Quest Diagnostics 2008 Annual Report Download - page 40

Our operations and reputation may be impaired if we do not comply with privacy laws or information
security policies.
In our business, we generate or maintain sensitive information, such as patient data. If we do not adequately
safeguard that information and it were to become available to persons or entities that should not have access to
it, our business could be impaired and our reputation could suffer.
We are subject to numerous political, legal, operational and other risks as a result of our international
operations which could impact our business in many ways.
Although we conduct most of our business in the United States, our expanding international operations
increase our exposure to the inherent risks of doing business in international markets. Depending on the market,
these risks include, without limitation:
•changes in the local economic environment;
•political instability;
•social changes;
•intellectual property legal protections and remedies;
•trade regulations;
•procedures and actions affecting approval, production, pricing, reimbursement and marketing of products
and services;
•exchange controls;
•weak legal systems which may affect our ability to enforce contractual rights;
•changes in local laws or regulations; and
•potentially longer payment and collection cycles.
International operations also require us to devote significant management resources to implement our controls
and systems in new markets, to comply with the U.S. Foreign Corrupt Practices Act and similar laws in local
jurisdictions and to overcome challenges based on differing languages and cultures.
We expect to expand further our international operations, through acquisition or otherwise, which would
increase these risks. As a result of these risks, our financial condition or results of operations could be materially
adversely affected.
Our medical diagnostic products business is subject to numerous governmental regulations and it can be
costly to comply with these regulations and to develop compliant diagnostics products.
Our medical diagnostic products are subject to extensive regulation by numerous governmental authorities in
the United States, including the FDA, and by regulatory authorities outside the United States, including the
European Commission. The process of obtaining regulatory clearance or approval to market a medical diagnostic
product can be costly and time-consuming, and clearance or approval for future products is never certain. Even
when additional indications or uses of existing products are sought, securing clearance or approval is never
certain. Delays in the receipt of, or failure to obtain clearance or approval for, future products, or new indications
or uses, could result in delayed realization of product revenues and in substantial additional costs.
In addition, no assurance can be given that we will remain in compliance with applicable regulations once
clearance or approval has been obtained for a product. These requirements include, among other things,
regulations regarding manufacturing practices, product labeling and advertising and postmarketing reporting,
including adverse event reports and field alerts due to manufacturing quality concerns. Our diagnostic product
facilities and procedures and those of our suppliers are subject to ongoing regulation, including periodic
inspection by the FDA and other regulatory authorities. Failure to comply with applicable rules could result in,
among other things, substantial modifications to our business practices and operations; refunds, recalls or seizures
of our products; a total or partial shutdown of production in one or more of our facilities while we or our
suppliers remedy the alleged violation; the inability to obtain future pre-market clearances or approvals; and
withdrawals or suspensions of current products from the market. Any of these events could disrupt our business
and have a material adverse effect on our revenues, profitability or financial condition.
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