Overcoming High-Risk Situations and Tight Deadlines: How to Successfully Complete Due Diligence

February 16, 2021

Much like buying a home as an individual, a company contemplating the acquisition of a new product or business requires a lot of research and fact checking. In both situations, it is critical for the seller to fully disclose all information important to the sale and that could affect a buyer’s decision to purchase, and to ensure there are no surprises after the sale. When buying a home, individuals commonly use a real estate agent to assist them through the process. Similarly, when acquiring a new product or business, the purchasing company should consult with an expert throughout the process to ensure a smooth transaction.

By conducting due diligence in advance of an acquisition, you are making an investment that will ultimately diminish the risk associated with your decision. Going back to our home buying comparison, the due diligence review functions much like a home inspection in that our findings can be used to assist our clients in negotiations with the target company.

Regulatory due diligence is just one of the disciplines necessary in a pharma/biotech acquisition. It is often considered near the end of the acquisition process, resulting in typically short timelines with tight turnaround required. We are able to start these projects quickly, often within 24 hours of the initial conversation.

When conducting a regulatory due diligence review for a client, the typical process is as follows:

  • Kick off meeting to:
    • Introduce team members and leaders
    • Discuss how to gain access to target company information
    • Agree upon project objectives, timeline, deadlines, and deliverables
    • Understand key client concerns related to the target
  • Conduct the diligence work, triaging our findings as:
    • Critical: Issues likely to jeopardize eventual approvals. Critical findings are communicated to the client within 24 hours of discovery.
    • Major: Issues that are likely to be noticed by FDA and/or EMA, will not jeopardize approvals, but will need to be addressed by the Sponsor and may delay the approval. Major findings are communicated to the client in weekly meetings.
    • Minor: Issues that are likely to be noticed by regulatory authorities but will not jeopardize or delay the FDA or MAA approval. Minor findings are presented at the completion of the project in the final report.
  • Present final report, including a written report in the format(s) requested by the client as well as a discussion held via videoconference to review our findings.

During the process it may be necessary to further investigate and get more detail on a suspected issue. For example, we notice an irregularity in the stability section (3.2.S.7) when reviewing Module 3 of an FDA New Drug Application (NDA). In this case, we might then go on to also review the original stability test data. When considering due diligence services, we offer various levels of service, customized to meet your needs.

Due diligence highlights areas of concern. Ultimately, this helps to inform a decision to buy or not to buy, to develop or not to develop – which means it’s a stage of the process that is best carried out by an expert that knows exactly what warning signs to look for.

ProPharma Group can guide you through the due diligence process with the necessary expertise and commercial awareness to ensure your business operations are compliant and profitable. For nearly 38 years, our experts have assisted clients with projects related to regulatory due diligence, including pharmaceutical and biotechnology firms, private equity groups, and other potential investors. Our due diligence projects have spanned anywhere from a simple one-day medical device assessment to a six-month project to review the FDA and EMA dossiers for a large multinational pharmaceutical company. To learn how we can support your unique project, contact our team today.

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