Question

Select an industry, identify what might make that industry high-risk, and discuss factors that you would consider when deciding whether to disclose contingencies based on the selected industry.

Answer 1

industry - Pharma industry

Risks Pharma Industry

• Patent Cliffs

Expiration of drug patents and the sudden drop-off of sales of products that previously constituted a large percentage of the market.

• New Technology:

Updating recent technology and new improvements will get effect the existing Product market. Failure to keep up with these technology advancements could open the door for non-traditional players to enter the market and infringe on pharmaceutical companies’ market share.

• Product Liability

For Generic Drugs competition is at High Level. cut down the cost of new drugs by streamlining and speeding up the research and development process

• International Control and Standards

Multinational Pharma companies have to ensure, they have to meet U.S. quality standards while adhering to all local regulations. There are stringent standards for all vendors and third parties involved in the manufacture and transportation processes.

• Increased Competition in Generic Drugs

Once a new brand name drug is approved, it’s granted a 180-day period of exclusivity, during which time generic versions cannot go to market. But, a backlog of generic applications has stretched that 180 days much longer. The FDA’s renewed effort to clear that backlog and get generic. According to the FDA, the entree of two competitive generic versions knocks down the price of a brand name drug by 52%. The price falls another 30% once nine generics are on the market.

Factors to be consider for discloser of Contingencies:

1. Litigation and claims
2. Going Concern Issues
3. If we know the Future Losses should recognize immediately
4. Legal Issues against Patents