to incur significant legal expenses, divert management’s attention, and result in harm to our business. For example:
• In 2019, the U.S. Attorney’s Office for the Western District of Virginia brought an indictment, followed by a superseding indictment, against the Company in connection with our marketing and promotional practices related to SUBOXONE Film and SUBOXONE and SUBUTEX Tablets (the "2019 Indictment"). The indictment charged Indivior Inc. and Indivior PLC with health care fraud, mail fraud, wire fraud, and conspiracy to commit the same. It generally alleged that the Company had falsely represented that SUBOXONE film was safer and less susceptible to misuse, abuse, diversion, and inadvertent pediatric exposure than SUBOXONE tablets, purportedly to delay approval of generic versions of SUBOXONE tablets and retain category share. Pursuant to a Resolution Agreement made on July 24, 2020 as part of a global resolution with the U.S. Attorney’s Office for the Western District of Virginia, the DOJ’s Consumer Protection Branch, the FTC, and several U.S. state attorneys general, an indirect wholly owned subsidiary of Indivior PLC pleaded guilty to a single count of making false statements relating to healthcare matters in 2012 (the “Resolution Agreement”). The DOJ dismissed all charges in the indictment, and the Company agreed to a total of $600 million in fines and agreed to substantial reporting and compliance obligations related to its U.S. operations with the DOJ and HHS-OIG, among other things. The Company completed its obligations under the Resolution Agreement in November 2025 after it paid the final amounts owed.
• In July 2022, the Company settled antitrust, patent infringement, and wrongful injunction claims with the manufacturer of a generic buprenorphine/naloxone film drug product for approximately $72 million and approximately $15 million for similar claims made by a second manufacturer of such a generic film drug product in October 2023.
• During 2023, Indivior Inc. settled civil antitrust cases filed by a class of direct purchasers, a class of end payors, and 41 states and the District of Columbia that had been consolidated in multi-district litigation pending in the U.S. District Court for the Eastern District of Pennsylvania (the “Antitrust MDL”) for $385 million, $30 million, and $103 million, respectively. During 2024, Indivior settled state-court cases for a combined total of $125 million in Virginia, Kentucky, and Pennsylvania with all of the remaining insurance companies who had asserted claims similar to those asserted in the Antitrust MDL but opted out of the Antitrust MDL end payor class.
• The Company was named as a defendant in numerous civil lawsuits alleging that manufacturers, distributors, and retailers of opioids engaged in a longstanding practice to market opioids as safe and effective for the treatment of long-term chronic pain to increase the market for opioids and their own market share or alleging individual personal injury claims. Most of these cases were consolidated and stayed in a federal multi-district litigation in the U.S. District Court for the Northern District of Ohio (the "Opioid MDL"). Nearly two-thirds of the cases in the Opioid MDL were filed by cities and counties ("Subdivisions"), and Tribal Nations, while nearly one-third of the cases were filed by private individual plaintiffs, most of whom assert claims relating to neonatal abstinence syndrome ("NAS"). A small number of cases were filed by additional types of plaintiffs such as
schools, hospitals, third-party payors, and charitable organizations. In 2024, following mediation, the Company, the Plaintiffs' Executive Committee (PEC) that represented the Subdivisions, and an executive committee of state attorneys general reached a framework for a potential settlement which would allow Subdivisions, including those cities and counties that filed suit against Indivior, to participate. The States (except Maryland) and the Company finalized an agreement reflecting the terms of that potential settlement on April 4, 2025, and the settlement became final in January 2026. The Compa ny separately executed a master settlement agreement with the Tribal Nations, and all Tribal Nations that sued the Company. In January 2026, the Company reached an agreement in principle with the State of Maryland related to the same allegations. The accrued cost of the settlements as of December 31, 2025 was $80 million. The proposed settlements would resolve claims by Subdivisions, public hospitals, public schools, and Tribal Nations, including those brought in courts outside of the Opioid MDL, but would not resolve third-party payor, charitable organization, or private individual plaintiff cases against the Company either within or outside of the Opioid MDL.
The amount of time that is required to resolve legal or regulatory proceedings is unpredictable and any litigation or claims against us, even those without merit, may cause us to incur substantial costs, divert management’s attention from the day-to-day operation of our business, and materially harm our stock price and reputation. In addition, we are obligated to indemnify and advance expenses to certain individuals and entities involved in certain of these and related proceedings. Any adverse judgment in or settlement of any pending or any future litigation could result in significant payments, fines and penalties that could have a material adverse effect on our business, results of operations, financial condition and reputation.
Moreover, the outcome of these legal proceedings may differ from the Company’s expectations because the outcomes of litigation, including regulatory matters, are often difficult to reliably predict. Although the Company maintains general liability insurance, the amount of liability that may result from certain of these risks may not be covered by, or could exceed, the applicable insurance coverage. See " Our insurance coverage may not be adequate," below. Various factors or developments can lead the Company to change current estimates of liabilities and, to the extent applicable, related insurance receivables, or make such estimates for matters previously not susceptible of reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement, significant regulatory developments or changes in applicable law. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on the Company’s results of operations or cash flows in any particular period. In addition, negative publicity related to these proceedings may negatively impact the Company’s reputation.
We must comply with the terms and conditions of the Stipulated Order for Permanent Injunction and Equitable Monetary Relief with the U.S. Federal Trade Commission (“FTC”), along with a similar injunction with certain State Attorneys General related to certain product launches and applications for product approvals and we could be subject to criminal charges or penalties if we fail to comply.
We operate on a global basis and the pharmaceutical industry is both highly competitive and highly regulated. Complying with all applicable laws and regulations, industry standards, and our Code of Conduct are core to the Company’s mission, culture, and practices. The Company has policies and procedures to identify (e.g., through reporting of concerns and monitoring), analyze and investigate potential or actual violations of law, regulation, or policy and, if necessary, take appropriate remedial or corrective actions. Effective procedures and controls assist in helping to ensure that we provide reliable information and prevent and detect potential fraud or misconduct. Failure to comply with applicable laws and regulations may subject the Company to civil, criminal, and administrative liability, including but not limited to the imposition of substantial monetary penalties, fines, damages and restructuring of the Company’s operations through the imposition of compliance or integrity obligations, and have a potentially adverse impact on the Company’s prospects, reputation, results of operations and financial condition.
The FTC Stipulated Order contains specific notice and reporting requirements related to certain activities, including (i) notice of filing a Citizen Petition along with certain information; (ii) notice of filing of a New Drug Application for new drug formulations related to Indivior approved drugs; (iii) requirement to
provide additional information about certain launch activities related to the new drug formulation; (iv) certain restrictions on pricing of the old drug formulations and activities regarding those old drug formulations for a period of time; (v) notice of FDA Approval of a drug or if Indivior Inc. obtains a drug through a license, acquisition or through obtaining control of an entity; (vi) notice of certain corporate activities such as a dissolution, merger, acquisition of Indivior Inc.; (vii) an obligation to provide the States (defined below) with certain information and interviews necessary to evaluate compliance with the Settlement Order; and (viii) an obligation to provide reports to the States explaining how Indivior has complied with the Settlement Order, if requested. The Company may be punished for contempt of court, including, but not limited to criminal contempt, if it fails to comply with any terms of the FTC Stipulated Order or Resolution Agreement. The obligations in the FTC Stipulated Order expire in November 2030.
Similarly, in June 2023, Indivior Inc. reached agreement with the Attorneys General of 41 States and the District of Columbia (the “States”) to resolve allegations that Indivior Inc. violated the Sherman Act and laws of the States by engaging in anticompetitive activities designed to impede competition from generic equivalents of the brand-name drug SUBOXONE, which Indivior Inc. disputes. As part of the settlement, Indivior Inc. also agreed to certain compliance and reporting obligations under a Stipulated Final Judgment and Dismissal with Prejudice (the “Settlement Order”). These obligations are similar to those in the FTC Order. The obligations in the Settlement Order expire concurrently with those of the FTC Stipulated Order in November 2030.
We are subject to additional risks because we import, manufacture, and distribute controlled substances.
Our products for opioid use disorder, SUBLOCADE long-acting injectable extended-release injection, SUBOXONE Film sublingual film, and outside the U.S., SUBLOCADE, SUBOXONE and SUBUTEX sublingual tablets, contain the active ingredient buprenorphine, which is a controlled substance under the Controlled Substance Act (CSA) and similar laws in other countries. Buprenorphine is a partial agonist opioid. Compared to a full opioid agonist, buprenorphine has less maximal euphoric effect and a ceiling on its ability to cause respiratory depression. While we market these products only for the treatment of opioid use disorder, the use of any opioid is highly stigmatized. Many people who are non-prescribers may fail to distinguish between drugs of abuse and drugs intended for treatment. The lack of distinction between the types and mechanisms of opioids, like buprenorphine, versus other opioids which have indications for pain, is widely misunderstood. These perceptions and misunderstandings may cause a variety of problems for the Company, including adverse publicity and cause some people or entities to decline to do business with us. See for example, “ We may be subject to adverse public opinion,” and “ Failure to retain key personnel or attract new personnel could have an adverse effect on us," below.
Products designed to treat drug addiction, by their nature, face additional risks. Drug addiction is a difficult environment in which to market our products. Societally, there is a stigma that prevents many people who suffer from OUD or other types of addiction from coming forward to receive treatment because of potential reputational damage, societal scrutiny, and other factors. Patients with OUD often suffer from other co-morbidities, including poor general health and mental health issues like schizophrenia, which may impact one’s understanding of the disease or affect their ability to obtain treatment. Similarly, drug addiction can result in job loss or unemployment, indebtedness, and criminal problems including incarceration which may make it more difficult for someone to obtain treatment. Other challenges include the misuse, diversion, or abuse of our products.
Regulators may impose additional requirements because of the nature of our products. Buprenorphine and products containing buprenorphine are classified as Schedule III controlled substances in the U.S. by the Drug Enforcement Administration (DEA) and similarly restricted by law enforcement authorities in the Rest of World that are signatories to the United Nations Single Convention on Narcotic Drugs (1961). Other molecules considered as product candidates, such as INDV-6001, may have more stringent classification (e.g., Schedule II) or ambiguous classifications.
Products containing opioids often require a risk evaluation and mitigation strategy (REMS) to mitigate potential risks which may be associated with the use of a product and to inform patients and prescribers of those risks. For example, the FDA requires a REMS for SUBLOCADE and SUBOXONE Film. The
SUBLOCADE REMS restricts distribution so that SUBLOCADE is dispensed directly to certified healthcare settings and pharmacies for administration by a healthcare professional. This closed distribution system should help mitigate the risk related to the potential for misuse and diversion by the patient, since the product is not dispensed directly to the patient. O ther products that we sell in the future may become subject to a REMS specific to the product or shared with other products in the same class of drug. The cost to implement the REMS may be high, which may in turn have a material adverse effect on o ur business, financial condition, and results of operations.
Individual states have also established controlled substance laws and regulations. Though state-controlled substance laws often mirror federal law, they may separately schedule our products or our product candidates as well. We or our partners may also be required to obtain separate state registrations, permits or licenses in order to be able to manufacture, distribute, administer or prescribe controlled substances for clinical trials or commercial sale, and a failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law.
U.S. facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be licensed and must comply with the security, control, recordkeeping and reporting obligations under the CSA, DEA regulations, and corresponding state requirements. The ability to do so is considerably more difficult for molecules and product candidates with a Schedule I or II classification, or ambiguous classification. In addition, the DEA and state regulatory bodies conduct periodic inspections of certain registered establishments that handle controlled substances. Federal and state regulators have also increased scrutiny of buprenorphine prescribing, dispensing, distribution, and diversion control practices, and evolving requirements may impose additional compliance obligations or operational constraints. Obtaining and maintaining the necessary registrations and complying with regulatory obligations may result in the delay of the importation, manufacturing, distribution or clinical research of our commercial products and product candidates. Furthermore, a failure to comply with CSA, DEA or state regulations by us or any of our third-party manufacturers can result in regulatory action, which can lead to criminal or civil penalties, the refusal to renew necessary registrations or proceedings to restrict, suspend or revoke applicable registrations.
A partial or total loss of revenue due to these delays or failure to comply with these regulations could have a material adverse effect on our business, results of operations and financial condition. Further, individual distributors and pharmacies may have their own legal, regulatory or business policy requirements that could impose restrictions or limits the distribution of prescription products. A partial or total loss of revenue from one or more such shipments could have a material adverse effect on our business, results of operations and financial condition.
Acquisitions, partnerships, joint ventures, dispositions, and other business combinations or strategic transactions involve several inherent risks, any of which could result in the benefits anticipated not being realized and could have an adverse effect on our business, financial condition, and results of operations.
Acquisitions are an important part of our growth model and we regularly consider and enter into strategic transactions, including mergers, acquisitions, investments and other growth, market and geographic expansion strategies, with the expectation that these transactions will result in increases in sales, cost savings, synergies and various other benefits. In the future, our ability to acquire additional companies or products synergistic with our current businesses may be limited by antitrust regulators who
may be particularly vigilant in our markets because we serve at-risk populations and because we already market several products in the space.
An element of our long-term strategy is to acquire a portfolio of other products in addition to our current products, through business or product acquisitions. T he success of this strategy depends in large part upon the combination of our regulatory, development and commercial capabilities and expertise and our ability to identify, select and acquire approved or clinically enabled products for therapeutic indications that complement or augment our current products, or that otherwise fit into our development or strategic plans on terms that are acceptable to us.
Identifying, selecting and acquiring promising products requires substantial technical, financial and human resources expertise. Efforts to do so may not result in the actual acquisition or license of a particular product, potentially resulting in a diversion of our management’s time and the expenditure of our resources with no resulting benefit. In addition, we face substantial competition from historically innovative companies, as well as companies with greater financial resources than us, for such acquisition targets. If we are unable to identify, select and acquire suitable products from third parties or acquire businesses at valuations and on other terms acceptable to us, or if we are unable to raise the capital required to acquire businesses or new products, our business and prospects will be limited.
We may fail to realize anticipated benefits from such transactions or partnerships, or any future ones, we may be exposed to additional liabilities or compliance violations of any acquired business or joint venture and we may be exposed to litigation in connection with any transaction. For example, in March 2023 we acquired Opiant Pharmaceuticals for $146 million. However, during the third quarter of 2025, the Company made a strategic decision to discontinue the sales and marketing support for OPVEE and failed to realize the expected benefits from the transaction.
Furthermore, we may have trouble identifying suitable acquisition targets in the future. Our ability to deliver the expected benefits from any strategic transactions is subject to numerous uncertainties and risks, including our acquisition assumptions; our ability to integrate personnel, labor models, financial, supply chain and logistics, IT and other systems successfully; disruption of our ongoing business and diversion of management time; the need to hire additional management and other critical personnel; and increasing the scope, geographic breadth and complexity of our operations.
In addition, the integration of acquired businesses may create complexity in our financial systems and internal controls and make them more difficult to manage or cause us to fail to meet our financial reporting obligations. Any impairment of goodwill or other assets acquired in a strategic transaction or charges to earnings associated with any strategic transaction as well as any failure by the acquired business to produce the expected margins or cash flows, may materially reduce our profitability. Furthermore, we may finance these strategic transactions by incurring additional debt or raising equity, which could increase leverage or impact our ability to access capital in the future.
The clinical study or commercial use of our products may cause unintended side effects or adverse reactions, or incidents of misuse may occur, which could adversely affect our products, business and share price.
The administration of drugs to humans carries the inherent risk of product liability claims whether or not the drugs are actually the cause of an injury. Our products may cause, or may be perceived to have caused, injury or clinically significant drug interactions or may produce undesirable or unintended side effects, and we may not learn about or understand those effects until the products have been administered to study participants or patients for a prolonged period of time. Additionally, incidents of product misuse may occur. We cannot be certain that the clinical or commercial use of our products will not produce undesirable or unintended side effects that have not been evident in the use of, or in clinical trials conducted for, such products to date. Risks can vary widely based on individual health conditions, demographics, and concurrent medications. Indivior follows strict regulatory guidelines and quality standards to ensure the safety and efficacy of our products via ongoing monitoring, including post-marketing safety surveillance. See " Product liability and product recalls could have a material adverse effect on us," below.
Additionally, simply sponsoring a clinical trial carries with it exposure for other tort liability. It is possible that an unrelated product or procedure required to be performed as part of the protocol for our clinical trial could cause harm or be perceived to cause harm to a subject, due to an adverse reaction or otherwise. In that case, we could be seen as being at fault because we sponsored the clinical trial and designed the protocol that required that the product be used or procedure be done.
Revenues generated by sales of our products depend on the availability from third-party payors for reimbursement for our products and the extent of cost-sharing arrangements for patients (e.g., patient co-payment, co-insurance, and deductible obligations) and cost-control measures imposed, and any reductions in payment rate or reimbursement or increases in our or in patients’ financial obligation to payors could result in decreased sales of our products and/or decreased revenues.
Revenues from our products depend on the availability, scope, and level of reimbursement from government and private payors in the U.S. and abroad. Any reduction of reimbursement, increase in patient cost-sharing obligations, delays in coverage determinations, or restrictions on coverage could reduce the utilization of our products and materially adversely affect our business, financial condition, cash flows and results of operations.
Third-party payors are under increasing pressure to control healthcare costs and are adopting measures that may limit or reduce reimbursement for pharmaceutical products, including our products. These measures include prior authorization requirements, step-therapy protocols, formulary exclusions or tiering, higher patient co-payments or deductibles, coverage limitations, mandatory discounts or rebates, and increased use of managed care arrangements. Payors may also encourage or require the use of lower-cost generic products or alternative therapies, which may reduce demand for our products.
Government authorities and private payors increasingly evaluate pharmaceutical products based on cost-effectiveness, in addition to safety and efficacy, when making coverage and reimbursement decisions. As a result, we may be required to generate additional pharmacoeconomic, real-world, or clinical data to support favorable reimbursement determinations, which could be costly and may not achieve the desired outcomes. If our competitors can demonstrate lower treatment costs or otherwise position their products as more cost effective, they may obtain broader or more favorable access than our products.
In addition, pricing, reimbursement, and coverage decisions are subject to significant regulatory and legislative scrutiny. U.S. federal and state governments continue to consider and implement initiatives to reduce healthcare spending, including drug pricing transparency laws, price controls, supplemental rebate requirements, and restrictions on coverage under Medicare and Medicaid programs. Similar cost-containment strategies are implemented by government-sponsored healthcare systems in other countries, including mandatory price reduction, reference pricing, and access restriction, any of which could reduce revenues or limit our ability to achieve acceptable pricing.
third-party payors, including pharmacy benefit managers, may further exert negotiating leverage by requiring increased rebates or other concessions as a condition of formulary inclusion or continued coverage. Failure to obtain or maintain favorable formulary placement could increase patient cost-sharing, delay treatment initiation, reduce adherence, or result in patients foregoing treatment altogether, which could negatively affect commercialization efforts and revenues. s
If we are unable to obtain and maintain adequate reimbursement, or if reimbursement is provided only on unfavorable terms, demand for our products could decline our business, prospects, and results of operations could be materially adversely affected. See also, “ The pharmaceutical sector is facing increased government scrutiny from competition and pricing authorities around the world, and any failure to comply, may expose us to significant damages and commercial restrictions that can materially and adversely affect our business,” below.
Congressional action to reduce spending may result in cuts to Medicaid which in turn might impair access to our products in the U.S., thereby adversely affecting our revenues and results of operations.
Congressional action to reduce spending, such as the 2025 budget reconciliation act (OBBBA), could lead to Medicaid cuts. These cuts may reduce patient eligibility, limit coverage of higher-cost treatments for OUD, and impose Medicaid work or eligibility requirements. Such changes could impair patient access to our products, thereby adversely affecting our revenues and results of operations.
Any cuts in Medicaid may impair access to our products in the U.S., thereby adversely affecting our revenues and results of operations.
We operate in a highly competitive industry, which includes companies with greater resources than us. The approval and launch of generic or branded products that compete with SUBLOCADE, and an additional generic competitor for SUBOXONE Film, could have a material adverse effect on our business, prospects, results of operations and financial condition.
The manufacture and sale of pharmaceuticals are highly competitive. We face competition from a number of sources, some of which may target the same indications as do our products and product candidates. As our competitors develop or market alternatives for the treatment of our target indications, our commercial opportunities may be reduced or eliminated.
Our competitors may have substantially greater financial, operational and human resources than we do. Companies with more extensive resources and larger research and development expenditures have a greater ability to fund clinical trials and other development work necessary for regulatory applications. Competitors may also have a greater ability to offer higher rebates, discounts, chargebacks or other incentives to gain commercial advantage, and may be more successful than us in acquiring or licensing new products for development and commercialization. Smaller or earlier-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.
If any product that competes with one of our products is approved, our sales of that product could decrease, the effect of which would be heightened by our product and geographic concentration, which could have an adverse impact on our business, prospects, results of operations and financial condition. For example, SUBLOCADE faces competition from BRIXADI in the U.S. Our products also compete with various alternatives including oral buprenorphine, methadone, and other drugs indicated for OUD and, in the future, may experience competition from other therapies or drugs.
Our SUBOXONE Film product has faced four generic competitors in the U.S. for some time. We have seen our category share of film decline from greater than 50% in 2018 to an average share of 14.2% in 2025 and expect further declines as other competing products become available or if existing participants choose to disrupt the market in line with industry analogs. Additionally, we no longer promote SUBOXONE Film in the U.S. For a discussion of the competition that we face with respect to our current marketed products, technology platforms and product indications, please see the section entitled “ Competition ” in “ Item 1. Business ” in this annual report. If we are unable to compete successfully in this highly competitive industry, our business, financial condition, cash flows and results of operations could be materially adversely affected.
In addition, some pharmaceutical companies may be able to deploy more personnel to market and sell their products than us. Each of our sales representatives is responsible for a territory of significant size. The continued growth of our current products may require the expansion of our sales force and sales support organization and we may need to commit significant additional funds, management and other resources to the growth of our field organization. We may not be able to achieve any such necessary growth in a timely or cost-effective manner or at all or realize a positive return on our investment.
The pharmaceutical and biotechnology industries are also characterized by continuous product development and technological change. Our products could, therefore, be rendered obsolete or
uneconomic through the development of new products with unique advantages (including, e.g., new medicines that may be safer, more effective, or more convenient than our products) or by technological advances in manufacturing or production by our competitors. Among other things, competition could continue to require us to increase further the level of rebates and other offsets to gross revenues, particularly in our U.S. operations, and could impact potential volume growth of any particular product, which could reduce our net revenues and therefore our results of operations in future periods.
Failure to retain key personnel or attract new personnel could have a material adverse effect on us.
We rely upon several key executives and employees who have an in-depth and long-term understanding of the industry and the disease space and our technologies, products, programs, collaborative relationships and strategic goals. Key personnel include experienced employees with specific expertise and the ability to compliantly interact with healthcare providers, key opinion leaders, and key decision-makers across the healthcare industry.
We compete with other pharmaceutical and life sciences companies to recruit, hire, train and retain sales and marketing personnel as well as research and development personnel. Competition for such personnel in the pharmaceutical and biotechnology industries is intense, and there can be no assurance that we will be able to recruit or retain such personnel. If our sales force and sales organization are not appropriately sized to promote any current or potential future products adequately, the commercial potential of our current products and any future products may be diminished.
We do not carry “key person” insurance. The loss of the services of any of our key executives or employees could delay or prevent the successful completion of some of our vital activities. Any employee may terminate his or her employment at any time without notice or with only short notice and without cause or good reason. The resulting loss of institutional knowledge may have a material adverse effect on our operations and future growth.
As a result of the above factors, any failure to retain key personnel or attract new personnel could have a material adverse effect on our business, prospects, results of operations and financial condition.
We are subject, directly or indirectly, to a variety of U.S. and international laws and regulations related to fraud and abuse, transparency, and privacy. Enforcement actions under such laws have increased in recent years. If we fail to comply, or have not fully complied, with such laws, we could face substantial penalties.
In the U.S., we are subject, directly or indirectly through our customers and other third parties, to various federal, state and local fraud and abuse and transparency laws. Our sales, marketing, patient support and medical activities may be subject to scrutiny under these laws. The U.S. federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving anything of value to induce (or in return for) the referral of business, including the purchase, recommendation or prescription of a particular drug reimbursable under Medicare, Medicaid or other federally financed healthcare programs. The statute has been interpreted to apply to arrangements between pharmaceutical companies on one hand and patients, prescribers, purchasers and formulary managers on the other. Although there are several statutory exceptions and regulatory safe harbors protecting certain common manufacturer business arrangements and activities from prosecution and administrative sanction, the exceptions and safe harbors are drawn narrowly and are subject to regulatory revision or changes in interpretation by the DOJ and HHS-OIG. Practices or arrangements that involve remuneration may be subject to scrutiny if they do not qualify for an exception or safe harbor. Violations of the federal Anti-Kickback Statute may be established without providing specific intent to violate the statute. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated. Violations of the Anti-Kickback Statute may be punishable by civil, criminal, and administrative fines and penalties, damages, imprisonment, and/or exclusion from participation in federal healthcare programs.
The U.S. federal civil False Claims Act prohibits, among other things, any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of federal funds, or knowingly making, or causing to be made, a false statement to get a false claim paid. A claim resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim. The False Claims Act also permits a private individual acting as a “whistleblower” to bring actions on behalf of themselves and the federal government alleging violations of the statute and to share in any monetary recovery. Violations of the False Claims Act may result in significant financial penalties (including mandatory penalties on a per claim or statement basis), treble damages and exclusion from participation in federal healthcare programs.
Pharmaceutical companies are subject to other federal false claims and statements laws, some of which extend to non-government health benefit programs. For example, the healthcare fraud provisions under the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations, or HIPAA, impose criminal liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, or falsifying or covering up a material fact or making any materially false or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Violations of HIPAA fraud provisions may result in criminal, civil and administrative penalties, fines and damages, including exclusion from participation in federal healthcare programs.
The majority of individual states also have statutes or regulations similar to the federal Anti-Kickback Statute and the False Claims Act, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Other states restrict whether and when pharmaceutical companies may provide meals or other items of value to healthcare professionals or engage in other marketing-related activities, and certain states and cities require the identification or licensing of sales representatives.
The Physician Payment Sunshine Act requires tracking of payments and transfers of value to physicians and teaching hospitals and ownership interests held by physicians and their families, and reporting to the federal government and public disclosure of these data. Since 2022, reporting is also required regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives. A number of states also require pharmaceutical companies to report expenses relating to the marketing and promotion of pharmaceutical products and to report gifts and payments to healthcare providers in the states. Government agencies and private entities may inquire about our marketing practices or pursue other enforcement activities based on the disclosures in those public reports.
We may also be subject to state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing, and state and local laws that require the registration of pharmaceutical sales representatives.
We are further subject in a similar manner to federal and state data privacy and security laws, such as HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, the Confidentiality of Substance Use Disorder Patient Records (42 C.F.R. Part 2), state consumer privacy laws, and state breach reporting requirements. Collectively, these laws may affect, among other things, our current and proposed research, sales, marketing and educational programs, as well as other possible relationships with customers, pharmacies, physicians, payers, and patients. An expanding number of U.S. states have enacted comprehensive privacy laws imposing differing and increasingly stringent requirements, and regulators and state attorneys general have become more active in enforcing these laws, further increasing our compliance and enforcement risk. We are subject to similar data privacy and security laws in Europe and other countries, including the EU General Data Protection Regulation (2016/679), or GDPR, under which fines of up to €20.0 million or up to 4% of the annual global revenue of the infringer, whichever is greater, could be imposed for significant non-compliance. We are also subject to qui tam , or
whistleblower lawsuits, under the False Claims Act. Compliance with these laws, including the development of a comprehensive compliance program, is difficult, costly and time-consuming.
Outside the US, we are also subject to extensive and evolving laws and regulations, including those relating to anti-bribery and corruption. and product commercialization. Some of those requirements may be more rigorous than in the US, may differ significantly from country to country and may be enforced differently from comparable U.S. laws. If we are found to be in violation of these laws or regulations, we could be subject to fines, civil or criminal sanctions, exclusion from government healthcare programs, withdrawal of marketing authorizations, product seizures or injunctions, and other penalties that could materially harm our business and financial standing.
Because of the breadth and evolving interpretations and requirements of these laws, the narrowness of available statutory and regulatory exemptions, and the wide array of U.S. and international authorities with overlapping regulatory jurisdiction, it is possible that some of our business activities could be subject to challenge under one or more of such laws. Any action against us alleging violation of these laws, whether brought by law enforcement, regulatory agencies or private qui tam actions brought by individual whistleblowers in the name of the government, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business, even if we successfully defend against those actions. If any enforcement actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have an impact on our business, including the imposition of significant civil, criminal and administrative sanctions, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, imprisonment, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
We have mechanisms in place to procure compliance with rules and regulations, and applicable self-regulatory industry codes by region that the Company has committed to follow. However, there can be no assurance that our policies and procedures will be followed at all times or will effectively detect and/or prevent violations of applicable compliance regimes by our employees and other relevant persons. Nevertheless, previously, we were subject to enforcement actions by the U.S. Department of Justice and the Federal Trade Commission. See "We are currently, in the past have been, and in the future may be, subject to substantial litigation that could cause us to incur significant legal expenses, divert management’s attention, and result in harm to our business," above, and "We must comply with the terms and conditions of the Stipulated Order for Permanent Injunction and Equitable Monetary Relief with the U.S. Federal Trade Commission (“FTC”), along with a similar injunction with certain State Attorneys General related to certain product launches and applications for product approvals and we could be subject to criminal charges or penalties if we fail to comply," below.
We may be subject to adverse public opinion.
The pharmaceutical industry often faces adverse publicity, whether from product recalls, pricing controversies, or other political and social issues. Since our products treat opioid use disorder and are opioid-based, negative public opinion about us, our medications, or the industry, could damage our reputation. This may limit acceptance of our products, lead to government intervention, or reduce the willingness of third parties to do business with us, ultimately impacting operations, financial condition, and our ability to engage policymakers.
We use hazardous materials in our manufacturing facilities, and any claims relating to the improper handling, storage, release or disposal of these materials could be time-consuming and expensive.
Our operations are subject to complex and increasingly stringent environmental, health and safety laws and regulations in the countries where we operate and, in particular, in the U.K. and U.S. where we have manufacturing and R&D facilities. The costs of compliance with environmental, health and safety laws and regulations are significant. If an accident or contamination involving pollutants or hazardous substances occurs, an injured party could seek to hold us liable for any damages that result, and any liability could
exceed the limits or fall outside the coverage of our insurance. We may not be able to maintain insurance with sufficient coverage on acceptable terms, or at all. Costs, damages and/or fines may result from the presence, investigation and remediation of such contamination at properties currently or formerly owned, leased or operated by us or at off-site locations, including where we have arranged for the disposal of hazardous substances or waste. In addition, we may be subject to third-party claims, including for natural resource damages, personal injury and property damage, in connection with such contamination, or in some cases for contamination or pollutants at properties we own caused by prior owners. Indivior has implemented risk mitigation activities at its manufacturing sites to identify and address environmental, health, and safety risks; however, there can be no assurance that a violation of current or future environmental, health or safety laws or regulations will not occur. Any violations, even if inadvertent or accidental, or the cost of compliance with any resulting order, fine or liability that may be imposed, could materially adversely affect our business, financial condition, cash flows and results of operations.
Actual costs to exit various businesses may differ materially from our estimates.
We have made various changes to our business and announced estimated exit costs related to those changes, but our estimates of those costs may differ materially from our estimates.
In August, 2025 and October 2025, we announced (i) the restructuring of our research and development and medical affairs organizations, (ii) the discontinuation of sales and marketing of OPVEE, (nalmefene) nasal spray for the emergency treatment of known or suspected opioid overdose , and (iii) the optimization of our Rest of World business, including the cessation of operations and discontinuation of the sale of our products in several markets, including the U.K., Ireland, Sweden, Israel, Finland, and Italy. Outside the U.S., we will focus on Australia, Canada, France and Germany, which generated 76% of our 2025 Rest of World net revenue.
As a result of these actions, we recognized exit costs of $127 million in 2025, including (i) severance and related employee exit charges, (ii) the consolidation and exit of certain real estate properties, including write-downs of leasehold improvements, fixed assets, and acceleration of leased property restoration costs, (iii) write-downs of intangible assets and inventory, (iv) contract termination and related costs, and (v) consulting services, among others. Actual costs could differ materially due to a number of factors including local law considerations in various jurisdictions related to employees exiting the business, changes to exit cost estimates for facilities based on greater or lesser demand for certain properties, changes in estimated demand for inventory in various countries and therefore changes to our estimates of inventory write-downs, and the requirements of various third parties including contract counterparties and ministries of health related to our exit and our estimates of exit costs.
To the extent that actual costs differ from our expectations, such differing costs could affect our results of operations.
Most of our pharmaceutical pipeline relies on collaborations with third parties, which may adversely affect the development and sale of our products.
We depend on alliances with other companies, including pharmaceutical and biotechnology companies, vendors and service providers, for the development of a portion of the products in our pharmaceutical pipeline and for the commercialization and sales of certain of our commercial products. For example, we have collaborations with third parties under which we share development rights, obligations and costs and/or commercial rights and obligations. See “ Item 1. Business Overview—Pipeline .”
Our agreements with development partners typically require substantial up-front investments, potential milestone or option payments, and royalties on net sales to the development partner. For example, through our agreements with multiple collaboration partners, we have potential development milestone obligations of up to approximately $97 million, and potential sales milestone obligations of $250 million if all sales milestones are met. Development milestones generally are payable upon the attainment of certain milestones towards and including the approval of a new product and, by definition, would be triggered (if at all) prior to the sale of such products. Sales milestones are payable upon the attainment of specified commercial sales levels. While these payments, if triggered, would require substantial resources, at the
same time they reflect increased value of products or potential products as development or sales milestones are attained.
Failures by these parties to meet their contractual, regulatory, or other obligations to us, or any disruption in the relationships between us and these third parties, could have a material adverse effect on our pharmaceutical pipeline and business. In addition, our collaborative relationships for R&D and/or commercialization and sales often extend for many years and may in the future give rise to disputes regarding the relative rights, obligations and revenues of us and our collaboration partners, including the ownership or prosecution of intellectual property and associated rights and obligations. This could result in the loss of intellectual property rights or protection, delay the development and sale of potential pharmaceutical products, affect the effective sale and delivery of our commercialized products and lead to lengthy and expensive litigation, administrative proceedings or arbitration.
In addition, we rely on contract research organizations and other third parties to assist in managing, monitoring and otherwise carrying out our clinical trials, including with respect to site selection, contract negotiation and data management. We do not control these third parties and, as a result, may not be able to prevent delays, interruptions, or other issues with respect to the clinical trials conducted by such third parties. They may fail to perform their contractual duties, comply with regulations or meet expected deadlines. If we, contract research organizations, our clinical investigators, or other third parties assisting us or our study sites fail to comply with applicable GCP requirements, the clinical data generated in the relevant clinical trials may be deemed unreliable and the FDA or its non-U.S. counterparts may require us to perform additional clinical trials before approving our marketing applications.
Clinical trials must be conducted with products manufactured, labeled and supplied under the FDA’s and non-U.S. regulatory agencies’ cGMP regulations and in strict compliance with local regulatory requirements (e.g., compliance with Investigational New Drug (IND) application in the U.S. and Clinical Trial Application (CTA) in Europe). Our failure, or the failure of third parties conducting clinical trials on our behalf, to comply with these regulations may require us to repeat or redesign clinical trials, which would delay the regulatory approval process or expose us to regulatory sanctions.
If our clinical trials do not meet regulatory requirements, or if the third parties conducting our clinical trials need to be replaced, our clinical trials may be extended, delayed, suspended or terminated. In addition, any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trials, and, depending upon the period of delay, require us to commence new clinical trials at additional expense or terminate clinical trials completely. If any of these events occur, we may not be able to obtain regulatory approval for our product candidates or succeed in our efforts to create approved line extensions for our existing products or generate additional useful clinical data in support of these products, which would adversely affect our business, prospects, results of operations and financial condition.
See also, “ If we fail to develop or acquire other new products or compounds for development, our business, prospects, results of operations and financial condition could be materially adversely affected,” below.
Clinical trials for the development of products, including our key pipeline products, may be unsuccessful and our product candidates may not receive authorization for manufacture and sale.
Before obtaining regulatory approvals for the commercial sale of each product under development, we must demonstrate, through pre-clinical, clinical and other studies, that the product is safe and effective for the claimed use or uses, and also demonstrate that the product is of appropriate quality. No assurance can be provided that a clinical study will demonstrate that a particular product candidate safely provided hypothesized benefits.
Our lead development products are INDV-6001 (buprenorphine based LAI) for which we initiated and completed multiple-dose pharmacokinetic Phase 2 clinical study in the third quarter of 2024 and in the fourth quarter of 2025, respectively, and INDV-2000 (selective orexin-1 receptor antagonist) for which two Phase 1 clinical trials (single and multiple ascending dose studies) have been completed and for which a
clinical Phase 2 proof-of-concept study was completed in the fourth quarter of 2025. We expect to announce results of both trials during the first half of 2026. However, Phase 1 clinical studies involve small groups of subjects and are intended to test the safety of the product under development; Phase 2 clinical studies involve a larger group of subjects than Phase 1 and are focused on the effectiveness and safety of the product under development. It is not until Phase 3 that the clinical study typically involves a much larger, more diverse group of subjects and looks not only at the safety and effectiveness of the product under development but also how the product compares to existing treatments. For that reason, the results from early clinical trials may not be indicative of results obtained in later and larger clinical trials, and therefore these product candidates may fail to show the desired safety and efficacy in later clinical trials despite having progressed successfully through initial clinical testing. In that case, the FDA or the equivalent regulatory authority in jurisdictions outside the U.S. may determine that our data are not sufficiently compelling to warrant marketing approval and may require us to engage in additional clinical trials or provide further analysis which may be costly and time-consuming and substantially delay the receipt of such regulatory approval, which may delay the launch of any potential product or ultimately decline to provide approval.
Also, the development process takes many years and can be very expensive. The number and duration of pre-clinical studies and clinical trials that are required vary depending on the product candidate, the indication being evaluated, the trial results and the regulations applicable to the particular product candidate. Many companies in the pharmaceutical industry have suffered significant setbacks in drug development and there can be no guarantee that FDA approval will ultimately be obtained for any given product. Such clinical and other studies can be delayed or halted for a variety of reasons, including:
• challenges in identifying clinical development pathways, including appropriate clinical trial protocol design, particularly where there is no regulatory precedent;
• delays or failures in obtaining regulatory authorization to commence a trial because of safety concerns of regulators relating to our product candidates or similar product candidates of our competitors or failure to follow regulatory guidelines;
• delays or failures in obtaining clinical materials and sufficient quantities of the product candidate for use in trials;
• delays or failures in reaching an agreement on acceptable terms with prospective study sites;
• delays or failures in obtaining approval of our clinical trial protocol from an institutional review board or ethics committees to conduct a clinical trial at a prospective study site;
• delays in identifying, recruiting, or enrolling patients to participate in a clinical trial;
• failure of clinical investigators to comply with FDA and other regulatory agencies’ good clinical practice (“GCP”) requirements;
• unforeseen safety issues, including negative results from ongoing pre-clinical studies and adverse events associated with product candidates;
• inability to monitor patients at multiple study sites adequately during or after treatment;
• disagreements with collaborative partners on the planning and execution of product development; or
• insufficient funds to complete the trials.
For example, in September 2024, following a Phase II clinical trial that failed to meet its primary endpoint, we made the decision to not exercise our option for AEF0117, a synthetic CB1-specific signaling inhibitor, which we had acquired in June 2021 from the French company Aelis Farma.
We rely on clinical investigators and clinical sites to enroll patients and conduct the clinical testing and sometimes third parties to manage our trials and to perform related data collection and analysis. However,
while we can set certain contractual expectations, we may be unable to control the amount and timing of resources that the clinical sites and third parties may devote to our clinical trials.
Our clinical trials also may be delayed or terminated due to the inability of our clinical investigators to enroll enough qualified patients. Patient enrollment depends on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites and the eligibility criteria for the trial. If our clinical investigators and clinical sites fail to enroll a sufficient number of patients in our clinical trials or fail to enroll them on our planned schedule, we may face increased costs, delays or termination of the trials, which could delay or prevent us from obtaining regulatory approvals for our product candidates.
Our agreements with clinical investigators and clinical sites for clinical testing and for trial management services place substantial responsibilities on these parties, which could result in delays in, or termination of, our clinical trials if these parties fail to perform as expected. For example, if any of our clinical trial sites fail to comply with FDA-approved GCPs, we may be unable to use the data gathered at those sites. If these clinical investigators, clinical sites or other third parties do not carry out their contractual duties or obligations or fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols or for other reasons, our clinical trials may be extended, delayed or terminated, and we may be unable to obtain regulatory approval for, or successfully commercialize, our product candidates.
Risks Related to Intellectual Property
Failure to obtain and maintain patents and protect other proprietary rights, including in-licenses of such rights from third parties, may adversely affect us.
Our success depends, in large part, on our ability to obtain and maintain patent and other intellectual property protection, particularly for our drug, compound, product, delivery, formulation and methods of treatment technologies and associated manufacturing processes in relation to both our products and our product candidates. The process of obtaining patents can be lengthy and expensive. We own, or in-license, several patent rights in the U.S. and other countries covering certain products and have also developed brand names and trademarks for other products. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies and future products are covered by valid and enforceable patents or are effectively maintained as trade secrets or confidential information within the Company. Our existing patents, and any future patents we obtain, may not be sufficiently broad to prevent others from using our technologies or from developing competing products and technologies. If third parties disclose or misappropriate our proprietary rights, it may materially and adversely impact our business, prospects, results of operations and financial condition. Moreover, our ability to obtain and enforce patents and other proprietary rights is critical to our business strategy and success.
The patent positions of many pharmaceutical and life sciences companies are highly uncertain and involve complex legal and factual questions. In some cases, the legal principles that apply to these cases may be changing or unresolved. As a result, the validity and enforceability of our patents cannot be predicted with certainty. In addition, we cannot guarantee that:
• we were the first to make the inventions covered by each of our issued patents and pending patent applications;
• we were the first to file patent applications for these inventions;
• patents will be granted in connection with any of our currently pending or future applications;
• other companies will not independently develop similar or alternative technologies or duplicate any of our technologies by inventing around our claims;
• a third-party will not challenge our proprietary rights, and if challenged that a court will hold that our patents are valid and enforceable;
• any patents issued to us or our collaboration partners will cover our products as ultimately developed, or provide us with any competitive advantages, or will not be challenged by third parties;
• we will develop additional proprietary technologies that are patentable; or
• the patents of others will not have an adverse effect on our business.
We also rely on trade secrets and other unpatented confidential information to maintain our competitive position but there can be no assurance that others may not independently develop the same or similar products or technologies, and may also obtain patents and other intellectual property protection for them. We have sought to protect trade secrets and confidential information in some cases through the provisions of confidentiality and non-use agreements with our employees, consultants, advisers and partners. Nevertheless, it may not always be possible to prevent the disclosure of our trade secrets and other confidential information or for us to obtain an adequate remedy in the event of unauthorized disclosure or use of such information. In addition, if our employees, consultants or partners develop inventions or processes independently that may be applicable to our products or technologies under development, such inventions and processes will not necessarily become our property, but may remain the property of those persons or their employers or the persons may be entitled to compensation in respect of those inventions. Protracted and costly litigation could be necessary to enforce and determine the scope of our proprietary rights.
We have entered into several collaborative arrangements for the development and commercialization of products including with Curia for the production of SUBLOCADE and Aquestive for the production of SUBOXONE Film. In connection with such arrangements, we have shared certain of our proprietary knowledge with our partners, and it may not be possible or practical to prevent our partners from developing similar or functionally equivalent products. Any disputes between us and such partners may threaten our ability to continue using such proprietary knowledge and, in turn, could impact our ability to market our products. We have also engaged in collaborations, sponsored research agreements and other arrangements with academic researchers and institutions, some of which have received and may receive funding from government agencies. Although we have sought to retain ownership of all intellectual property rights pertaining to inventions that may result from such collaborations, there can be no assurance that governments, institutions, researchers or other third parties will not also attempt to claim certain rights to such inventions.
If we fail to obtain and maintain sufficient intellectual property protection for our current and future products and technologies and if third parties disclose or misappropriate our proprietary rights, our ability to successfully and fully exploit these products and technologies could be adversely affected, which in turn would adversely affect our business, prospects, results of operations and financial condition.
We may incur substantial costs as a result of litigation or other proceedings relating to patents and other intellectual property rights, and we may be unable to protect our rights to, or commercialize our products.
Litigation and other similar proceedings, such as inter partes reviews in the U.S. (which are initiated by third parties to challenge the validity of a patent) relating to infringement, validity or misappropriation of patent and other intellectual property rights in the pharmaceutical and life sciences industry are common. We may receive notifications of challenges to the validity of our patents or alleged infringement of patents owned by third parties. For example, we incurred significant costs in connection with the ANDA proceedings relating to SUBOXONE Film in the U.S. from 2013 through 2023 and were ultimately unable to enforce our patents against two of the challengers. If we choose to go to court to prevent a third-party from infringing our patents, our licensed patents or our partners’ patents (where we have the right to do so), that allegedly infringing third-party has the right to ask the court to rule that these patents are invalid and/or should not be enforced against that third-party.
Separately, other third parties may allege that patents on our other products or product candidates are not valid. These lawsuits are expensive and, as with the SUBOXONE ANDA litigation, could cost the Company several million dollars per year. They are time-consuming and could divert management’s
attention from the day-to-day operation of our business . In addition, there is a risk that a court will decide that these patents are not valid or not infringed and that we do not have the right to prevent the other party from using the patented subject matter. There can be no assurance that these, or other litigation that we may file in the future, will be successful in preventing the infringement of our patents, that we will be able to successfully defend the validity of our patents, that any such litigation will be cost-effective, or that the litigation will have a satisfactory result for us. In addition, such litigation diverts the attention of management and development personnel. Failure to stop infringement of our patents or an unsatisfactory result in litigation would adversely affect our business and results of operations.
Additionally, when enforcing such patents, we risk being subject to potential liability as a result of counterclaims and related damages, including potential antitrust violations, among other things. For example, Dr. Reddy’s Laboratories (“DRL”) and Alvogen pursued claims for wrongful injunction damages, and further asserted antitrust counterclaims against the Company after the Company sought to enforce particular patent claims against DRL and Alvogen. The Company reached settlements with DRL and Alvogen in 2022 and 2023, respectively.
We may initiate or defend legal proceedings relating to our patents alongside a collaborator or third-party with an interest or right in the relevant patents. In this scenario, our strategy for asserting or defending our rights might be impacted by that of our co-claimant or co-defendant which, in turn, may have an adverse impact on our existing commercial relationship.
In the pharmaceutical and life sciences industry, like other industries, it is not always clear to industry participants, including the Company, which patents cover various types of products or methods. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our products or methods do not infringe the patent claims of the relevant patent and/or that the patent claims are invalid or unenforceable, which we may not be able to do, and which could in turn result in our being required to pay substantial sums. These sums potentially include damages, legal fees, and increased damages if we are found to have infringed such rights willfully. Further, if a patent infringement suit is brought against us, our research, development, manufacturing, or sales activities relating to the product or product candidate that is the subject of the suit may be delayed, materially affected, or terminated by the grant of an injunction against us.
We cannot be certain that others have not filed patent applications for inventions covered by our licensors’ or our issued patents or pending applications, or that we or our licensors were the first inventors. Our competitors may have filed, and may in the future file, patent applications covering subject matter similar to those of the Company. Any such patent application may have priority over our or our licensors’ patents or applications and could further require us to obtain rights to patent rights covering such subject matter. In the U.S., if another party has filed a patent application on inventions similar to those of the Company, we may have to participate in an interference or derivation proceeding declared by the US. Patent and Trademark Office to determine the priority of invention in the U.S. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our U.S. patent position with respect to such inventions.
As a result of patent infringement claims, or in order to avoid potential infringement claims, we or our collaborators may choose to seek, or be required to seek, a license from the third-party, which would be likely to include a requirement to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if a license can be obtained on acceptable terms, the rights may be non-exclusive, which would potentially give our competitors access to the same intellectual property rights. If we are unable to enter into a license on acceptable terms, we, or our collaborators, could be prevented from commercializing one or more of our product candidates, or forced to modify such product candidates, or cease some aspect of our business operations, which could adversely affect our business, prospects, results of operations or financial condition.
The cost to us of any patent litigation or other proceedings, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of complex patent and other intellectual property litigation more effectively than we can because they have substantially greater
resources than the Company. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue its operations.
Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.
Risks Related to Regulatory or Legal Matters
The FDA, the DEA, or other regulatory agencies may impose limitations or post-approval requirements on approvals for our products.
Labeling. The approved label for a product may not be consistent with our initial expectations or commercial plans, even if regulatory approval to market a product is granted by the FDA or other regulatory agencies, because of limitations on what can be discussed or limitations or requirements related to the labelling or indication. The FDA or other regulatory agencies may also impose limitations on the clinical data that may be included in the label for the product or the indicated uses for which, or the manner in which, the product may be marketed, or may impose additional post-approval requirements. Our business could be materially adversely affected if we do not complete these post-approval requirements and, as a result, the FDA or other regulatory agencies require us to change the label for such product or if there are limitations or requirements on such label, or if such post-approval requirements significantly restrict the marketing, sale or use of such product. For example, in January 2022 the FDA issued a warning about dental problems associated with buprenorphine medicines dissolved in the mouth to treat opioid use disorder and required that all manufacturers of these products provide a warning in their prescribing label and their patient Medication Guide. Following such change, the Company was named as a defendant in lawsuits filed in the Northern District of Ohio and other courts in which individual plaintiffs claim that SUBOXONE caused them to suffer dental cavities, tooth loss, or other damage to their teeth. See Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies . Other regulatory agencies may follow the FDA on this change; for example, Health Canada required similar changes in 2023.
REMS. We may be required to include, as part of an NDA, a proposed REMS, the goal of which is to mitigate potential risks that may be associated with the use of a product and to inform patients and prescribers of those risks. We may also be required to include a plan for communication with healthcare providers, restrictions on a drug’s distribution, or a medication guide to provide information to consumers about the drug’s risks and benefits. For example, the FDA requires separate REMS for SUBLOCADE and SUBOXONE Film because they have distinct REMS goals. The goal of the REMS program for SUBLOCADE is to mitigate the risk of serious harm or death that could result from intravenous self-administration by a patient, whereas the goals for the shared Buprenorphine Transmucosal Products of Opioid Dependence (BTOD) REMS for which SUBOXONE is a part of are to (1) mitigate the risks of accidental overdose, misuse and abuse and (2) inform prescribers, pharmacists and patients of the serious risks associated with buprenorphine-containing products. Other products that we sell in the future may become subject to a REMS specific to the product or shared with other products in the same class of drug. Depending on the nature of the REMS, the cost to implement the REMS may be high, and the impact to the business may be significant.
Post-Approval or Post-Marketing Studies. The FDA and other regulatory agencies may require post-approval or post-marketing studies as a condition for approval. For example, we were required to conduct seven post-marketing requirement studies and three post-marketing commitment studies in connection with the approval of SUBLOCADE. Further, although we are no longer marketing OPVEE, Indivior is still required to carry out two clinical pediatric studies unless and until it withdraws the NDA for OPVEE.
In addition, post-marketing obligations in the form of further clinical trials may be imposed to further expand on the evaluation of the risk/benefit profile of the product relative to any potential safety concerns. These trials typically occur after approval and according to pre-specified timelines set by regulatory authorities. Depending on the nature of the post-marketing commitment, trial completion can be a lengthy and expensive process. Failure to comply with any of these requirements may potentially lead to suspension of the marketing authorization for the product and other penalties. The costs and other
consequences of non-compliance with any of the post-approval obligations described above could have an adverse impact on its business, prospects, results of operations and financial condition.
Scheduling Under the Controlled Substances Act. Further, if a product for which we obtain regulatory approval is a controlled substance or has been shown to have a drug abuse liability, such as INDV-6001, it will not become commercially available until after the DEA (or other applicable regulatory authority) provides its final schedule designation for the product, and may take longer and may be more restrictive than we expect or may change after its initial designation. In addition, a final designation that is more restrictive than we expect could adversely affect our ability to commercialize such product and could materially adversely affect our business, financial condition, cash flows and results of operations.
Changes to Requirements. In addition, legislation and regulatory policies relating to post-approval requirements and restrictions on promotional activities for pharmaceutical products, or FDA, DEA or other regulatory agency regulations, guidance or interpretations with respect to such legislation or regulatory policy, may change, which may impact the development and commercialization of our products.
We are subject to ongoing obligations and continued regulatory inspection by the FDA and equivalent foreign regulatory agencies, and we may be subject to penalties and litigation and large incremental expenses if we fail to comply with regulatory requirements or experience problems with our products.
The FDA and other regulatory authorities track information on side effects and adverse events reported during clinical studies and after marketing approval. We are required to file periodic safety update reports with the authorities concerning adverse events. If, upon review, an authority determines that any events and/or reports indicate a trend or signal, they can require a change in a product label, restrict sales and marketing, require post-approval safety studies, require a labor-intensive collection of data regarding the risks and benefits of marketed products and ongoing assessments of those risks and benefits, and/or require other actions. Such safety findings could potentially lead to the withdrawal or suspension of the product from the market. The FDA also periodically inspects our records related to safety reporting. Following such inspections, the FDA may issue non-compliance notices on FDA Form 483 and warning letters that could cause us to modify certain activities. An FDA Form 483 notice, if issued, can list conditions FDA investigators believe may have violated relevant FDA standards. Failure to adequately and promptly correct the observations can result in a warning letter or other regulatory enforcement action. See also “ We are subject to risks related to the manufacture and distribution of our products globally and must meet stringent current Good Manufacturing Practices.”
The FDA also regulates advertising and promotional activities for products in the U.S., requiring advertising, promotional materials and labeling to be truthful and not misleading, and products to be marketed only for their approved indications and in accordance with the provisions of the approved label. The FDA actively investigates allegations of pre-approval and off-label promotion in order to enforce regulations prohibiting these types of activities. The FDA routinely issues informal and more formal communications such as untitled letters or warning letters regarding companies’ activities.
The manufacture, quality control, labeling, packaging, safety surveillance, adverse event reporting, storage, advertising, promotion and record-keeping for products are subject to extensive and ongoing regulatory requirements which are becoming increasingly stringent. If we become aware of previously unknown problems or potential new safety risks associated with any of our products, a regulatory agency may impose restrictions on our products, our contract manufacturers or on us. If we, our products and product candidates, or the manufacturing facilities for our products and product candidates, fail to comply with applicable regulatory requirements, regulatory agencies have wide-ranging powers of enforcement, including the power to impose monetary penalties. In such instances, we could experience a significant drop in the sales of the affected products, our product revenues and reputation in the marketplace may suffer, and we could become the target of lawsuits, each of which could have a material adverse effect on our business, prospects, results of operations and financial condition.
The regulations, policies or guidance of regulatory agencies may change, and new or additional statutes or government regulations may be enacted that could prevent or delay regulatory approval of our product candidates or further restrict or regulate post-approval activities.
As a result of the breadth of these laws and regulations and the lack of definitive legal guidance in certain areas, it is possible that some of our business activities could be subject to challenge. Such challenges, irrespective of the underlying merit or the ultimate outcome of the matter, could have a material adverse effect on our business, prospects, reputation, results of operations and financial condition. Similarly, if we are unable to achieve and maintain regulatory compliance, we will not be permitted to market our drugs, which would materially adversely affect our business, results of operations and financial condition.
Product liability and product recalls could have a material adverse effect on us.
The testing, manufacturing, marketing and sale of pharmaceutical products entail a risk of product liability claims, product recalls, litigation and associated adverse publicity. Unanticipated side effects of, or manufacturing defects in, our products could exacerbate a patient’s condition or could result in serious injury or impairments or even death. This could result in product liability claims and/or recalls of one or more of our products. In many countries, including in EU member states, national laws provide for strict (no-fault) liability.
Product liability claims may be brought by individuals seeking relief for themselves, or by or on behalf of groups seeking to represent a class of injured patients. Further, third-party payors, either individually or as a putative class or group action, may bring actions seeking to recover monies spent on products. The risk of product liability claims may also increase if we are subject to regulatory action by the FDA, the European Medicines Agency (the “EMA”), or other competent authorities, or following a product recall. The cost of defending such claims is expensive even when the claims are without merit. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, an adverse judgment in a product liability suit, even if insured or eventually overturned on appeal, could generate substantial negative publicity about our products and business and inhibit or prevent the commercialization of other products.
For example, the Company has been named as a defendant in a large number of cases in the U.S., and proposed class actions in Quebec and British Columbia against various subsidiaries of the Company, among other defendants. These cases purport to represent a class of plaintiffs, which claim that SUBOXONE Film (and in Canada, both film and tablets) caused them to suffer dental cavities, tooth loss, or other damage to their teeth. The plaintiffs generally allege that the Company failed to properly warn physicians of the risk of dental injury, and further allege that SUBOXONE products were defectively designed. The plaintiffs generally seek compensatory damages, as well as punitive damages and attorneys’ fees and costs. Product liability cases such as these typically involve issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual, provable injury and other matters. These cases are in their preliminary stages. See Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies . The Company has been informed by its primary insurance carrier that it will reimburse defense costs for this matter (now that the Company's self-insurance retention has been exhausted) but has issued a reservation of rights against payment of any liability costs and certain causes of actions. In the event of a liability finding, depending on the claim, various factors could affect reimbursement or payment by insurers, if any, including (i) the scope of the insurers' purported defenses and exclusions to avoid coverage, (ii) the outcome of negotiations with insurers, (iii) delays in or avoidance of payment by insurers, and (iv) the extent to which insurers may become insolvent in the future. Moreover, although we carry product liability insurance, current coverage may not be adequate or may not be available at all or in part.
Product recalls may be issued at our discretion or at the discretion of our suppliers, government agencies, clients for whom we manufacture, and other entities that have regulatory authority over pharmaceutical sales. Any recall of our products could materially adversely affect our business by rendering us unable to sell that product for some time and by adversely affecting our reputation. In addition, product liability claims, product complaints or product quality issues reported by us (or others) to authorities as required by local regulations could result in an investigation (conducted by the FDA, the EMA, or the
competent authorities of EU member states or other national authorities) into the safety or efficacy of our products, our manufacturing processes and facilities, or our marketing programs. An investigation could potentially lead to a recall of our products or more serious enforcement actions including seizure, injunction or criminal charges, proposed changes to the indications for which they may be used or suspension or withdrawal of approval.
Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition. Further, product liability insurance may not be available for many claims relating to our opioid drug products for a wide variety of reason, see generally, " Our insurance coverage may not be adequate," below.
We are subject to federal, state and foreign healthcare laws and regulations and implementation or changes to such healthcare laws and regulations could adversely affect our business and results of operations.
We are subject to extensive federal, state and foreign healthcare laws regulation governing the development, manufacture, marketing, sale, and reimbursement of pharmaceutical products. As a pharmaceutical company that participates in government-regulated healthcare programs, we operate in a highly regulated environment in the United States, the European Union, and other jurisdictions where we do business. Failure to comply with applicable healthcare laws or regulations could result in significant administrative, civil, or criminal penalties, including fines, damages, exclusion from government healthcare programs, additional reporting or compliance obligations, or other sanctions that could require changes to, or restructuring of our operations. Even if we are successful in defending against any enforcement action, we may incur substantial legal expenses and divert our management’s attention away from the operation of our business, any of which could materially adversely affect our business, financial condition, and result of operations.
Healthcare laws and regulations are subject to frequent change, and legislative and regulatory proposals in the U.S. and abroad continue to reshape healthcare systems in ways that could negatively affect our profitability. These are proposals are generally aimed at containing healthcare costs, expanding access, or increasing transparency, and the pharmaceutical industry has been a focus of these efforts. As a result, our products, pricing practices, and reimbursement arrangements may be subject to increased scrutiny and regulation.
In the U.S., for example, the Affordable Care Act and subsequent legislative and regulatory developments have significantly changed the healthcare landscape and continue to affect the U.S. pharmaceutical industry. Drug pricing practices have come under increased scrutiny, including congressional and regulatory inquiries into pricing, rebates, and the role of pharmacy benefit managers. Policymakers have also examined whether rebates and other pricing mechanisms contribute to higher drug costs, and Congress and regulatory agencies continue to consider reforms affecting Medicare Part B (physician-administered drugs) and Medicare Part D (prescription drug benefit), as well as broader managed care and institutional purchasing practices.
In addition, enhanced premium tax credits under the Affordable Care Act tax credits expired at the end of 2025 and, if not extended by Congress, the number of uninsured individuals could increase Although negotiations continued in Congress to reinstate these subsidies, there can be no assurance an agreement will be reached. Any increase in the uninsured population or further changes to healthcare coverage or reimbursement frameworks could reduce access to our products and adversely affect demand.
Collectively, existing and future healthcare regulatory and legislative developments could increase compliance costs, limit pricing or reimbursement flexibility, reduce patient access, or otherwise materially adversely affect our business, prospects, and results of operations.
The pharmaceutical industry faces ongoing uncertainty regarding drug pricing policy. In November 2020, HHS finalized the “rebate rule” regulations removing safe harbor protection for certain price reductions from pharmaceutical manufacturers to Medicare Part D plan sponsors, unless otherwise required by law, while creating new safe harbors for point-of-sale price reductions and certain fixed fee arrangements
between pharmacy benefit managers and manufacturers. The Inflation Reduction Act subsequently extended the moratorium on implementation, administration, or enforcement of this final rule until January 1, 2032.
The Inflation Reduction Act also requires the HHS Secretary to negotiate, subject to a statutory cap, the prices of a set number of high-spend Medicare drugs and biologicals each starting in 2026. Although we do not currently expect these provisions to apply to our products for several years, if at all, the Act also imposed inflation-based penalties on certain Medicare Part B and Part D drugs, and modifies in manufacturer liability under the Medicare Part D program. These and other legislative or administrative actions could adversely affect us,
Changes in Medicare reimbursement, pricing, or coverage policies could indirectly affect coverage, pricing, and utilization of our products in Medicaid and commercial markets. Although our products are primarily reimbursed through Medicaid and commercial payors and we currently have limited indirect exposure to Medicare reimbursement, Medicare policies frequently serve as benchmarks for other payors when establishing formularies, utilization management requirements, reimbursement levels, and coverage criteria. Any such changes could adversely affect our business, financial condition, and results of operations.
Governments in the U.S. and abroad continue to consider and implement measures to reduce drug prices. In the U.S., bi-partisan support exists for drug pricing reforms at both federal and state levels, including initiatives related to the import of drugs, international pricing reference, increased competition, and other cost-containment measures. These efforts, together with fiscal pressures on public health programs, could create direct and indirect downward pressure on drug prices. Although we continue to monitor and engage on legislative and regulatory developments, future drug pricing reforms could materially adversely affect our financial performance and results of operations.
In the U.S., in May 2025, an executive order was issued directing federal agencies to pursue actions intended to reduce prescription drug prices charged in other developed countries, including by directing the Department of Health and Human Services (HHS) to establish a most-favored-nation (MFN) price target applicable to Medicare and Medicaid programs. To date, we have not been contacted by federal officials regarding the pricing of any of our products, and it is not clear whether our products are within scope of this executive order.
Outside the U.S., including Europe, governments, policymakers, and healthcare payors continue to propose and implement cost-containing measures designed to keep healthcare costs down. These measures may limit the prices that can be charged for our products or any approved product candidates, reduce reimbursement from governmental or third-party payors, increase tax or other financial obligations applicable to pharmaceutical companies, or facilitate the introduction of generic competition.
In addition, U.S., federal and state governments have enacted and continue to consider legislation and regulations intended to lower prescription drug prices, including through international reference pricing, pricing restrictions, and the, importation of drugs from outside the U.S.
The implementation of these or other healthcare cost-containment reforms may prevent us from being able to generate revenue, maintain profitability, or commercialize our current products and/or those for which we may receive regulatory approval in the future.
Guidelines and coverage determinations published by the government, professional societies, insurance carriers, physician groups, science foundations, and other organizations may affect the use of the Company’s products.
Government agencies promulgate regulations and guidelines directly applicable to us and to our products. In addition, professional societies, practice management groups, insurance carriers, physicians’ groups, private health and science foundations, and organizations involved in various diseases also publish guidelines and recommendations to healthcare providers, administrators and payers, as well as patient
communities. Recommendations by government agencies or other groups and organizations may relate to such matters as usage, dosage, route of administration and use of related therapies.
In the U.S., for example, a growing number of organizations are providing assessments of the value and pricing of pharmaceutical products, and even organizations whose guidelines have historically been focused on clinical matters have begun to incorporate analyses of the cost effectiveness of various treatments into their treatment guidelines and recommendations. In addition, value assessments may come from private organizations that publish their findings and offer recommendations relating to the reimbursement of products by government and private payers. Some companies and payers have announced pricing and payment decisions based in part on the assessments of private organizations. In addition, government health technology assessment organizations in many countries make reimbursement recommendations to payers in their jurisdictions based on the clinical effectiveness, cost-effectiveness and service effects of new, emerging and existing medicines and treatments. Such recommendations have included and may in the future include reimbursement for certain of our products for a narrower indication than was approved by applicable regulatory agencies or may include recommending against reimbursement entirely.
Such recommendations or guidelines may affect our reputation, and any recommendations or guidelines that result in decreased use, dosage or reimbursement of our products could have a material adverse effect on our product sales, business and results of operations.
Failure to comply with payment and reporting obligations under the Medicaid Drug Rebate program or other governmental pricing programs in the U.S. could result in additional reimbursement requirements, penalties, sanctions and fines .
In the U.S., we participate in the Medicaid Drug Rebate and Medicare Part D programs and, by virtue of such participation, are also required by federal law to participate in the 340B Program and Federal Supply Schedule pricing program. These programs require us to pay certain rebates based on pricing data, such as (among others) average manufacturer price and best price, reported by us to the various federal agencies administering the programs.
Pricing and rebate calculations vary among products and programs. The calculations are complex and the calculation methodology is often subject to interpretation by us, governmental or regulatory agencies and the courts. If we become aware that our reporting for a prior period was incorrect or has changed as a result of the recalculation of the pricing data, we are obliged to resubmit the corrected data. Such restatements and recalculations can increase our costs for complying with the laws and regulations governing the various programs. Any corrections to our rebate calculations could result in either additional or reduced rebate liability for past periods, depending on the nature of the correction. Price recalculations may also affect the ceiling price at which we are required to offer our products to certain covered healthcare entities, such as safety-net providers under the 340B Program, as well as the prices under which our products are made available to federal government purchasers such as the U.S. Department of Veterans Affairs and the Department of Defense under the Veterans Health Care Act of 1992, as amended (“VHCA”).
We are liable for errors associated with our submission of pricing data. In addition to retroactive rebates and the potential for 340B Program and VHCA refunds, if we are found to have knowingly submitted any false price or product information to the government, we may be liable for civil monetary penalties. Any failure to submit data on a timely basis could result in a civil monetary penalty for each day the information is late beyond the due date. We are currently defending such allegations, which we deny, in the matter United States ex rel. Miller v. Reckitt Benckiser Group PLC et al. See Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies . In the case of the Medicaid Drug Rebate program, such failure could also be grounds for CMS to terminate our Medicaid drug rebate agreement, pursuant to which we participate in the Medicaid program. In the event that CMS terminates our rebate agreement, no federal payments would be available under Medicaid or Medicare Part B for our covered outpatient drugs. As another example, we can be subjected to civil monetary penalties under, or termination from, the 340B Program if we knowingly and intentionally overcharge covered entities.
CMS and HHS-OIG have previously indicated that they intend to pursue more aggressively companies that fail to report pricing data to the government in a timely manner. Governmental agencies may also make changes in program interpretations or requirements or conditions of participation, some of which may have implications for amounts that we previously estimated or paid. There can be no assurance CMS or any other government agency will find that our submissions are complete and correct.
Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.
Failure to comply with anti-corruption laws and regulations, anti-money laundering laws and regulations, and/or economic sanctions could result in us becoming subject to fines or penalties.
We are subject to various federal and foreign laws and regulations regarding anti-bribery, anti-corruption, anti-money laundering, and economic sanctions. These include the U.S. Foreign Corrupt Practices Act of 1977, as amended, which prohibits, among other things, payments, offers, or promises made for the purpose of improperly influencing any act or decision of a foreign official. The nature of our business means that we engage in significant interactions with foreign officials. We are also subject to economic sanctions and export controls rules and regulations imposed by, amongst others, the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of Commerce, other agencies of the U.S. government, the United Kingdom, the European Union, and the United Nations. Any expansion, broadened or changed interpretation, variation, or addition to these rules and regulations could impose significant compliance costs on us.
We have mechanisms in place to procure compliance with applicable anti-corruption, anti-money laundering, and economic sanctions rules and regulations, and applicable self-regulatory industry codes by region that the Company has committed to follow. However, there can be no assurance that our policies and procedures will be followed at all times or will effectively detect and/or prevent violations of applicable compliance regimes by our employees, consultants, sub-contractors, agents and partners. As a result, in the event of non-compliance, we could be subject to legal proceedings, fines and/or civil or criminal penalties, the disgorgement of profits, damage to our reputation and resulting loss of revenue and profits, which could have a material adverse impact on our business, financial conditions and operations.
The pharmaceutical sector is facing increased government scrutiny from competition and pricing authorities around the world, and any failure to comply, may expose us to significant damages and commercial restrictions that can materially and adversely affect our business.
We are required to comply with competition laws in the territories where we do business around the world. Compliance with these laws has been the subject of increasing focus and activity by regulatory authorities (and private plaintiffs, where they have enforcement rights under the law), both in the U.S. and Europe, in recent years. Violations of such laws may have a material adverse effect on our reputation, business, financial condition, and results of operations. Our company has faced and may in the future face investigations and/or legal proceedings alleging that actions purportedly taken by our company violated such laws. For example, we were a party to civil claims settled in 2023 brought by state officials and private plaintiffs alleging that we violated U.S. federal and/or state antitrust and consumer protection laws. See Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies . We may face additional claims from state officials and private plaintiffs in the future, and any such claims could materially and adversely affect our business. Also, on November 20, 2020, we entered into a Stipulated Order for Permanent Injunction and Equitable Monetary Relief in the U.S. District Court for the Western District of Virginia, Abingdon Division, with the FTC. As part of the resolution with the FTC, for a ten-year period ending in 2030, Indivior Inc. is required to make specified disclosures to the FTC and is prohibited from certain conduct. We reached a similar settlement with the Attorneys General of 41 States and the District of Columbia on June 13, 2023 related to the civil claims settlement discussed above, which also expires in 2030.
Companies operating in the pharmaceutical industry also face challenges to the validity or enforceability of listed patents and frequently agree to settlements of patent litigation. Regulatory authorities in the U.S. and Europe, including the FTC and the European Commission, increasingly scrutinize patent settlements.
Additionally, competition law authorities may send formal or informal requests for information about particular settlement agreements, and there is a risk that governmental authorities, customers, other downstream purchasers or others may commence actions alleging violations of antitrust laws based on our settlement agreements. The U.S. Congress and certain state legislatures in the U.S. have also passed, or proposed passing, legislation that could adversely impact the ability to settle patent litigation. For example, the State of California has enacted legislation that prohibits, with certain exceptions and safe harbors, various types of patent litigation settlements, and imposes substantial monetary penalties on companies and individuals who do not comply.
Following calls in recent years from policymakers and other stakeholders in many countries for governmental intervention to address the high prices of certain pharmaceutical products, we may become, from time to time, subject to governmental investigations, claims or other legal or regulatory actions regarding our pricing and/or other alleged exclusionary practices. It is not possible to predict the ultimate outcome of any such investigations, claims or proceedings or what other investigations or lawsuits or regulatory responses may result from such assertions, which could have a material adverse effect on our reputation, business, financial condition, and results of operations.
The regulatory approval process is expensive, time-consuming, and uncertain and may prevent us or our partners from obtaining approvals for the commercialization of some or all of our product candidates. Further, the FDA or other regulatory agencies may not agree with our regulatory approval strategies or components of our filings for our products and may not approve, or may delay the approval of, our products.
The research, development, testing, manufacturing, approval, labeling, advertising and promotion, distribution and import and export of pharmaceutical products are subject to extensive regulation, and regulations differ from country to country. We must obtain government approvals before marketing or selling our products. Approval in one jurisdiction does not ensure approval in other jurisdictions. The regulatory approval process is lengthy, expensive and uncertain, and we may be unable to obtain approval for our product candidates. The FDA in the U.S., and comparable regulatory agencies in other jurisdictions, impose substantial and rigorous requirements for the development, manufacture and commercialization of products, the satisfaction of which can take a significant number of years and can vary substantially based upon the type, complexity and novelty of the product.
For example, in the U.S., the process for obtaining marketing approval for a drug or biologic product candidate generally includes (a) conducting preclinical laboratory and animal testing and submitting the results to the FDA in an investigational new drug application (IND) requesting approval to test the product candidate in human clinical trials; (b) conducting adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate in the desired indication; (c) submitting an NDA, biologics license application (BLA), or supplemental NDA/BLA, as appropriate, and (d) completing inspections by the FDA of the facilities where the product candidate is manufactured, analyzed and stored to demonstrate compliance with cGMP, and any requested FDA audits of the clinical trial sites that generated the data supporting the application.
In addition, regulation is not static, and regulatory agencies, including the FDA, evolve in their staff, interpretations, and practices and may impose more stringent requirements than currently in effect, which may adversely affect our plans for product development, approval, manufacture and/or commercialization. The approval procedure and the time required to obtain approval also vary among countries. Regulatory agencies may have varying interpretations of the same data, and approval by one regulatory agency does not ensure approval by regulatory agencies in other jurisdictions. In addition, the ultimate decision by the FDA or other regulatory agencies regarding drug approval may not be consistent with prior communications due to the evolution of new information or changes in clinical practice during the development and registration processes.
The product approval process can last many years, be very costly and still be unsuccessful. For example, the development of SUBLOCADE from concept to commercial launch took approximately eight years. Regulatory approval by the FDA or other regulatory agencies can be delayed, limited or not granted
at all. A product may fail to demonstrate safety and efficacy for each target indication in accordance with applicable regulatory agencies’ standards for many reasons, including:
• data from preclinical testing and clinical trials may be interpreted by applicable regulatory agencies in ways different from how we or our licensees interpret it;
• regulatory agencies may not agree with our or our licensees’ regulatory approval strategies, plans for accelerated development timelines, components of our or our licensees’ filings such as clinical trial designs, conduct and methodologies, or the sufficiency of our or our licensees’ submitted data to meet their requirements for product approval;
• regulatory agencies might not approve our or our licensees’ manufacturing processes or facilities, or those of the contract research organizations (CROs) and contract manufacturing organizations who conduct research or manufacturing work on our or our licensees’ behalf;
• failure by our clinical investigational sites and the records kept at such sites, including any clinical trial data, to be in compliance with the FDA’s good clinical practices (GCP), or other applicable legislation governing GCP, or to pass FDA, European Medicines Agency or other relevant regulatory agency’s inspections of clinical trials;
• regulatory agencies may change their requirements for approval or post-approval marketing; and
• adverse medical events during the trials could lead to requirements that trials be repeated or extended, or that a program be terminated or placed on clinical hold, even if other studies or trials relating to the program are successful.
In addition, disruptions at the FDA and other regulatory agencies that are unrelated to our Company or our products could cause delays to the regulatory approval process for our products. For example, if a prolonged U.S. government shutdown occurs as a result of political or economic conditions or if a future pandemic were to be more severe, the FDA’s ability to timely review and process regulatory submissions could be significantly impacted.
Further, any adverse events or other data generated during the course of clinical trials of our product candidates and/or our currently marketed products could result in action by FDA or an equivalent regulatory authority. Such safety findings may restrict our ability to sell or adversely affect the commercialization of currently marketed products. Specifically, clinical trial safety data could result in FDA requiring changes to the clinical development program, labeling, including additional warnings or additional boxed warnings, or requiring us to take other actions that could have an adverse effect on patient and prescriber acceptance of our products. See, “ We are subject to ongoing obligations and continued regulatory review by the FDA and equivalent foreign regulatory agencies, and we may be subject to penalties and litigation and large incremental expenses if we fail to comply with regulatory requirements or experience problems with our products, ” below.
Risks Related to our Financial Condition and Tax Matters
Our balance sheet is leveraged, and any reduction in revenue or change in our estimates may adversely affect our liquidity and profitability.
The Company offers rebates to healthcare authorities and under contractual arrangements with certain customers. The amount of the rebate varies based on sales channel and payor but can be significant. G enerally, we are paid in full shortly after delivery and we accrue an estimate of our liability for rebates. Several months or quarters may pass between the original estimate of rebates due, confirmation of the amount, and subsequent payment of the liability. At December 31, 2025, the liability for accrued rebates and product returns was $582 million. As a result, our current liabilities exceed our current assets by over $250 million and total liabilities exceed our total assets by approximately $100 million. Until the final amount of the rebate or incentive is determined and paid, we benefit from the use of this cash. If our revenue were to decline, the corresponding reduction of rebates payable would negatively impact our liquidity. Additionally, w e expect a decline in net revenues from SUBOXONE Film in 2026 due to increased generic pricing
activity. Any material change in net revenues, the timing of collections, and rebate payments may impact our liquidity and profitability in the near-term and our ability to meet our obligations in the long term. In addition, the liability we accrue is an accounting estimate based on a number of factors. This estimate may be more sensitive than others in our industry or in other industries, and can be impacted by the actions of third parties, for example states or municipalities who fail to provide invoices for rebates on a timely basis. See generally, “ Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations —E. Critical Accounting Estimates . ”
Our business strategy may involve future transactions that may harm the market price of our common stock or require us to seek additional funds, and such funding may not be available on commercially favorable terms or at all and may cause dilution to our existing stockholders. The issuance of additional common stock in connection with future acquisitions, any stock incentive or stock option plan, or otherwise, may dilute all other stock holdings.
In order to achieve our business strategy, we regularly review potential transactions related to technologies, products or product rights, and businesses that are complementary to our business, including mergers and acquisitions, licenses and collaborations, and development and supply, commercialization or co-promotion arrangements, among others. We may choose to enter into one or more of these or other transactions at any time, which may cause substantial fluctuations in the market price of our common stock. Moreover, depending upon the nature of any transaction, we may experience a charge to earnings, which could also materially adversely affect our results of operations and could harm the market price of our common stock.
In order to finance such transactions, we may require additional funds, and we may seek such funds through various sources, including debt and equity offerings, corporate collaborations, bank borrowings, arrangements relating to assets, monetization of royalty streams or other financing methods or structures. In particular, we may, for these and other purposes, issue additional equity or convertible equity securities which would cause our stockholders to suffer dilution to their percentage ownership of the Company, or the market price of our common stock may be adversely affected. The source, timing and availability of any financings will depend on global economic conditions, credit and financial market conditions, interest rates and other factors. If we issue additional equity securities or securities convertible into equity securities, our stockholders will suffer dilution of their investment, and it may adversely affect the market price of our common stock. If we issue additional debt securities, our existing debt service obligations will increase further. If we are unable to generate sufficient cash to meet these obligations and need to use existing cash or liquidate investments in order to fund our debt service obligations or to repay our debt, we may be forced to curtail our operations. We cannot be certain that additional financing will be available from any of these sources when needed or, if available, will be on acceptable terms. If we fail to obtain additional capital when we need it, we may not be able to execute our business strategy successfully and may have to give up rights to our product platforms, and/or products, or grant licenses on terms that may not be favorable to us.
Our effective tax rate may increase, and changes in tax rules and regulations, or interpretations thereof, may adversely affect our financial condition.
As a global biopharmaceutical company and following our reorganization into a U.S.-parented corporate structure, we are now subject to U.S. federal income taxation on our worldwide income, in addition to taxation in the various jurisdictions in which we operate. As a result, our effective tax rate is derived from a combination of applicable tax rates in the various places where we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each of these places. Our effective tax rate may fluctuate depending on several factors, including, but not limited to, the distribution of our earnings or losses between the jurisdictions where we operate and differences in the interpretation of tax laws. In addition, the tax laws of any jurisdiction in which we operate may change in the future, which could impact our effective tax rate. Tax authorities in the jurisdictions in which we operate may audit us. If we are unsuccessful in defending any tax positions adopted in our submitted tax returns, we may be required to pay taxes for prior periods, interest, fines or penalties, and may be obligated to pay increased taxes in the future, any of which could have a material adverse effect on our business, financial condition, cash flows and results of operations.
As a result of our becoming a U.S. corporation subject to worldwide taxation, this change may increase our overall effective tax rate, particularly as the distribution of earnings among taxing jurisdictions evolves. Further, our effective tax rate could be affected by numerous factors, such as changes in tax laws, regulations, administrative practices, principles and interpretations, or our ownership or capital structures. Any current or future proposed changes to the tax rules that apply to corporations could materially affect our tax obligations and effective tax rate. In addition, the Organisation for Economic Co-operation and Development (OECD) has achieved widespread political agreement to work towards the implementation of a global minimum tax. As a result, it is possible that the Company’s consolidated effective tax rate may be affected. It is difficult to predict whether and when tax law changes will be enacted that would have a material adverse effect on our business, financial condition, results of operations and cash flows.
The application of tax law is subject to interpretation and is subject to audit by taxing authorities. Additionally, administrative guidance can be incomplete or vary from legislative intent, and therefore the application of the tax law is uncertain. While we believe the positions taken by the Company comply with relevant tax laws and regulations, taxing authorities could interpret our application of certain laws and regulations differently. Future tax controversy matters may result in previously unrecorded tax expenses, higher future tax expenses, or the assessment of interest and penalties.
Our deferred tax assets may not be realized.
On December 31, 2025 we had $323 million of deferred tax assets, net of valuation allowance, including $211 million of net deferred tax assets in the U.S. and $111 million of net deferred tax assets in the U.K., respectively. It is possible that some or all of such deferred tax assets will not be realized, especially if we incur losses in either the U.S. or the U.K. in the future. Losses may arise from unforeseen operating events. Unless we are able to generate sufficient taxable income in the future, a substantial reduction in the carrying value of either our U.S. or U.K. deferred tax assets may be required, which would materially increase our expenses in the period the reduction is recognized and materially adversely affect our business, financial condition, and results of operations.
Tariffs on pharmaceutical products, and potential reciprocal responses by other countries, may adversely affect our revenues or profitability.
Proposed tariffs on pharmaceutical products, and potential reciprocal responses by other countries, may adversely affect our revenues or profitability. We import certain raw materials, components, and API from the U.K., EU, Australia, Japan, and the Philippines. Tariffs apply to both SUBLOCADE and SUBOXONE Film but with moderate impact based on the latest tariffs, especially since the main contributors (APIs) originate from our manufacturing plant in the U.K. and are currently exempt from tariffs for at least the next 3 years, following a recent U.K./US agreement. If U.S. tariffs on those countries were to increase, it could adversely affect our profitability. Further, we may face retaliatory tariffs levied by impacted countries which could adversely impact our revenues. We export finished products from the U.S. to Canada and Australia. We have limited ability to avoid any applicable tariffs in the short or medium term due to existing manufacturing commitments, availability of raw materials, and the time needed to validate new manufacturing sites by the FDA and other regulators. Also, we have limited capacity to raise prices to recover costs of tariffs because, for example, the federal Inflation Reduction Act limits U.S. pharma price increases.
Weakness in the economy, geopolitics, market trends, disruptions in our supply chain, uncertainty, and other conditions in the markets in which we operate, particularly in the U.S., may adversely affect our sales growth and results of operations.
Our financial performance depends in part on general economic and geopolitical conditions in the geographic markets in which we operate, particularly in the U.S., where we generated approximately 85% of our revenue in fiscal 2025. Further, we are also subject to changes in economic conditions and cost inflation, interest rates, credit and capital markets, foreign exchange rates, political conditions, and tax and trade relations. For example, in 2022, the U.S. experienced price inflation at its highest levels in 40 years, and inflation rates globally have been elevated. Global supply chain challenges continue to challenge all industries. Armed conflicts may compound supply chain challenges, possibly including shortages of
materials and labor, increased demand for goods and services, constricted logistics capacity, and rising commodity and energy prices. Our agreements with some customers and government purchasers may limit our ability to raise prices commensurate with these cost increases. Numerous industries have suffered from supply chain disruptions or labor shortages that may affect us in unexpected ways. If major delays or shortages occur, the delivery of products to our patients could be disrupted and impact the Company’s short-term financial performance. Any of these geopolitical or macroeconomic trends may have an adverse effect on our profitability, ability to generate revenue or fund operations, and ability to raise capital, which in turn could have a material adverse effect on our business, financial condition, and results of operations.
We may also be affected by other factors which ultimately might reduce demand for our products. While OUD prevalence remains elevated in the U.S., our largest market, recent data shows a reduction in overdose deaths. Further, authorities report increased abuse of other drugs including sedatives and anesthetics such as xylazine (also known as ‘tranq’) and ketamine, and amphetamines and stimulants such as methamphetamine, and our products are not indicated to treat the abuse of such non-opioid drugs. Also, the prevalence of OUD might also be affected by the actions of governments to better restrict the manufacture of opioids outside the U.S. and the illegal import of such drugs into the U.S.
Our operating results may fluctuate significantly.
We expect that any potential growth in revenue may fluctuate from quarter to quarter and year to year because of many factors, including the factors discussed in these Risk Factors. The results of any prior quarterly period should not be relied upon as an indication of our future operating performance. If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our stock to fluctuate substantially.
Any future pandemic, and governmental and societal responses thereto, may harm our business, results of operations, and financial condition.
The COVID-19 pandemic had a significant impact on the global healthcare delivery system. Many healthcare systems had to restructure operations to prioritize caring for COVID-19 patients and limit or cease other activities. Many governments, including in the U.S., U.K., and Canada, imposed stringent restrictions to seek to mitigate, or slow, the spread of COVID-19, including restrictions on international and local travel, public gatherings and participation in business meetings, as well as closures of workplaces, churches, schools, and other public sites. Possible future pandemics may negatively affect us in a variety of ways, including restrictions on access to HCPs by our sales force; disruptions to the supply of our products to patients if we experience either a significant absence of our employees and/or employees at our contract manufacturing organizations, vendors and service providers due to infection and/or government containment measures; and capacity issues at our airfreight and road logistics providers. In addition, possible future pandemics may result in overall fewer patient visits to healthcare provider offices for non-pandemic reasons or essential treatments, as patients become unable or unwilling to make visits due to overburdened healthcare systems, safety concerns, quarantines and other travel restrictions, or elect to have remote consultations with their providers. In the past, this also impaired our ability to enroll new patients in clinical trials and the development of real-world evidence for our existing products that are used for regulatory submissions and to supplement our label. Any of the above factors could have a material adverse effect on our business, financial condition, and results of operations.
Our insurance coverage may not be adequate.
Our business exposes us to potential product liability and professional indemnity claims and other risks which are inherent in the research, pre-clinical and clinical evaluation, manufacturing, sales and marketing and use of pharmaceutical products. We have public liability (general liability) and product liability insurance. However, product liability insurance may be unavailable for many claims involving our opioid drug products due to contractual exclusions in our insurance policies. We also have insurance covering losses from property damage and business interruption, third-party named suppliers, marine and cargo, directors’ and officers’ liability, clinical trials, automobile (fleet vehicles), employers’ liability, personal accident and travel, and cybersecurity.
We believe the insurance coverage currently in place generally is appropriate for a business of our current size, nature and financial position. However, our coverage limits and indemnity provisions may be insufficient to cover all potential claims arising from our business operations, may not apply to certain risks, and there is no assurance that we will be able to obtain appropriate coverage in the future due to cost, risk profile or other factors. There are additional factors that could affect reimbursement of payment by insurers, including (i) the scope of the insurers’ purported defenses and exclusions to avoid coverage, (ii) the outcome of negotiations with insurers, (iii) delays in or avoidance of payment by insurers and (iv) the extent to which insurers may become insolvent in the future. In addition, insurance coverage, while potentially available, may carry premiums that are not commercially reasonable and/or may be difficult to obtain or maintain on commercially reasonable terms. Product liability insurance, particularly for buprenorphine products, is difficult to obtain and may not be available in the future on acceptable terms or at all. A successful claim or claims against us in excess of or outside of our insurance coverage may have a material adverse effect on our business, prospects, results of operations and financial condition.
Our term loan contains certain covenants that could limit our ability to plan for or respond to changes in our business.
The Company has a term loan extended pursuant to a Note Purchase Agreement, which includes two financial covenants, the unpaid balance of which was $333 million at December 31, 2025. T he first covenant requires that the Total Leverage Ratio of the consolidated borrower group to be less than 3.0 to 1.0 (through September 30, 2026), and then less than 2.50 to 1.0 from December 31, 2026 and thereafter. The Total Leverage Ratio is generally defined as the ratio of (i) total debt less cash and cash equivalents (up to $50 million) to (ii) Adjusted EBITDA for the preceding 12-month period. (See Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 12. Debt for an explanation of Adjusted EBITDA). The second requires that the Interest Coverage Ratio of the consolidated borrower group to be at least 2.50 to 1.00. The Interest Coverage Ratio generally is defined as the ratio of Adjusted EBITDA to interest expense for the preceding 12-month period.
The Note Purchase Agreement also has several other affirmative covenants and generally subjects the Company to negative covenants customary for facilities of this nature, including a limitation on disposal of assets, a limitation on prepayments and redemptions of certain indebtedness, a limitation on further indebtedness, a limitation on liens, a limitation on further negative pledges, limitations on share buybacks and redemptions, dividends and other “restricted payments,” a limitation on subsidiary distributions, limitations on investments, a limitation on mergers and acquisitions and other fundamental changes, limitations on sale and lease-back transactions, a restriction on changes to any material line of business (including the business of the restricted subsidiaries of the Borrower), restrictions on modifying the terms of certain debt and general restrictions on the organizational documents and fiscal year of the Borrower. These negative covenants are subject to various carve-outs, grace periods and qualifications and, in some instances, are also applicable to most subsidiaries of Indivior Pharmaceutical.
Risks Related to Our Common Stock
Our common stock is subject to market price volatility and the market price may decline disproportionately in response to developments that are unrelated to our operating performance.
The market price of our common stock has been, and in the future may be, volatile and subject to wide fluctuations as a result of a variety of factors including, but not limited to: general economic conditions; developments with our pending litigation; period to period variations in operating results or changes in revenue or earning estimates by us, market and industry participants, and/or financial analysts; our failure to meet our stated guidance; our failure to comply with the rules under the Sarbanes-Oxley Act related to accounting controls and procedures; the discovery of material weaknesses and other deficiencies in our internal control and accounting procedures; and the other factors discussed in these risk factors. The market price could also be adversely affected by developments unrelated to our operating performance, such as the operating and share price performance of other companies that investors may consider comparable to us, speculation about us in the press and/or the investment community, unfavorable press, strategic actions by competitors (including acquisitions and restructurings, new competing products, and new generic products), changes in market conditions, regulatory changes and broader market volatility and
movements. Any or all of these factors could result in material fluctuations in the price of our common stock, which could result in investors getting back less than they invested or a total loss of their investment.
In addition, when the market price of a company’s shares has been volatile, the stockholders of such company may file securities class action litigation against that company based on various claims, such as securities fraud and other violations of securities laws. For example, although ultimately dismissed during the third quarter of 2025, an amended purported securities class action lawsuit was filed against Indivior PLC, Mark Crossley (the CEO of the Company), Ryan Preblick (the CFO of the Company), and Richard Simkin (the Chief Commercial Officer of the Company) in December 2024 alleging violations of certain U.S. federal securities laws following a sudden drop in the market price of the Company’s common stock. See Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies . See also the discussion of similar, but less common, U.K. litigation under the caption “ U.K. stock holder claims ” in Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies .
If securities or industry analysts do not publish research or publish inaccurate or unfavorabl e research about our business, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and opinions that securities or industry analysts publish about us or our business which we do not control. If one or more of the analysts who cover us downgrade our rating, lower our price target, or publish inaccurate or unfavorable research about our business, our stock price could decline. If one or more of these analysts cease coverage of our company or fail to publish reports on our company regularly, demand for our common stock could decrease, which might cause our stock price and trading volume to decline.
The Parent Company is a holding company with no business operations of its own and depends on its subsidiaries for cash, including in order to pay dividends or repurchase shares .
The Parent Company is a holding company with no independent operations and is dependent on earnings and distributions of funds from its operating subsidiaries for cash, including in order to pay dividends to its stockholders or repurchase shares. The Parent Company’s ability to pay dividends to its stockholders or repurchase shares therefore depends on the ability of its subsidiaries to distribute earnings or pay dividends to the Parent Company, general economic conditions, restrictions under our Note Purchase Agreement and other factors the Board deems significant from time to time. Also, Delaware law limits the ability of the Parent Company to pay dividends only from its capital surplus or its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. The Parent Company’s distributable reserves also can be affected by reductions in profitability, impairment of assets and severe market turbulence.
We may not pay dividends or repurchase our shares in the future. Our ability to pay dividends, repurchase our shares, or make other returns of capital in the future depends, among other things, on our financial performance.
There can be no guarantee that our historical performance will be repeated in the future, particularly given the competitive nature of the industry in which we operate, and our revenue, income and cash flow may significantly underperform market expectations. If our cash flow underperforms market expectations, then our capacity to pay a dividend, repurchase shares, or make other returns of capital may be adversely impacted. Any decision to declare and pay dividends or to make other returns of capital will be made at the discretion of the Board and will depend on, among other things, applicable law, regulation, restrictions (if any) on the payment of dividends and/or capital returns in our financing arrangements, our financial position, retained earnings, working capital requirements, finance costs, general economic conditions and other factors that the Board deems significant from time to time.
We last paid a dividend in July 2016. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future, including due to limitations that are currently imposed by our Note
Purchase Agreement. Any return to stockholders therefore likely will be limited to the increase in the price of our common stock, if any.
Similarly, while we have completed four share repurchase programs with an aggregate value of approximately $400 million between July 2021 and January 2025, any future repurchase of shares is subject to the discretion of our Board and will depend on similar factors as those that affect decisions to pay dividends. There can be no assurance the Company will repurchase any additional shares beyond the programs already announced.
We are subject to anti-takeover provisions in our certificate of incorporation and bylaws and under Delaware law that could delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders.
Certain provisions of Delaware law, the state in which we are incorporated, and our certificate of incorporation and bylaws could hamper a third-party’s acquisition of us, or discourage a third-party from attempting to acquire control of us. These provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock. In addition, these provisions make it more difficult for our stockholders to remove our Board of Directors or management or elect new directors to our Board of Directors. These provisions include the following:
• Our Board of Directors may issue, without stockholder approval, shares of preferred stock. This makes it possible for our Board of Directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us;
• Stockholders must comply with advance notice procedures to nominate individuals for election to the Board of Directors or to propose matters that can be acted upon at a stockholders' meeting. These provisions may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect such acquirer's own slate of directors or otherwise attempting to obtain control of our Company;
• Our stockholders may not act by written consent. As a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions outside of a stockholders' meeting;
• Special meetings of stockholders may be called only by the chairman of our Board of Directors, our chief executive officer, a majority of our Board of Directors, or the holders of 20% or more of our outstanding shares who follow specified procedures;
• Our Board of Directors has the right to set the size of the Board of Directors and to elect a director to fill a vacancy, which prevents stockholders from being able to fill vacancies on our Board of Directors; and
• Our Board of Directors has the ability to amend our bylaws without obtaining stockholder approval.
In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These and other provisions in our certificate of incorporation, our bylaws, and in the Delaware General Corporation Law could make it more difficult for stockholders or potential acquirers to obtain control of our Board of Directors or initiate actions that are opposed by the then-current Board of Directors.
Provisions of our Note Purchase Agreement may deter or prevent an otherwise beneficial takeover attempt of us.
Provisions of the Note Purchase Agreement could deter or prevent an otherwise beneficial takeover attempt of us. For example, a change of control constitutes an Event of Default under the Note Purchase Agreement. The Note Purchase Agreement generally defines a Change of Control to mean (i) the acquisition by any Person or group of Capital Stock representing more than 35% of the total voting power of
all of the outstanding voting stock of Indivior Pharmaceutical, or (ii) the occupation of a majority of the seats on the Board of Directors of Indivior Pharmaceutical by persons who were not members of the Board of Directors of Indivior PLC when we entered into the Note Purchase Agreement and whose election to the Board of Directors of Indivior Pharmaceutical was not approved by a majority of our Board. Because a Change of Control would trigger an Event of Default under the Note Purchase Agreement, otherwise beneficial takeover attempts may be discouraged or delayed.
Risks Related to Information Security and Data Privacy
Business interruptions or breaches of data security could disrupt our product sales and delay the development of our product candidates.
We are dependent on information technology systems and infrastructure, including mobile technologies, to operate our business. In the ordinary course of our business, we collect, store and transmit confidential information, including intellectual property, proprietary business information and personal information. It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. While we have implemented processes and controls to collect, store, and transmit such information in a secure manner, there can be no assurance that any measures we take will prevent potential cyber-attacks or other security breaches that could adversely affect the confidentiality and integrity of such confidential information.
Like many companies, we have experienced breaches of our data security, including phishing attacks and malware. To date, none has had a material effect on our business strategy, results of operations or financial condition. Were we to have a cybersecurity incident, it is reasonably likely that it could have a material adverse effect on our business and financial results. While we have taken a number of steps to prevent further cybersecurity incidents, we cannot estimate how likely any such incident would be.
We also use a number of third-party vendors who have or could have access to our confidential information. The size and complexity of our information technology systems, and those of third-party vendors with whom we contract, make such systems potentially vulnerable to breakdown, malicious intrusion, insider threat attacks, security breaches, ransomware, and other cyber-attacks, all of which would be costly to remedy. In addition, the use of mobile devices or cloud-based systems that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other proprietary information. Failures of or disruptions to our systems or the systems of third parties on whom we rely, particularly if prolonged, could result in breaches of data security and/or a loss of key data which would adversely affect our reputation, business and results of operations. While we have implemented security measures to protect our data security and information technology systems, our visibility into the data security processes and controls in place at our third-party vendors is inherently limited and, as a result, such measures may not prevent the adverse effect of such events.
In addition, we may be impacted by data breaches or business interruptions occurring within our supply chain, with our customers, or their business partners. For example, in February 2024, a data breach occurred at a leading provider of revenue and payment cycle management that connects payors, providers, and patients within the U.S. healthcare system. Although we did not contract with this provider, the impact of this data breach significantly disrupted payers, providers and their patients which subsequently impacted SUBLOCADE revenue in the first and second quarters of 2024, particularly affecting new patient and refill adjudications, which contributed to a decrease in SUBLOCADE's sequential dispense growth in the U.S. in the second quarter of 2024. For additional information regarding how we manage information resources and threats, see “ Item 1.C. Cybersecurity. ”
We are required to maintain the privacy and security of personal information in compliance with privacy and data protection regulations worldwide. Failure to meet the requirements could result in fines, penalties, or private actions, harm our business and damage our reputation with customers, suppliers, and associates.
We rely on systems, networks, products, and services, some of which are managed by third-party service providers to protect our information. Increased information security threats, more sophisticated cyber-attacks and a growing base of diversified threat actors continually pose a risk to all systems and data.
Additionally, we collect, store, and process personal information relating to many stakeholders, including our customers, suppliers, and associates. This information is increasingly subject to a variety of U.S. laws, including an increasing number of comprehensive and health-care-specific laws across various U.S. states, and other emerging privacy and cybersecurity laws internationally, at the federal level in the U.S., and across various U.S. states, that may carry significant potential penalties for noncompliance. We are also subject to a variety of international laws and regulations, such as the General Data Protection Regulation, as enacted in the European Union, the Data Protection Act in the U.K., Canada’s Personal Information Protection and Electronic Documents Act, the Australian Privacy Act 1988 and its amendments, that may carry significant potential penalties for noncompliance.
The FTC also sets expectations surrounding the privacy and security of consumers’ personal information. It asserts that failing to take appropriate steps to keep consumers’ personal information secure or failing to provide a level of security commensurate to promises made to individuals about the security of their personal information (such as in a privacy notice) may constitute unfair or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act (“FTC Act”). The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards. With respect to privacy, the FTC also sets expectations that companies honor the privacy promises made to individuals about how a company handles consumers’ personal information; any failure to honor promises, such as the statements made in a privacy policy or on a website, may also constitute unfair or deceptive acts or practices in violation of the FTC Act. While we do not intend to engage in unfair or deceptive acts or practices, the FTC has the power to enforce promises as it interprets them, and events that we cannot fully control, such as data breaches, may result in FTC enforcement. Enforcement by the FTC under the FTC Act can result in civil penalties or enforcement actions.
These data privacy and data protection laws and regulations are typically intended to protect the privacy of personal information that is collected, processed, transmitted, and stored. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between a company and its subsidiaries. While we have invested and continue to invest significant resources to comply with data privacy regulations, many of these regulations are new, complex, and subject to interpretation. Noncompliance with these laws could result in negative publicity, damage to our reputation, penalties, or significant legal liability. We could be adversely affected if legislation or regulations are revised or extended to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business. The landscape of federal and state laws regulating personal information is constantly evolving, and compliance with these laws requires a flexible privacy framework and substantial resources, and compliance efforts will likely be an increasing and substantial cost in the future.
Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data.
Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability or other adverse consequences to our business operations. We may adopt and integrate generative artificial intelligence tools into our systems for specific use cases reviewed by legal and information security. Our vendors may incorporate generative artificial intelligence tools into their offerings without disclosing this use to us, and the providers of these generative
artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience. If we, our vendors or our third-party partners experience an actual or perceived breach or privacy or security incident because of the use of generative artificial intelligence, we may lose valuable intellectual property and confidential information and our reputation and the public perception of the effectiveness of our security measures could be harmed. Further, bad actors around the world use increasingly sophisticated and rapidly evolving methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property. Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business.
Risks Related to Our International Status and Operations
We are exposed to risks related to currency exchange rates.
We present our financial statements in this report in U.S. doll ars. Based on the country where sales originate, we derived 85% , 85% , and 83% of our net revenues from the U.S. in 2025, 2024, and 2023, respectively (although we expect the share of revenues from outside the U.S. to decline as a result of the growth of SUBLO CADE and the operational changes we announced in 2025). We also conduct business in Canada, Europe and Australia, among other places. Our agreements with customers outside the U.S. often involve payments denominated in currencies other than U.S. dollars, which creates foreign currency translation risk. Our operating results are therefore subject to currency fluctuations in translating revenues and costs from those foreign currencies to U.S. dollars. Additionally, if in the future we expand our sales and operations into new markets, different currencies could expose us to additional currency translation risks. These risks increase with the varying strength of the U.S. dollar.
We generally do not actively hedge exchange rate fluctuations, although we attempt to balance large non-U.S. dollar liabilities with similarly sized monetary assets in the same currency, which is sometimes referred to as a natural hedge. To the extent that we do not hedge our exposure to foreign currency exchange rate fluctuations, or to the extent that such hedging is structured ineffectively or does not fully offset our exposure to exchange rate fluctuations, our business, financial condition, and results of operations could be materially adversely affected.
Exchange rate fluctuations between local currencies and the U.S. dollar also create risk in other ways, including but not limited to: (i) increasing the U.S. dollar cost of non-U.S. research and development expenses and the cost of sourced product components outside the U.S. (in the case of a weakening U.S. dollar); (ii) decreasing the value of our revenues denominated in other currencies (in the case of a strengthening U.S. dollar); (iii) distorting the value of non-U.S. dollar transactions and cash deposits; and (iv) affecting commercial pricing and gross margins of our products. These effects can have an adverse impact on our results of operations and financial condition and may also make it more difficult for investors to understand the relative strengths or weaknesses of our underlying business on a period-over-period comparative basis.
Risks Related to Being a Publicly-Traded Company in the U.S.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters, could significantly affect our financial results or financial condition.
Accounting standards and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, inventories, lease obligations, self-insurance, tax matters, pensions and litigation, and impairment of goodwill and other intangible assets are complex and involve many subjective assumptions, estimates and judgments. See, for example, “ Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations —E. Critical Accounting Estimates .” These estimates may be more sensitive, particularly regarding assumptions pertaining to the difference between gross revenue and net revenue, than others in our industry or in other industries. Changes in accounting standards or their
interpretation or changes in underlying assumptions and estimates or judgments could significantly change our reported or expected financial performance or financial condition.
