Danaher 2011 Annual Report Download - page 22

Table of Contents
clearance (such as 510(k) clearance) for our new products or modifications to existing products within the anticipated timeframe or at all, and if we do obtain
such clearance it may be time-consuming, costly and restrictive. Our ability to obtain such regulatory clearances will depend on many factors, including our
ability to obtain the necessary clinical trial results, and the process for obtaining such clearances could change over time and may require the withdrawal of
products from the market until such clearances are obtained. Failure to obtain such regulatory clearances before marketing our products, other violations of
these regulations, efficacy or safety concerns or trends of adverse events with respect to our products (even after obtaining clearance for distribution) and
unfavorable or inconsistent clinical data from existing or future clinical trials can lead to FDA Form 483 Inspectional Observations, warning letters, notices to
customers, declining sales, loss of customers, loss of market share, recalls, seizures of adulterated or misbranded products, injunctions, administrative
detentions, refusals to permit importations, partial or total shutdown of production facilities or the implementation of operating restrictions, suspension or
withdrawal of approvals and pre-market notification rescissions.
As Beckman Coulter previously reported in its filings with the Securities and Exchange Commission as a stand-alone company, the business is addressing
issues raised by the FDA relating to its compliance and quality systems and product clearances for certain of its assays. These matters have been the subject
of Form 483 Inspectional Observations and warning letters issued by the FDA to certain of the business’ facilities. Although the obtaining of regulatory
clearances and other resolutions with respect to these matters depends upon many factors and the timing thereof cannot be predicted with certainty, the
business is working diligently to address these issues. We are also subject to various laws regulating (1) fraud and abuse in the healthcare industry, and
(2) the privacy and security of health information, including the federal regulations described in “Item 1 – Business – Regulatory Matters.” Many states and
foreign countries have also adopted laws and regulations similar to, and in some cases more stringent than, such federal regulations. For more information
regarding these regulations please see “Item 1 – Business – Regulatory Matters.”
Failure to comply with the regulations described above could result in the adverse effects referenced below under “Our businesses are subject to extensive
regulation; failure to comply with those regulations could adversely affect our financial statements and reputation.” Compliance with these and other
regulations may also require us to incur significant expenses.
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The healthcare industry and related industries that we serve have undergone, and are in the process of undergoing, significant changes in an effort to reduce
costs, including the following:
• Many of our customers, and the end-users to whom our customers supply products, rely on government funding of and reimbursement for
healthcare products and services and research activities. The recently enacted Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”), healthcare austerity measures in Europe and other
potential healthcare reform changes and government austerity measures may reduce the amount of government funding or reimbursement available
to customers or end-users of our products and services. Global economic uncertainty or deterioration can also adversely impact government
funding and reimbursement.
• Beginning in 2013, the PPACA will also impose a 2.3% excise tax on any entity that manufactures or imports medical devices offered for sale in
the United States as well as new reporting and disclosure requirements on medical device manufacturers.
• Governmental and private healthcare providers and payors around the world are increasingly utilizing managed care for the delivery of healthcare
services, forming group purchasing organizations to improve their purchasing leverage and using competitive bid processes to procure healthcare
products and services.
These changes may cause participants in the healthcare industry and related industries that we serve to purchase fewer of our products and services, reduce
the prices they are willing to pay for our products or services, reduce the amounts of reimbursement and funding available for our products services from
governmental agencies or third-party payors, reduce the volume of medical procedures that use our products and services, increase our tax liabilities and
increase our compliance and other costs. In addition, we may be unable to enter into contracts with group purchasing organizations and integrated health
networks on terms acceptable to us, and even if we do enter into such contracts they may be on terms that negatively affect our current or future profitability.
All of the factors described above could adversely affect our financial statements.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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