The complex role of IT in the life sciences industry

The life sciences industry is one of the most complex and dynamic information technology sectors. It involves sophisticated instruments, software, and databases to process, analyse, and store vast amounts of critical data. However, the industry’s “lengthy” research and development processes make it appear slow, especially when compared to the evolving IT industry, which is in a constant state of advancement.

As technology continues to transform the operations of life science companies, advancements in technology, automation, data management, and medical innovations enhance operational efficiency in an already complex environment. Additionally, the pharmaceutical industry actively engages in mergers and acquisitions (M&A), often acquiring start-ups to access innovative technologies and advancements in medical technologies (MedTech).

However, in the context of M&A transactions, IT introduces new complexities to deal-making, particularly in compliance, regulation, patient data, IT systems, and security.

What are some of the main challenges specific to these areas, and how can pharmaceutical companies overcome them? What can be done to execute M&A transactions efficiently and seamlessly, with limited risk and minimal disruption to business continuity pre- and post-Day 1?

Typical challenges

Based on our experience, three main challenges in M&A transactions within the life sciences industry have been identified, including, but not limited to:

In the context of dealmaking, the challenges listed above could become potential “decelerators” – or even “dealbreakers” – when separating or integrating systems. Identifying and addressing them early enough is key to mitigating potential risks that could arise from them. Challenges that are not appropriately addressed may impact on deal valuation and timeline. Appropriate mitigations can help de-risk the deal’s completion and provide clear input into the business case.

The challenges listed above are spread across multiple IT domains, and it is critical to understand the impact on which domain for an IT team involved in separating or integrating. Typically, such domains in the LSHC industry include but are not limited to quality & pharmacovigilance systems (PCV), compliance, and data. Thus, they require dedicated attention during the M&A transaction. The deep-dive section below will examine these domains in more detail.

Challenges in specific IT domains

Quality and pharmacovigilance systems

Pharmaceutical and biotechnology organisations are increasingly subject to complex regulations. They rely heavily on technology for support, including information and quality management systems. At the same time, quality and pharmacovigilance departments must keep up with advances in technological innovation and ensure the proper technological support to maintain drug safety and quality.

Compliance

The ever-changing nature of the regulatory environment in pharma has pushed companies to look at how they can  leverage innovative technologies to automate and improve their compliance activities while ensuring they maintain their data’s integrity and adhere to regulatory requirements. Global companies often struggle with data migration and legal documentation stored in different IT systems, and some face blockers where certain countries do not allow the movement of documentation across borders. Regulatory non-compliance in pharma can significantly harm a firm’s reputation, finances, and the safety of its customers and patients.

Patient data and privacy laws

Various data privacy laws govern the life sciences industry. In an M&A, buyer and seller organisations must follow these laws, including industry-specific data and information security requirements. Compliance with data privacy laws is essential when separating or migrating patient data, integrating, or carving out patient records for applications such as medical research or clinical trials.

Summary and overall considerations for an accelerated and successful M&A execution

The environment in the LSHC industry is complex and dynamic. Companies must adapt and rely on a strong and stable technological backbone to survive.

Complex regulations mean heavy reliance on supporting technology and their underlying information and quality management systems, which raises risks as these are typically centralised and tightly integrated across business functions and regions.

The fast pace of the constantly changing environment is pushing companies to leverage innovative technologies to automate and improve their compliance activities while ensuring that data is handled and stored properly to remain compliant.

In an M&A context, patient data must be handled with particular care where cross-border delivery is involved, given the added risk to the delivery of an international transaction.

IT M&A deals need to be planned early, thoroughly, and comprehensively to succeed and cope with arising challenges.

Some of the key enablers for an accelerated and successful M&A execution are:

How Deloitte can help

Deloitte has dedicated technology M&A and due diligence teams in a number of locations, with unrivalled experience in deal preparation and execution, as well as in IT assessments. Our M&A Technology practice is a worldwide leader and the largest in Switzerland.

If you would like to understand more about the critical IT considerations for successful M&A transactions in the life sciences sector, please reach out to us.

Contributors

We are grateful to Ilario Musio for his valuable inputs to this report.