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endorse actions that are contrary to the company’s long-term goals in the name of creating shareholder value in the near term. Such actions may include special dividends or share buybacks, corporate spinoffs, sales of divisions or other disaggregating transactions or sale of the whole company. Life science companies may be prime targets for a number of reasons, including the number of established industry players who are regular buyers and may step in once a company is “in play;” life science companies tend to hold cash to fund long-term R&D projects; and the volatility of the industry creates opportunities for activists to move quickly when a company is at its weakest. Prepare for activism by investigating and monitoring your shareholder base; reviewing your corporate governance structure and takeover defenses; considering initiating proactive changes to governance, takeover or compensation practices to address industry trends; and developing a plan to respond to public and non-public advances by shareholders.
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China—regarding good manufacturing practices (GMP) and pharmacovigilance (PV) require review and coordination of global compliance by life sciences companies. The US FDA Safety and Innovation Act of 2012 (FDASIA) requires greater management of the global supply chain (including supplier and API quality), encourages sharing inspection information with governments, and grants FDA extraterritorial jurisdiction over certain violations. Implementation of China’s new GMP rules will challenge its local pharmaceutical industry, likely forcing some underdeveloped facilities to close, but also presenting opportunities for companies interested in manufacturing in China. In the EU, scandals involving medical devices have resulted in increased regulatory oversight of the EU’s medical device sector. Also, in the wake of high profile safety lapses, pharmacovigilance enforcement in the U.S. will rise. Noncompliance with EU PV and pediatric rules for medicinal products are subject to penalties of up to five percent of a company’s annual EU turnover.
litigation in international jurisdictions. Prepare for plaintiff counsels’ efforts to leverage more permissive discovery and legal rules across borders, including seeking to reduce protections offered by the attorney-client privilege. Focus on best practices for making international tort litigation work.
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Review and coordinate global GMP and Pharmacovigilence compliance, ahead of enforcement increase. Evolving laws and policies—in the US, EU and
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Prepare for and coordinate international tort litigation. Expect that US tort litigation will be accompanied by
Aggressively manage your supply chain and prepare to implement e-coding requirements in China. Expect more price controls in China on drug and device products (particularly certain high-risk and high value medical devices), either by maximum retail price or maximum distribution margin. Strategize on how to address requirements to participate directly in the tendering and bidding process of hospital purchasing and eliminate multiple layers of distributors. Additionally, anticipate new regulations to raises the market entrance thresholds for distributors. Implement the 2013 requirements regarding e-coding for certain pharmaceutical products and labeling requirements for all medical device products manufactured outside of China. (All products must be e-coded by the end of 2015.)
For further information on the Global Life Sciences Practice at Sidley Austin, please contact:
Scott Bass +1.202.736.8684 +1.212.839.5613 [email protected] James C. Stansel +1.202.736.8092 [email protected]
Michael W. Davis +1.312.853.7731 [email protected] Patricia Thayer +1.415.772.7469 [email protected]
Paul E. Kalb M.D. +1.202.736.8050 [email protected] David J. Zampa +1.312.853.4573 [email protected]
This article has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and the receipt of it does not constitute, a lawyer-client relationship. Readers should ??????????????????????????????????????????????????????Q????????????????????????? ???????????????????????????????????????????????9??e???M??? ???????????????????????M???????????11@?????M??????????9??e????9d???????????????????????=???M???????????
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