Mergers, acquisitions, and integrations strengthen the innovation pipeline and help biotech, pharmaceutical and MedTech companies derive maximum value from their existing product portfolio.
Across the R&D value chain from pre-clinical development to clinical development, lifecycle management and regulatory affairs, there are specific considerations to bear in mind for an M&A transaction to be successful from a business and technology point of view. In Part 1 of our four-part series, we look at some key R&D considerations and explore the importance of clearly defined processes and well-designed systems in enabling a successful cutover.
Key R&D considerations
The following are some of the key M&A considerations and R&D functions that are most impacted by them.
Table 1: Key M&A considerations and their impact on R&D functions
R&D applications, especially ones that are used in managing clinical trials, might contain personally identifiable data (PII) and personal health data (PHI). Laws surrounding protection of PHI and PII data vary for each of the regulated markets and geographies.
When a global pharmaceutical company divests one of its businesses or when a company in one geography acquires a company in another geography, it is important to identify applications that contain PII or PHI data and design a strategy to manage data in compliance with data privacy laws of the respective market.
Existing patents and potentially patentable data are valuable assets for an organization. Sometimes, M&A decisions are made primarily to acquire access to patented data of the target. It is paramount to track access to patent data at all stages of the deal cycle, thereby necessitating restricted access to approved individuals. Patent prosecution, a verification process that occurs before grant of a new patent, might require production of raw/source data. It is important to ensure that all data (from raw/source data to final reports) are available in a readable format to the legal entity that owns the data post separation or integration.
Products that are manufactured or sold in regulated markets are governed by guidelines put forth by regulatory authorities of the market. An M&A transaction triggers a set of regulatory activities that need to be performed for companies to stay compliant. These include change of company name/ address, transfer of Marketing Authorization Holder (MAH), transfers of manufacturing sites (if any), validation of manufacturing sites (if required) and changes in branding and logo.
Some of these changes such as change of company name/address are managed through a relatively simple process of submission of a variation to the concerned regulatory agencies. Transfer of MAH and manufacturing sites, however, require detailed knowledge of regulatory guidelines. For instance, the requirements and timelines for MAH transfer are different for products authorized via Centralized Procedures versus products authorized by mutual recognition/decentralized procedures or national procedures. In the latter case (MRP/DCP or national procedures), the requirements vary by country and navigating the process requires profound regulatory knowledge and understanding of national processes.
Safety and Pharmacovigilance (PV)
Accountability for reports of adverse events due to products that were manufactured or sold by a different legal entity is a key consideration in an M&A transaction. There needs to be a well-defined strategy for managing adverse event reports filed during the transition phase between legal entities.
Paper documents such as laboratory notebooks, patient consent forms, paper reports of adverse events stored at local sites are assets that need to be catalogued and assessed. Decisions such as archiving adverse event reports at the local site vs shipping them to a central location and digitizing and storing paper documents in access-controlled file shares and folders need to be made while executing an M&A deal.
A Transition Service Agreement, or a TSA, is a contract between the buyer and the seller or between separated entities to continue to share certain applications or services for a defined period. TSAs are employed in R&D functions due to business needs or due to lengthy execution timelines for projects. Lengthy timelines for project could be due to high volumes of data that need to be migrated, complexity of system, infrastructure etc.
As an example of a business need, TSAs are utilized by clinical functions for long-running clinical studies to allow personnel to continue until trial completion, irrespective of the legal entity that they move to post divestiture or spin-off. In such instances, managing restricted user access to systems and data, after separation of legal entities is crucial. Yet another technological consideration in a TSA is provision of access to two legal entities’ systems for a set of employees during the transition period. This involves provision of temporary user accounts in the active directory of the other legal entity and configuration of systems firewalls to allow access to users from a domain not registered under a given legal entity.
Developing a cost model to account for effort, resource and infrastructure support is central to a well-designed TSA.
Legal hold requirements and operational data retention policies are governed by jurisdictional regulations and corporate policies respectively. Legal holds or document preservation orders impact how data of legal entities are managed after separation or integration. These should be stipulated and agreed upon as part of the legal contract and post deal obligations. While planning and executing activities in an M&A project, it is worthwhile to spend time evaluating scenarios where an entity would own a copy of data of a different legal entity for legal hold purposes. Buyer and seller will agree on data request and provision through a defined data request and fulfillment process with defined SLAs and costs, to cover for any ad-hoc data needs.
Content management and authoring
Standard operating procedures, study protocols, product inserts, product warnings, labeling artwork, clinical trial patient recruitment documents, periodic safety update reports, and individual case safety reports are examples of content created by R&D division. Authoring of such content follows a structure and process defined by the quality management team of each organization, based on guidelines set forth by regulatory authorities of the respective geography. Following an M&A deal, an essential exercise in content management and authoring is conversion of the acquired entities’ documents to the structure defined by the acquirer’s quality system. Preparation, approval and operationalization of new SOPs, study protocols, change to product inserts, labeling artwork and other content require man hours, end-user training on new processes, well-defined change control processes, activity tracking and management.
Furthermore, clinical trial documentation such as patient recruitment documents, patient consent forms, investigator selection, site selection, regulatory approvals might need to be assessed and fresh documents prepared after separation or integration of organizations to reflect the branding, logo, and guidelines of the new entity.
We have taken an in-depth look into some of the key factors that go into ensuring success of an M&A deal from an R&D point of view. For an M&A deal to be successfully executed, it is imperative that all functional and infrastructure support teams work together.
Read more from this series:
Rahul is Senior Principal in Infosys’s Health and Life Sciences Consulting practice. Rahul has worked with leading management consulting firms and performed varied engagements across the life cycle (Strategy formulation to Transformation management and benefits realization). He is currently focusing on M&A and brings diverse experience on pre-deal and post- deal engagements.
Deepak is a Partner in the CIO Advisory practice of Infosys Consulting and leads the M&A offerings. He has more than 23 years of extensive experience in leading large-scale M&A and business transformation programs. He has supported clients in life sciences, retail, energy and information services sector through innovative engagement models like ITaaS and service optimization. His areas of expertise include mergers and acquisitions, enterprise resource planning, IT operating models and business process automation.