Sanofi (SNYNF) Risk Factors

Our success depends on the expertise of our senior management team and other key employees. In 2023, there were 2,264 "Senior Leaders" within Sanofi. In addition, we rely heavily on recruiting and retaining talented people to help us meet our strategic objectives. We face intense competition for qualified individuals for senior management positions, or in specific geographic regions or in specialized fields such as clinical development, biosciences and devices, or digital and artificial intelligence. Our ability to hire qualified personnel also depends in part on our ability to reward performance, incentivize our employees and pay competitive compensation. The inability to attract, integrate and/or retain highly skilled personnel, in particular those in leadership positions, may weaken our succession plans, may materially adversely affect the implementation of our strategy and our ability to meet our strategic objectives, and could ultimately adversely impact our business or results of operations. Environmental and safety risks of our industrial activities

Our industry is both highly collaborative and competitive, whether in the discovery and development of new products, in-licensing, the marketing and distribution of approved products, or manufacturing activities. We expect that we will continue to rely on third parties for key aspects of our business and we need to ensure our attractiveness as a potential partner. We conduct a number of significant research and development programs and market some of our products in collaboration with other biotechnology and pharmaceutical companies. For example, we currently have a global strategic collaboration with Regeneron on monoclonal antibodies for the development and commercialization of DUPIXENT, KEVZARA (sarilumab) and SAR440340 (REGN3500- itepekimab) (see "Item 5. Operating and Financial Review and Prospects - A.1.7. Financial Presentation of Alliances - A.1.7.1/ Alliance Arrangements with Regeneron Pharmaceuticals Inc."). We rely upon Regeneron to successfully carry out their responsibilities with regard to the manufacture and supply of these collaboration antibodies. (see "Item 4. Information on the Company - B. Business Overview"). We may rely on partners to design and manufacture medical devices as well, notably for the administration of our products. Finally, we may also rely on partners for the development and commercialization of in-vitro diagnostic tests used in clinical trials and in-vitro diagnostic tests which are specified in the labeling of our products as necessary or useful for the management of patients taking our products. As regards products recently launched or under development for which we have a collaboration agreement with partners, the terms of the applicable alliance agreement may require us to share profits and losses arising from commercialization of such products with our partners. This differs from the treatment of revenue and costs generated by other products for which we have no alliance agreement, and such profit sharing may deliver a lower contribution to our financial results. We could also be subject to the risk that we may not properly manage the decision-making process with our partners. Decisions may be controlled by, or subject to the approval of our collaboration partners, who may have views that differ from ours. We are also subject to the risk that our partners may not perform effectively, which could have a detrimental effect when our collaboration partners are responsible for the performance of certain key tasks or functions, for example related to manufacturing or distribution. This risk is further increased by the growing number of distribution centers divested by Sanofi as part of its global strategy and by the resulting growing externalization of distribution tasks and functions. Any failures in the development process or differing priorities may adversely affect our business, including the activities conducted through our collaboration arrangements. We also cannot guarantee that third-party manufacturers will be able to meet our near-term or long-term manufacturing requirements, for internal reasons (e.g., in case of financial difficulties), reasons directly related to their contractual relationship with Sanofi, or external reasons (e.g., in the event of a health crisis). Thereby, following the completion of the spin-off of EUROAPI in May 2022, EUROAPI became a third-party manufacturer and continues to manufacture a certain number of APIs for Sanofi. We are also subject to the risk that contract research organizations or other vendors (for instance regarding digital activities) retained by us or our collaboration partners may not perform effectively. Any conflicts or difficulties with our partners during the course of these agreements or at the time of their renewal or renegotiation, or any disruption in the relationships with our partners, may affect the development, manufacturing, launch and/or marketing of certain of our products or product candidates and may cause a decline in our revenues or otherwise negatively affect our results of operations.

The commercial success of our existing products and our product candidates depends in part on their pricing and reimbursement conditions. Our products are negatively affected by continued downward pricing pressure and scrutiny due, inter alia, to: - stricter price and access controls imposed by governments and other payers around the world: –requirements for greater transparency around drug pricing and drug development costs,–widespread use of international reference pricing and therapeutic reference pricing, among other pricing methodologies and caps,–mandatory price cuts, renegotiations, industry payback and rebates,–delisting from reimbursement and restrictions on the label population,–access restrictions for high-priced innovative medicines,–prescribing guidelines and binding medicine utilization controls,–Medicare drug price negotiations under the US Inflation Reduction Act (IRA),–greater use of tendering and centralized procurement (national/regional/class-wide level),–cross-country cooperation in price negotiations, contracting or procurement, which is already occurring to some extent, such as the Vaccine Alliance (GAVI), the COVID-19 Vaccines Global Access (COVAX) initiative, the BeNeLuxA alliance in Europe, and the Pan American Health Organization (PAHO),–shifting of the payment burden to US patients and access disruptions through co-pay accumulator and maximizer programs as well as alternative funding programs,–more aggressive formulary utilization management controls (including stepped therapy, strict prior authorization criteria, formulary exclusions) by US insurers and pharmacy benefits managers (PBMs), and –discriminatory and non-transparent pricing and procurement policies (e.g. government procurement restrictions, import bans) in favor of domestic pharmaceutical companies;- widespread use of health technology assessment (HTA) to inform coverage and reimbursement decisions: –more stringent evidence and value requirements (e.g. comparative effectiveness, patient preferences, real-word evidence, health economic modelling) by payers and HTA authorities, raising the bar for market entry,–unreasonable thresholds for cost-effectiveness, and –increasingly restrictive HTA decisions with significant variation across markets;- increased generic and biosimilar competition, accelerating price erosion: –next generation biosimilars coming to the market across major therapeutic areas,–potential savings from increased biosimilar use, expected to be a cumulative $285 billion globally through 2025 according to the IQVIA Institute, and –evolving regulatory landscapes to support interchangeability (e.g., in the US and EU) and pharmacy substitution (e.g. in the EU Nordic countries, Germany and France). In the United States, which accounted for 43.0% of our net sales in 2023, the IRA was enacted in August 2022. The law includes three core drug pricing provisions (Medicare negotiation, Part D redesign, and Medicare inflation penalties) with effective dates ranging from 2022 through 2026. The IRA legislation is likely to have a negative impact on industry revenue growth and future innovation. While significant uncertainties remain on the process and methods of Medicare negotiation, we anticipate exposure to the negotiation provision in the latter part of the decade, and in the case of DUPIXENT not before 2031. Furthermore, we face increasing pricing pressure and gross-to-net (GTN) erosion from continuing vertical integration and consolidation of the US health insurance market. With the three largest pharmacy benefit manager group purchasing organizations (PBM GPOs) (i.e. Ascent, Zinc and Emisar) now covering over 85% of prescription drug claims, consolidation has led to increased utilization management and restrictive formularies, resulting in strong bargaining power to negotiate discounted prices, thereby adversely impacting our sales. There is also uncertainty about the potential impact of the continued growth of the federal 340B drug pricing program, among other risks. In China, pricing pressure is likely to intensify as a growing number of our products are subject to national reimbursement drug list (NRDL) price negotiations and national volume-based procurement (VBP) tenders, with the lowest prices prevailing to compete with local champions. At market entry, new drugs listed on the NRDL had an average price cut of 60% over the past five years. Further expansion of the VBP policy to biologics and biosimilars also poses a growing threat to our key established products, with over 500 drugs targeted for inclusion by 2025. In Europe, budget pressure remains high in the wake of Covid-19, translating into an acceleration of cost-containment policies in major EU markets. The industry is also facing high uncertainty in the context of the new pharmaceutical strategy in Europe, including numerous policy changes to the EU pharmaceutical legislation, HTA and joint procurement, among others. If passed, these reforms will likely create new challenges and risks for access, innovation and competitiveness in Europe, primarily because of the reductions in regulatory data protection (from eight to six years for all new drugs) and market exclusivity for orphan medicines.

Discovering and developing a new product is a costly, lengthy and uncertain process. To be successful in the highly competitive pharmaceutical industry, we must commit substantial resources each year to research and development in order to develop new products to compensate for decreasing sales of products facing patent expiration and termination of regulatory data exclusivity, introduction of lower-priced generics, or competition from new products of competitors that are perceived as being superior or equivalent to our products. We must pursue both early-stage research and early and late development stages in order to propose a sustainable and well-balanced portfolio of products. In 2023, we spent €6,728 million on research and development, amounting to 15.6% of our net sales. As part of an update on our strategy, we announced in October 2023 our intent to increase our research and development investments. Failure to invest in the right technology platforms, therapeutic areas, product classes, geographic markets and/or licensing opportunities could adversely impact the productivity of our pipeline. We are pursuing our strategic transformation through R&D, including potential multi-indication assets such as amlitelimab, frexalimab and the oral TNFR1si, intended to address unmet patient needs in markets with low penetration of advanced therapies. We focus our R&D strategy on oncology, immunology and inflammation, multiple sclerosis, neurology, rare diseases and rare blood disorders. In 2021, Sanofi acquired Translate Bio to accelerate the deployment of mRNA technology for the development of new vaccines, including for seasonal influenza, and beyond vaccines, therapeutics where there is a strong unmet medical need. However, mRNA technology is still in its early days and the ability of this technology to produce strong results and safety still remains to be fully asserted. We may also fail to improve our development productivity sufficiently to sustain our pipeline (see also "- We may fail to successfully identify external business opportunities or realize the anticipated benefits from our strategic investments or divestments" below). Other new innovations under investigation, such as natural killer (NK) cells and conditionally activated biologics, raise similar uncertainties. In addition, the competitive landscape includes a high level of uncertainty as numerous companies are working on or may be evaluating similar targets and a product considered as promising at the beginning of its development may become less attractive if a competitor addressing the same unmet need reaches the market earlier. There can be no assurance that any of our product candidates will be proven safe or effective (see "Item 4. Information on the Company - B. Business Overview - B.4. Global research & development"). Over these research and development cycles, usually spanning several years, there is a substantial risk at each stage of development – including pre-clinical activities and clinical trials – that we will not achieve our goals of safety and/or efficacy and that we will have to abandon a product in which we have invested substantial amounts of money and human resources. For instance, in 2022 patient enrollment of Phase 3 tolebrutinib trials paused globally after a decision of the FDA regarding potential side effects. As another example, the global clinical development program of amcenestrant (breast cancer) was discontinued in August 2022 following the outcome of the prespecified interim analysis of a Phase 3 trial. More and more trials are designed with clinical endpoints of superiority; failure to achieve those endpoints could damage the product's outlook and our overall development program. Decisions concerning the studies to be carried out can have a significant impact on the marketing strategy for a given product. Multiple in-depth studies can demonstrate that a product has additional benefits, facilitating the product's marketing, but such studies are expensive and time consuming and may delay the product's submission to regulatory authorities for approval. In addition, following (or in some cases contemporaneously with) the marketing authorization, the dossier is also submitted to governmental agencies and/or national or regional third-party payers (HTA bodies) for review. These HTA bodies evaluate evidence on the value of the new product, assess the medical need it serves, and provide recommendations on the corresponding reimbursement. Such analyses may require additional studies, including comparative studies, which may effectively delay marketing, change the population which the new product treats, and add costs to its development. Our continuous investments in research and development for future products and for the launches of newly registered molecules could therefore result in increased costs without a proportionate increase in revenues, which would negatively affect our operating results and profitability. Lastly, there can be no assurance that all the products approved or launched will achieve commercial success. In addition, even after a product reaches the market, certain developments following regulatory approval may decrease demand for our products. Clinical trials and post-marketing surveillance of certain marketed drugs have the potential to raise concerns among some prescribers and patients relating to the safety or efficacy of pharmaceutical products in general, which could negatively affect the sales of such products or lead to increased volatility in market reaction.

Through patent and other proprietary rights, such as data exclusivity or supplementary protection certificates in Europe, we hold exclusivity rights for a number of our research-based products. However, the protection that we are able to obtain varies in its duration and scope. Furthermore, patents and other proprietary rights do not always provide effective protection for our products. We cannot be certain that we will obtain adequate patent protection for new products and technologies in important markets or that such protections, once granted, will last as long as originally anticipated. For example, governmental authorities are increasingly looking to facilitate generic and biosimilar competition for existing products through new regulatory proposals intended to achieve, or resulting in, changes to the scope of patent or data exclusivity rights and through the use of accelerated regulatory pathways for generic and biosimilar drug approvals. At the EU level, the proposed wide-ranging revision of the general pharmaceutical legislation may pose downside risks to innovation and competitiveness in Europe, primarily due to the reduction of intellectual property (IP) protections and a stricter incentives framework for orphan medicinal products (OMPs). Such regulatory proposals could make patent prosecution for new products more difficult and time consuming or could adversely affect the exclusivity period for our products. Moreover, manufacturers of generic products or biosimilars are increasingly seeking to challenge patent validity or coverage before the patents expire, and manufacturers of biosimilars or interchangeable versions of the products are seeking to have their version of the product approved before the exclusivity period ends. Furthermore, in an infringement suit against a third party, we may not prevail and the decision rendered may not conclude that our patent or other proprietary rights are valid, enforceable or infringed. Our competitors may also successfully avoid our patents. Even in cases where we ultimately prevail in an infringement claim, legal remedies available for harm caused to us by infringing products may be inadequate to make us whole. Moreover, a successful result against a competing product for a given patent or in a specific country is not necessarily predictive of our future success against another competing product or in another country because of local variations in the patents and patent laws. In addition, if we lose patent protection as a result of an adverse court decision or a settlement, we face the risk that government and private third-party payers and purchasers of pharmaceutical products may claim damages alleging they have over-reimbursed or overpaid for a drug. For example, in 2009, in Australia, our patent on clopidogrel was ultimately held invalid. Following this decision, the Australian Government sought damages for its alleged over-reimbursement of clopidogrel drugs due to the preliminary injunction we had secured against the sale of generic clopidogrel during the course of the litigation. The Australian Government's claim was dismissed following two decisions, one of the Federal Court of Australia in April 2020 and one of the Full Court of the Federal Court of Australia in June 2023. On December 18, 2023, the Australian Government was granted a special leave to appeal to the High Court of Australia. We also rely on unpatented proprietary technology, know-how, trade secrets and other confidential information, which we seek to protect through various measures, including confidentiality agreements with licensees, employees, third-party collaborators, and consultants who may have access to such information. If these agreements are breached or our other protective measures should fail, then our contractual or other remedies may not be adequate to cover our losses. In certain cases, to terminate or avoid patent litigation we or our collaboration partners may be required to obtain licenses from the holders of third-party intellectual property rights. Any payments under these licenses may reduce our profits from such products and we may not be able to obtain these licenses on favorable terms or at all. Third parties may also request a preliminary or permanent injunction in a country from a court of law to prevent us from marketing a product if they consider that we infringe their patent rights in that country. If third parties obtain a preliminary or permanent injunction or if we fail to obtain a required license for a country where valid third-party intellectual property rights as confirmed by a court of law exist, or if we are unable to alter the design of our technology to fall outside the scope of third-party intellectual property rights, we may be unable to market some of our products in certain countries, which may limit our profitability. In addition, the pursuit of valid business opportunities may require us to challenge intellectual property rights held by others that we believe were improperly granted, including through negotiation and litigation, and such challenges may not always be successful. Third parties may claim that our products infringe one or more patents owned or controlled by them. Claims of intellectual property infringement can be costly and time-consuming to resolve, may delay or prevent product launches, and may result in significant royalty payments or damages. Furthermore, some countries may consider granting a compulsory license to a third party to use patents protecting an innovator's product, which limits the value of the patent protection granted to such products. We have increased the proportion of biological therapeutics in our pipeline relative to traditional small molecule pharmaceutical products. Typically, the development, manufacture, sale and distribution of biological therapeutics is complicated by third-party intellectual property rights (otherwise known as freedom to operate (FTO) issues), to a greater extent than for the small molecule therapeutics, because of the types of patents allowed by national patent offices. Further, our ability to successfully challenge third-party patent rights is dependent on the legal interpretation and case law of national courts. In addition, we expect to face increasing competition from biosimilars in the future. With the accelerated regulatory pathways provided in the United States and Europe for biosimilar drug approval, biosimilars can be a threat to the exclusivity of any biological therapeutics we sell or may market in the future and can pose the same issues as the small molecule generic threat described above. If a biosimilar version of one of our products were to be approved, it could reduce our sales and/or profitability of that product. We currently hold trademark registrations and have trademark applications pending in many jurisdictions, any of which may be the subject of a governmental or third-party objection, which could prevent the maintenance or issuance of the trademark. As our products mature, our reliance on our trademarks and trade dress to differentiate us from our competitors increases and, as a result, our business could be adversely affected if we are unable to prevent third parties from adopting, registering or using trademarks and trade dress that infringe, dilute or otherwise violate our rights. If our patents and/or proprietary rights to our products were limited or circumvented, our financial results could be adversely affected.

Our business depends heavily on the use of interdependent information technology systems, including Internet-based systems and digital tools. Certain key areas such as research and development, production and sales are to a large extent dependent on our information systems (including cloud-based computing) or those of third-party providers (including for the storage and transfer of critical, confidential, sensitive or personal information regarding our patients, clinical trials, vendors, customers, employees, collaborators and others). We are therefore vulnerable to cybersecurity attacks and incidents and misuse or manipulation of any of these IT systems could result in exposure of confidential information or the modification of critical data. We and our third-party service providers, suppliers, contract manufacturers, distributors or other contracting third parties use, to the best of our ability, secure information technology systems for the protection of data and threat detection. Like many companies, we may experience certain of the following events which pose a risk to the security and availability of these systems and networks, and the confidentiality, integrity, and availability of our sensitive data: breakdown, outages, service disruption or impairment, data loss or deterioration in the event of a system malfunction or increasing threat of data theft or corruption in the event of a cyber-attack, security breach, industrial espionage attacks, insider threat attacks, cybercrimes, including state-sponsored cybercrimes, malware, misplaced or lost data, programming or human errors or other similar events. Also, in the event of an attack, US and European legislation related to the financing of terrorism imposes increasing restrictions on payments of ransom. As a result, our ability to recover the data might be limited. Therefore, our business continuity could be at risk if we are unable to recover data through back-ups and restorations. We are increasingly using generative artificial intelligence to enhance our business processes. Although we have set up a governance body to control the artificial intelligence initiatives taken on a company-wide scale and have made a generative artificial intelligence charter available to all our employees, this new technology, like other artificial intelligence technology, entails risks linked to transparency and explainability, privacy and confidentiality, eco-responsibility, and cybersecurity. Those risks could lead to, among other things, unethical practices, business and reputational harm, cyber-attacks and security breaches (see "- We may fail to develop or take advantage of digitalization and prioritizing data as an organizational asset" below). Each of these events could negatively impact important processes, such as scientific research and clinical trials, the submission of outcomes to health authorities for marketing authorizations, the functioning of production processes and the supply chain, compliance with legal requirements, trade secrets, security strategies and other key activities, including Sanofi's employees' ability to communicate between themselves as well as with third parties (see also "- Product liability claims could adversely affect our business, results of operations and financial condition" above). This could result in material financial, legal, competitive, operational, business or reputational harm. Although we maintain relevant insurance coverage, this insurance may not be sufficiently available in the future to cover the financial, business or reputational losses that may result from an interruption or breach of our systems. For example, certain types of cyber-attacks could be considered as an Act of War subject to insurance exclusion.

Over the past several years, growth of the global pharmaceutical market has become increasingly tied to global economic growth. In this context, a substantial and lasting slowdown of the global economy, major national economies or emerging markets could negatively affect growth in the global pharmaceutical market and, as a result, adversely affect our business. For example, unpredictable political conditions that currently exist in various parts of the world could have a material negative impact on our business, in particular armed conflicts between Russia and Ukraine since 2022, and in Gaza following the terrorist attacks that occurred in Israel in October 2023. The consequences of those conflicts are difficult to predict and will depend on developments outside Sanofi's control, including, but not limited to the duration and severity of the conflicts, and the consequences of the ongoing and additional financial and economic sanctions imposed by governments in response. Other related issues have arisen or are arising such as regional instability; geopolitical uncertainties; adverse effects on fuel and energy costs, supply chains, macroeconomic conditions, inflation, and currency exchange rates in various regions of the world; and exposure of third parties to gas shortages. Collectively, such unstable conditions could, among other things, disturb the international flow of goods and increase the costs and difficulties associated with international transactions. (1) The information in this section supplements the disclosures required under IFRS 7 as presented in Notes B.8.7., D.10. and D.34. to our consolidated financial statements, provided at Item 18. of this annual report. (2) The information in this section supplements the disclosures required under IFRS 7 as presented in Note B.8.7. to our consolidated financial statements, provided at Item 18. of this annual report. Unfavorable economic conditions have reduced the sources of funding for national social security systems, leading to austerity measures including heightened pressure on drug prices, increased substitution of generic drugs, and the exclusion of certain products from formularies among others (see "- The pricing and reimbursement of our products is negatively affected by increasing cost containment pressures and decisions of governments and other third parties" above). Further, our net sales may be negatively impacted by the continuing challenging global economic environment, as high unemployment, increases in cost-sharing, and lack of developed third-party payer systems in certain regions may lead some patients to switch to generic products, delay treatments, skip doses or use other treatments to reduce their costs. In the United States there has been a significant increase in the number of beneficiaries in the Medicaid program, under which sales of pharmaceuticals are subject to substantial rebates and, in many US states, to formulary restrictions limiting access to brand-name drugs, including ours. Also, employers may seek to transfer a greater portion of healthcare costs to their employees due to rising costs, which could lead to further downward price pressure and/or lower demand. Our Consumer Healthcare (CHC) business could also be adversely impacted by difficult economic conditions, as the financial resources of our customers may be reduced as a result of the economic situation. If economic conditions worsen, or in the event of default or failure of major players including wholesalers or public sector buyers financed by insolvent states, our financial situation, the profitability and results of our operations and the distribution channels of our products may be adversely affected. See also "- We are subject to the risk of non-payment by our customers" above.

As part of the presentation of our strategy in December 2019, we identified our strong presence in China among our core drivers, with revenue amounting to 6.8% of our net sales in 2023. Nevertheless, the difficulties in operating in emerging markets, a significant decline in the anticipated growth rate or an unfavorable movement of the exchange rates of currencies against the euro could impair our ability to take advantage of growth opportunities and could adversely affect our business, results of operations or financial condition. For instance, if a long-lasting epidemic and prolonged or repeated restrictive measures to control the outbreak were to result in an economic slowdown in any of our targeted markets, it would reduce our sales due to lower healthcare spending on other diseases and fewer promotional activities, and could significantly impact our business operations. Furthermore, it is not possible to predict if or how the current health crisis will impact any particular affected jurisdiction, or to what extent (see also "- Global economic conditions and an unfavorable financial environment could have negative consequences for our business" above). Emerging markets also expose us to more volatile economic conditions, political instability (including a backlash in certain areas against free trade), competition from multinational or locally based companies that are already well established in these markets, the inability to adequately respond to the unique characteristics of emerging markets (particularly with respect to their underdeveloped judicial systems and regulatory frameworks), difficulties in recruiting qualified personnel or maintaining the necessary internal control systems, potential exchange controls, weaker intellectual property protection, higher crime levels (particularly with respect to counterfeit products), and compliance issues including corruption and fraud (see particularly "- Claims and investigations relating to ethics and business integrity, competition law, marketing practices, pricing, human rights of workers, data protection and other legal matters could adversely affect our business, results of operations and financial condition" above).

Despite enhanced crisis preparedness and response, due in particular to recent crises such as the COVID-19 pandemic and the war in Ukraine since February 2022, unpredictable and extraordinary internal or external events, or a combination of escalating events that may occur as a result of a large scale cyber-attack (see also "- Breaches of data security, disruptions of information technology systems and cyber threats could result in financial, legal, competitive, operational, business or reputational harm" above), a pandemic or natural disasters, which could result in the failure of critical processes within Sanofi or a third party on whom we rely. Such failure may adversely impact our business, operations and reputation. The occurrence of these unforeseen events may also heighten other risks such as a disruption or temporary suspension in production of APIs, raw materials and some of other products and/or lead to manufacturing delays or disruptions and supply chain interruptions (including to the extent those measures apply to our third-party suppliers) and may have an adverse effect on our business (see "- The manufacture of our products is technically complex, and supply interruptions, product recalls or inventory losses caused by unforeseen events may reduce sales, adversely affect our operating results and financial condition, delay the launch of new products and negatively impact our image" above). Also, a sudden increase in demand for selected medicinal products in the event of a crisis can result in short-term unavailability or shortages of raw materials.

We run the risk of delayed payments or even non-payment by our customers, which consist principally of wholesalers, distributors, pharmacies, hospitals, clinics and government agencies. This risk is accentuated by recent concentrations among distributors and retailers, as well as by uncertainties around global credit and economic conditions, in particular in emerging markets. As a result, we may be affected by fluctuations in the buying patterns of such customers. The United States poses particular customer credit risk issues because of the concentrated distribution system: our three main customers represented respectively 11%, 9% and 7% of our consolidated net sales in 2023. We are also exposed to large wholesalers in other markets, particularly in Europe. An inability of one or more of these wholesalers to honor their debts to us could adversely affect our financial condition (see Note D.34. to our consolidated financial statements included at Item 18. of this annual report). In some countries, some customers are public or subsidized health systems. The economic and credit conditions in these countries may lead to an increase in the average length of time needed to collect on accounts receivable.