Illumina (ILMN) risk factors, FY2024 10-K

Risks Relating to Our Sales of Products and Services, Marketing and Research and Development

1. 01Our success depends upon the continued emergence and growth of markets for analysis of genetic variation, and continued substantial increases in the use of sequencing as the cost of sequencing declines
2. 02We face intense competition, which could render our products obsolete, result in significant price reductions, or substantially limit the volume of products that we sell
3. 03China’s Ministry of Commerce has added Illumina to its List of Unreliable Entities, which could result in fines or restrictions on our ability to do business in China and could have a material adverse effect on our revenue and results of operations
4. 04If we do not successfully manage the development, manufacturing, and launch of new products or services, including product transitions, our financial results could be adversely affected
5. 05Our continued growth is dependent on continuously developing and commercializing new products
6. 06As we develop, market, or sell diagnostic tests, we may encounter delays in receipt, or limits in the amount, of reimbursement approvals and public health funding, which will impact our ability to grow revenues in the healthcare market
7. 07Uncertainties with respect to the development, deployment, and use of artificial intelligence in our business and products may result in harm to our business and reputation

Risks Relating to Supply Chain, Manufacturing, and Quality

1. 08We depend on third-party manufacturers and suppliers for some of our products, or sub-assemblies, components, and materials used in our products, and if shipments from these manufacturers or suppliers are delayed or interrupted, or if the quality of the products, components, or materials supplied do not meet our requirements, we may not be able to launch, manufacture, or ship our products in a timely manner, or at all
2. 09In the past, defects have been discovered in our products, as a result of which we have incurred costs and our products have been subject to recalls. If defects are discovered in our products in the future, we may incur additional unforeseen costs, our products may be subject to recalls, customers may not purchase our products, our reputation may suffer, and ultimately our sales and operating earnings could be negatively impacted
3. 10If we are unable to increase our manufacturing or service capacity and develop and maintain operation of our manufacturing or service capability, we may not be able to launch or support our products or services in a timely manner, or at all
4. 11An interruption in our ability to manufacture our products or an inability to obtain key components or raw materials due to a catastrophic disaster, infectious disease, or infrastructure failure could adversely affect our business

Risks Relating to Our Strategic Collaborations

1. 12If we fail to maintain and successfully manage our strategic collaborations, our future results may be adversely impacted

Risk Relating to the Protection of Our Intellectual Property

1. 13Any inability to effectively protect our proprietary technologies could harm our competitive position

Risks Related to Acquisitions, Including the Acquisition of GRAIL

1. 14Our acquisitions expose us to risks that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of businesses or technologies
2. 15On June 24, 2024, we completed the separation of GRAIL into a separate, independent publicly traded company. As of September 6, 2024, all previously disclosed regulatory proceedings in the United States and European Union related to our acquisition of GRAIL (the Acquisition) have come to an end. Litigation, regulation, and other proceedings related to or resulting from the Acquisition have resulted in operational restrictions and increased costs and could result in similar additional future consequences or further result in loss of revenues
3. 16The Spin-Off could result in substantial tax liability
4. 17Following the Spin-Off, we remain the obligor on the contingent value rights (the CVRs) we issued in connection with the GRAIL Acquisition
5. 18The Spin-Off could adversely affect the market value of the CVRs

Risks Relating to Litigation

1. 19Litigation, other proceedings, or third-party claims of intellectual property infringement could require us to spend significant time and money and could prevent us from selling our products or services
2. 20If product or service liability lawsuits are successfully brought against us, we may face reduced demand for our products and incur significant liabilities

Risks Relating to Government Regulation

1. 21Changes in, or failure to comply with, competition laws could adversely affect our business, financial condition, or results of operations
2. 22Our products, if used for the diagnosis of disease, could be subject to government regulation, and the regulatory approval and maintenance process for such products may be expensive, time-consuming, and uncertain both in timing and in outcome. Since our strategy includes an emphasis on increasing our participation in clinical markets, we will be increasingly exposed to these risks
3. 23In April 2024, the FDA issued the Final Rule relating to Laboratory Development Tests (LDTs). Newly developed LDT products may be subject to regulatory clearance or approval, and could result in adverse impacts to our business, financial condition, or results of operations

Risks Relating to Information Technology Security and Continuity

1. 24Despite using commercially reasonable measures to secure our systems, networks, and products, security breaches, including with respect to cybersecurity, and other disruptions could compromise our information, products, and services, disrupt our or our customers’ operations, and expose us to liability, which could cause our business and reputation to suffer
2. 25Disruption of critical information technology systems could have an adverse effect on our operations, business, customer relations, and financial condition

Risk Relating to Public Health Crises

1. 26We are unable to predict the extent to which public health crises may adversely impact our business operations and financial performance

General Risk Factors

1. 27Doing business internationally, especially in emerging markets, creates operational risk for our business
2. 28The armed conflict between Russia and Ukraine, the international sanctions imposed on Russia, and the restrictions imposed on exports to Russia will likely continue to negatively affect our business. Armed conflict in the Middle East or elsewhere could also negatively impact us
3. 29We are exposed to risks associated with transactions denominated in foreign currency
4. 30We are subject to risks related to taxation in multiple jurisdictions
5. 31Our operating results may vary significantly from period to period
6. 32Adverse economic or market conditions may harm our business