The life science industry has been among the most active sectors for mergers and acquisitions in recent years¹.

As the industry becomes more dynamic, the lengthy process of bringing a new drug to market involves enormous investment of time and money. As a result, it demands expertise and strategic thinking to ensure you acknowledge and embrace the right opportunities for your business.

The importance of due diligience

The life science sector is fraught with regulatory pitfalls, government enforcement, and increasing public scrutiny. So, conducting effective due diligence means uncovering risks and obstacles that impact corporate decision making. It also helps us understand the implications of the terms and timing of such judgments.

The due diligence process plays a key role in supporting C-level decisions with a variety of unique issues to life sciences companies. It’s vital that organisations understand the importance of due diligence. It can have a major impact in the assessment of evaluating, structuring, and negotiating transactions in the industry¹.

Getting ahead of the game

However, due diligence can very often be a buy-side activity. So, in an increasingly competitive investment industry, life science companies seeking partnerships or out-licensing opportunities have realized the critical nature of unearthing and addressing issues before they have an interested party.

By getting the jump on possible issues in development, operations, manufacturing, or any other asset related stream work, we can significantly improve the quality and amount of information available. This helps to provide balance at the negotiation table and increase the chance of an informed decision.

Show them you mean business

Getting a head start provides the evaluating party the best possible framework to correctly assess the potential acquisition’s ability to achieve its desired post-closing objectives.

However, the extent and scope of due diligence in the pharmaceutical industry will differ from matter to matter. It can very often spread beyond merger and acquisition (M&A) reasoning to broader purposes such as:

• co-development opportunities
• funding prospects
• ex-US market feasibility
• commercial fit
• regulatory approval likelihood
• therapeutic fit
• launch readiness
• landscape assessment
• and many other areas that you can see here.

The information delivered through due diligence intends to bring companies to a point where they can make a fully informed, unbiased decision regarding optimal strategies to guide future plans.

Where to focus

Due diligence focuses on both strategy and data, and the findings can range from positive information to negative aspects of a therapeutic drug.

For example, through proper due diligence, a company might find out that its drug has:

• commercial and market access issues
• no differentiation to competitors
• CMC lagging
• negative risk-benefit
• inadequate filing package
• disconnection between development plans and commercial timelines
• negative KOL opinion in specific geographic locations

Above and beyond, detailed assessments in the life science industry are always valid. This is especially so when the findings are negative as it guides risk mitigation and decision-making³.

Decision time

Although the due diligence process can be time-consuming and sometimes even frustrating, it is a prerequisite to a well-planned deal.

It can take considerable time to identify and explore potential issues. This can be more the case with life science companies where therapeutic assets are likely to bring significant complexity to their valuation, supporting data and intellectual property².

That is why due diligence experience, scientific expertise, and a strong industry background are important to properly assess the opportunity and understand what effect any issues uncovered might have².

When it comes to biotechnology, it is not as simple as working through a checklist, which is why specialist life science consulting companies like Solem Global are often engaged to conduct due diligence work.

You can contact us today to discuss how our process of due diligence has helped many of our clients achieve their own objectives.

In our next article we will explore the areas beyond M&A in which due diligence plays a role in guiding C-level decisions in the life science industry.

About Solem

Solem is a Life Science Consultancy that helps businesses launch new drugs and medical products. We partner with you across the entire development process. We ensure your products not only receive approval – they actually reach and connect with the intended market.

For more information about how Solem can support your Due Diligence processes contact us at info@solemglobal.com