820237--2/23/2007--GEN_PROBE

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{customer, product, revenue}

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{property, intellectual, protect}

{acquisition, growth, future}

{cost, regulation, environmental}

{tax, income, asset}

{regulation, change, law}

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{competitive, industry, competition}

We are dependent on Novartis and other third parties for the distribution of some of our products. If any of our distributors terminates its relationship with us or fails to adequately perform, our product sales will suffer. If we cannot maintain our current corporate collaborations and enter into new corporate collaborations, our product development could be delayed. In particular, any failure by us to maintain our collaboration with Novartis with respect to blood screening would have a material adverse effect on our business. If our TIGRIS instrument reliability does not meet market expectations, we may be unable to retain our existing customers and attract new customers. We and our customers are subject to various governmental regulations, and we may incur significant expenses to comply with, and experience delays in our product commercialization as a result of, these regulations. We face intense competition, and our failure to compete effectively could decrease our revenues and harm our profitability and results of operations. Our gross profit margin percentage on the sale of blood screening assays will decrease upon the implementation of smaller pool size testing and individual donor testing. Because we depend on a small number of customers for a significant portion of our total revenues, the loss of any of these customers or any cancellation or delay of a large purchase by any of these customers could significantly reduce our revenues. Intellectual property rights on which we rely to protect the technologies underlying our products may be inadequate to prevent third parties from using our technologies or developing competing products. The diagnostic products industry has a history of patent and other intellectual property litigation, and we have been and may continue to be involved in costly intellectual property lawsuits. We may be subject to future product liability claims that may exceed the scope and amount of our insurance coverage, which would expose us to liability for uninsured claims. We are exposed to risks associated with acquisitions and other long-lived and intangible assets that may become impaired and result in an impairment charge. Future changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse unexpected revenue or expense fluctuations and affect our reported results of operations. Our future success will depend in part upon our ability to enhance existing products and to develop and introduce new products. We recently entered into collaboration agreements to develop NAT products for industrial testing applications. We have limited experience operating in these markets and may not successfully develop commercially viable products. We expect to continue to incur significant research and development expenses, which may make it difficult for us to maintain profitability. We may not have financing for future capital requirements, which may prevent us from addressing gaps in our product offerings or improving our technology. We have only one third-party manufacturer for each of our instrument product lines, which exposes us to increased risks associated with delivery schedules, manufacturing capability, quality control, quality assurance and costs. If we or our contract manufacturers are unable to manufacture our products in sufficient quantities, on a timely basis, at acceptable costs and in compliance with regulatory requirements, our ability to sell our products will be harmed. Our products are subject to recalls even after receiving FDA approval or clearance. Our sales to international markets are subject to additional risks. If third-party payors do not reimburse our customers for the use of our clinical diagnostic products or if they reduce reimbursement levels, our ability to sell our products will be harmed. Disruptions in the supply of raw materials and consumable goods from our single source suppliers, including Roche Molecular Biochemicals, which is an affiliate of one of our primary competitors, could result in a significant disruption in sales and profitability. We are dependent on technologies we license, and if we fail to maintain our licenses or license new technologies and rights to particular nucleic acid sequences for targeted diseases in the future, we may be limited in our ability to develop new products. If we fail to attract, hire and retain qualified personnel, we may not be able to design, develop, market or sell our products or successfully manage our business. We may acquire other businesses or form collaborations, strategic alliances and joint ventures that could decrease our profitability, result in dilution to stockholders or cause us to incur debt or significant expense. If a natural or man-made disaster strikes our manufacturing facilities, we will be unable to manufacture our products for a substantial amount of time and our sales will decline. If we use biological and hazardous materials in a manner that causes injury or violates laws, we may be liable for damages. The anti-takeover provisions of our certificate of incorporation and by-laws, and provisions of Delaware law could delay or prevent a change of control that our stockholders may favor. We may not successfully integrate acquired businesses or technologies.

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820237--2/23/2007--GEN_PROBE_INC