Healthcare/Medical Tech/Pharma M&A Complexity Forum

[Anonymous User]

I am exploring an offer in this space seems as if an extra layer of complexity and time commitment is present in such deals because of, among other things, how heavily regulated they are. Is that correct?

I like M&A but I don't want a two jobs in one sort of situation, where I also need to be a regulatory expert.

[Kikero]

I do quite a bit of this work both on the M&A side and on the Cap Markets side. There’s a little bit of a learning curve on your first couple of deals where you learn some lingo and some very high level stuff (e.g. the difference between Phase I, Phase II, and Phase III trials, what INDs and NDAs are, etc.) but after that it’s basically the same as any other M&A work. I’m certainly not a regulatory expert nor am I expected to be, more of a well-educated layperson.

That’s how it is at my firm anyway, it may differ firm to firm, but I would imagine that any large full-service law firm will have regulatory specialists that support the M&A team and IP/tech transactions folks who work on the licensing and collaboration agreements, so the M&A team can focus on M&A.

I will say it’s a pretty interesting area to be in and it opens up some in house exit opportunities that may not be available to folks without life sciences experience.

[lolnopedude]

I will say it’s a pretty interesting area to be in and it opens up some in house exit opportunities that may not be available to folks without life sciences experience.

Do you mind talking a bit more about this? Not OP, but I have a science degree and a JD/MBA and I'm in M&A, so looking to see where I can best leverage my knowledge/experiences.

[Anonymous User]

I do quite a bit of this work both on the M&A side and on the Cap Markets side. There’s a little bit of a learning curve on your first couple of deals where you learn some lingo and some very high level stuff (e.g. the difference between Phase I, Phase II, and Phase III trials, what INDs and NDAs are, etc.) but after that it’s basically the same as any other M&A work. I’m certainly not a regulatory expert nor am I expected to be, more of a well-educated layperson.

That’s how it is at my firm anyway, it may differ firm to firm, but I would imagine that any large full-service law firm will have regulatory specialists that support the M&A team and IP/tech transactions folks who work on the licensing and collaboration agreements, so the M&A team can focus on M&A.

I will say it’s a pretty interesting area to be in and it opens up some in house exit opportunities that may not be available to folks without life sciences experience.

Thank you! It makes sense that you'd be able to "triage" while at a firm, but once you go in-house wouldn't it be a bit more difficult? As in, wouldn't you have to have more involvement in the regulatory and science aspects as the M&A person?

[Kikero]

I’ve never practiced in house at a healthcare/medical tech/pharma company, but my sense it depends on the size of the legal department. I have one small public company client that has a legal department of one, so that person does everything (with help from outside counsel of course). Regulatory, public company reporting, employment, etc. I have other larger clients that have dedicated M&A teams as well as in house IP and regulatory lawyers, so from what I can tell from my interactions with them on deals, those in house M&A folks are obviously knowledgeable about their employer’s business but probably not any more qualified than me to submit applications to the FDA.

[Anonymous User]

The only incremental complexity in this discipline of M&A is around nomenclature for key steps in the commercialization process as mentioned above, and drafting technology relating to milestone achievement, contingent payments, healthcare-specific representations and warranties, and the formulation of industry-specific closing conditions (relating to approvals). A healthcare merger agreement is structurally no different than any other--there are articles for merger mechanics, company reps, buyer reps, covenants, closing conditions, termination, and boilerplate just the same. Sometimes, drug development deals do have a heightened regulatory enforcement risk attribute, and so you will see DOJ Consent-driven divestitures more frequently. An interesting example was Celgene-Otezla, which was a deal cut in the wake of the announcement of Celgene-Bristol Myers Squibb.

[Anonymous User]

The only incremental complexity in this discipline of M&A is around nomenclature for key steps in the commercialization process as mentioned above, and drafting technology relating to milestone achievement, contingent payments, healthcare-specific representations and warranties, and the formulation of industry-specific closing conditions (relating to approvals). A healthcare merger agreement is structurally no different than any other--there are articles for merger mechanics, company reps, buyer reps, covenants, closing conditions, termination, and boilerplate just the same. Sometimes, drug development deals do have a heightened regulatory enforcement risk attribute, and so you will see DOJ Consent-driven divestitures more frequently. An interesting example was Celgene-Otezla, which was a deal cut in the wake of the announcement of Celgene-Bristol Myers Squibb.

Thank you all!

This post is especially helpful. You mention "healthcare-specific representations and warranties, and the formulation of industry-specific closing conditions". Wouldn't that result in more specialized diligence as well?

[Anonymous User]

Yes, but as a member of the M&A team, you won't be performing it. Your specialist teams (FDA/Healthcare Regulatory/Life Sciences/whatever your firm calls it) will be reviewing large batches of esoteric documents in a virtual data room and sending you drafts of either (x) the disclosure letter to the acquisition agreement (if on sell-side) or (y) a draft of a portion of the due diligence memo (if on the buy-side) in respect of that specific due diligence material.

[Anonymous User]

Yes, but as a member of the M&A team, you won't be performing it. Your specialist teams (FDA/Healthcare Regulatory/Life Sciences/whatever your firm calls it) will be reviewing large batches of esoteric documents in a virtual data room and sending you drafts of either (x) the disclosure letter to the acquisition agreement (if on sell-side) or (y) a draft of a portion of the due diligence memo (if on the buy-side) in respect of that specific due diligence material.

Got it, thanks.