Strategic Risks Mitigation

Value Generation from Acquisitions 

Acquisitive growth remains a core element of the Group’s strategy. A failure to execute and properly integrate acquisitions may impact the Group’s projected revenue growth, its ability to capitalise on the synergies they bring and/or the development and retention of the associated talent pool.

All potential acquisitions are assessed and evaluated to ensure the Group’s defined strategic and financial criteria are met. A discrete integration process and post integration review is developed for each acquisition. This process is supported by experienced management with a view to achieving identified benefits, cultivating talent and minimising general and specific integration risks.


Progress: No change


Innovation and Insight


The continued success of the Group has been dependent upon the development and delivery of innovative solutions to our clients. Examples include serialised packaging and multichannel Contract Sales Organisation (‘CSO’). An inability to predict client and market trends and develop and deliver such innovation would be a risk to the maintenance of our market leading positions in the various sectors in which we operate.

Innovation and insight is at the fore of all business and acquisition strategies set down by the SET. At a divisional level, each management team has a responsibility to identify current and projected client and market demands for new service offerings and market changes and have designated roles within their business units tasked to deliver on this.


Progress: No change

Client Diversification

As the Group’s activities consolidate and further acquisitions are completed, the Group’s client base may become more concentrated, making the Group more susceptible to competitive, client merger or procurement led threats.

In individual business units where there is a high dependence on a small number of key clients, the threats and opportunities are reviewed by divisional management at each business review. The impact that any potential acquisition may have on client concentration is considered as part of the acquisition assessment process.


Progress: No change



Client Outsourcing Strategy

Changes to pharma company outsourcing strategy such as reduced roster of preferred vendors, or a wholesale move to outsource to holding companies that meet all of their service requirements.

In order to maintain or develop a preferred vendor relationship with our target clients, acquisitions can be used to fill any key gaps in client coverage or service offering. The key is to maintain strong client relationships and to keep abreast of potential changes in their business strategies.

We have developed an agile business development strategy to maximise our value to clients.

Progress: Reduced risk


Concerns around client outsourcing strategy have not materialised

Talent Management


The success of the Group is built upon effective management teams that consistently deliver superior performance. If the Group cannot attract, retain and develop suitably qualified, experienced and motivated employees, this could have an impact on business performance.

Talent requirements of the Group are monitored to ensure businesses meet prevailing and anticipated requirements in term of skills, competencies and performance. There is a strong focus on key talent management practices, including leadership and management development, succession planning and performance management. A formal talent review process is implemented globally and local talent reviews are conducted and linked to the global process.


Progress: Increased risk


Anticipated to be a temporary increase due to recent changes and transition of leadership


The continuing trading uncertainty associated with Brexit may result in some UDG Healthcare clients reducing the size of their U.K. operations or have a negative impact on our ability to conduct business profitably in the U.K.


The overall Group exposure to the U.K. as a proportion of our total profitability has declined as we have acquired and developed businesses with greater exposure to markets other than the U.K. Uncertainty remains in relation to the outcome and impact of Brexit.


Progress: Reduced risk



Economical, Political, Legislative, Regulatory and Tax Risk


The global macroeconomic, political, regulatory, legislative and taxation environment may have a detrimental impact on our client base, the markets in which they operate, the services we can offer them and our operations in those markets. For example, a slowing economic outlook and increasing trade tensions may negatively impact our clients, while changes to labour or tax laws, or potential changes to the pricing environment in markets in which we operate may impact our offering and operations if implemented.

The Group continues to review its portfolio of investments through the annual strategic review process and through constant challenge at a SET and Board level. Acquisitions and new service offerings are sought which improve the balance of our investments and give greater exposure to innovative and growing market segments and geographies.


Progress: No change

Operational risk  

Patient Risk


Throughout the Group, medicines and medical devices can be packaged, supplied or administered directly to patients. The risk of inappropriate advice, packaging, supply or administration could lead to a negative patient experience.

The level of automation within the Group’s packaging facilities continues to increase. The serialisation of packaging processes continues and in addition, the use of electronic batch records will improve assurance and reduce the possibility of human error in packaging.


Health Cloud CRM for patient support programmes has gone live and is a fully validated system.


Administration of medicines to patients or providing patient support is covered by a detailed client contract with the Marketing Authorisation Holder (‘MAH’), fully approved scripts, and a divisional clinical governance framework.


Progress: No change

IT Systems Risk


The ability of the Group to support operations and provide its services effectively and competitively is dependent on technology and information systems that are appropriately integrated and that meet current and anticipated future business, regulatory and security requirements.

The Group’s technology and information systems and infrastructure are the subject of an ongoing programme to ensure that they are capable of meeting the Group’s strategic intent and future requirements. Collectively this initiative is referred to as Future Fit IT.

Progress: No change


Contract Risk


The underlying terms of the Group’s commercial relationships drive the profitability of the Group. The nature of the Group’s business means that the Group could be exposed to undue cost or liability if it agrees inappropriate terms.

The Group has adopted processes for identifying and mitigating against undue risks in all prospective commercial relationships, supported by personnel with expertise and/or experience in key commercial risk areas.


Progress: Increased Risk

Slight increase due to increased pressure from client procurement teams


Business Continuity


The Group is exposed to risks that, should they arise, may give rise to the interruption of critical business processes that could adversely impact the Group or its clients.

The Group has developed a business continuity template based on risk and is currently re-working the operational business continuity plans in line with this. Mitigation strategies and continuity plans are part of a structured risk review process as are disaster recovery and communications.


Progress: No change

Regulatory Compliance


The Group has many legal and regulatory obligations, including in respect of: (a) protection of patient information (such as HIPAA and GDPR); and (b) patient and employee health and safety. In addition, many of the Group’s activities are subject to stringent licensing regulations, for example, FDA, EMEA and national agency manufacturing, packaging and promotional regulations and more recently the serialisation requirements under the Falsified Medicine’s Directive (‘FMD’). A failure to meet any of these could result in regulatory restrictions, financial penalties, the inability to operate, or products and services being defective, harming patients and potentially giving rise to very significant liability.

Maintenance of legal, regulatory and quality standards is a core value of the Group. The Sharp division and Ashfield Pharmacovigilance are subjected to routine FDA, EMEA and national agency inspections and so are required to be ‘audit ready’ at all times.


Patient education and information programmes are reviewed to ensure compliance with regulation and codes of practice and are subject to regular assessment by Quality and Compliance. Following the introduction of GDPR, regular data protection auditing has now commenced across E.U. locations in 2019 while data protection training and gap analyses have commenced outside the E.U. to focus on local data protection law compliance.


Progress: No change

Cyber Security

The global threat is increasing due to the activities of criminal organisations and nation states targeting valuable business and personal information through increasingly sophisticated means. These are advanced persistent and other sensitive threats targeted at business-critical data using, for example, ransomware, impersonation etc. for financial and other gain.

As part of Future Fit IT, the Group is implementing multi-layered information security defences to identify vulnerabilities and protect against attacks. To meet the increasing cyber threat, procedures are continuously being developed and resources are being deployed to detect and respond effectively to any cyber security events that may occur. Specific training is being sourced for continuing awareness programmes throughout 2019.


Progress: No Change

Financial risks  

Financial Controls


The Group’s resources and finances must be managed in accordance with rigorous standards and stringent controls. A failure to meet those standards or implement appropriate controls may result in the Group’s resources being improperly utilised or its financial statements being inaccurate or misleading

The financial controls of the Group, as well as their effectiveness, are monitored by the Board in the context of the standards to which the Group is subject and the expectations of its stakeholders. This monitoring is supported by a dedicated internal audit function. The Group’s financial function, systems and controls are also subject to periodic review to ensure that they remain robust and fit for purpose.


Progress: No Change

Liquidity, Interest Rates and Credit


The Group is exposed to liquidity, interest rate and credit risks.

The management of the financial risks facing the Group is governed by policies reviewed and approved by the Board. These policies primarily cover liquidity risk, interest rate risk and credit risk.


The primary objective of the Group’s policies is to minimise financial risk at a reasonable cost. The Group does not trade in financial instruments.


Progress: No Change

Foreign Exchange


UDG Healthcare plc’s reporting currency is the U.S. Dollar. Given the nature of the Group’s businesses, exposure arises in the normal course of business to other currencies, principally sterling and euro.

The majority of the Group’s activities are conducted in the local currency of the country of operation. As a consequence, the primary foreign exchange risk arises from the fluctuating value of the Group’s net investment in different currencies. Our strategic intent is to proportionally grow the U.S. as a source of earnings at a faster rate than other markets which will lower the foreign exchange risk for the Group.


Progress: No change