healthcare and life sciences

Healthcare and Life Sciences

After a relatively quiet 2016, pharma M&A is expected to become more active in 2017, though industry concerns in the U.S. remain acute about a possible successor to the U.S. Affordable Care Act, as well as government policy on drug pricing. Last year’s slow deal environment means there is a backlog of biotechs who could pursue IPOs or go for a deal with a major firm. If the new U.S. administration follows through on its promise to allow companies to repatriate billions of dollars of locked-down cash from overseas, this would support an upsurge in biotech M&A this year and make IPOs less attractive, though venture capital funding remains plentiful for those companies wishing to remain private. Pharma is an international industry, including in M&A; China is gradually moving into a lead position both in regional biotech and as a center for clinical research organizations and may well join Japan on the acquisition trail.

Our Partners' Perspectives

What are the critical considerations for life sciences companies to keep top of mind in order to ensure they have effective compliance programs in place?

Multinational healthcare and medical device companies continue to be the focus of an increasingly international mix of regulators and must be prepared to face scrutiny on multiple, simultaneous fronts. A proactive approach to compliance that incorporates recognized best practice is the foundation, and should be designed to evolve as new issues and risks are identified. An ideal approach mixes traditional compliance disciplines with the ability to respond dynamically to emerging risks before actual issues arise. A comprehensive, forward-thinking approach ensures issues are identified and remediated, lessons learned are implemented across the business, and the compliance commitment is embedded in corporate culture and counterparty dealings.

Morgan Miller

Washington, D.C.

What is the No. 1 issue for life sciences companies to consider in relation to leveraging and protecting their IP?

IP enforcement and defense are major business issues for life sciences companies, since they ultimately determine the exclusivity of the IP portfolio. It’s important for these companies to think about their patent portfolios in the context of potential patent litigation. They should have a clear picture of their patent risks and opportunities for key products and respective IP in order to make solid business decisions. The key questions to consider are: What are the risk factors? How long is the period of exclusivity likely to be? Answering these questions requires the company to make a strategic assessment of the strengths and weaknesses of its IP, and develop a clear vision of how patent litigation is likely to play out from a practical perspective.

Bruce Wexler

New York

What near-term changes will have the greatest impact on compliance programs and government investigations involving U.S. pharma companies?

The pharmaceutical industry has experienced the unrelenting grip of government enforcement across all facets of U.S. operations, with fines and penalties running into the billions of dollars, even in individual cases. It has not been much better for global operations, with many companies having been prosecuted under the FCPA and other anti-corruption laws. After years of playing defense, companies are investing earlier and like never before in compliance programs. Yet there is clearly much more enforcement to come. The government is pursuing old and new theories alike in the U.S., and actions and saber rattling alike strongly suggest that FCPA enforcement 2.0 will be arriving soon.

Gary Giampetruzzi

New York

How will changes in the political and regulatory landscape shape M&A activity in the U.S. healthcare and life sciences industry?

M&A loathes uncertainty. And uncertainty is emanating from the changing landscape in Washington. This uncertainty relates obviously to the fate of the Affordable Care Act, but also importantly to the antitrust environment. The demise of the Anthem/Cigna and Humana/Aetna transactions due to antitrust concerns has been somewhat startling. As a result, I expect that many in the life sciences and healthcare space will be fairly cautious in their M&A endeavors for the near and medium term.

David Shine

New York

How is the venture financing environment changing for life sciences start-ups and emerging companies? What are the key trends to follow?

Crossover investors, who dominated the life sciences market in 2015, pulled back in 2016; crossover deals dropped more than 70% last year. A key question for 2017 is whether crossover investors will provide equity support for new raises in a softer IPO market. Two trends we’re watching: exits for pre-clinical and phase I companies, and the market’s appetite for oncology and orphan drug companies. Pre-clinical and phase I acquisition targets drove the market last year, and we expect this to continue in 2017. Oncology investments continue to have the most exits and the largest median deal size, and orphan drug has had a remarkably quick pace of exit, averaging only 1.5 years from Series A equity raise to exit.

Samuel Waxman

New York

Two Hatch-Waxman Impact Cases of the Year

LMG Life Sciences Awards

Highlights of Our Client Successes

Merck diversifies healthcare portfolio with US$1.25B pharmaceutical acquisition

Our lawyers represented Merck & Co., Inc. in its US$1.25B acquisition of Afferent Pharmaceuticals. Afferent is a leader in the development of therapeutic candidates targeting the P2X3 receptor for the treatment of common, poorly managed, neurogenic conditions. The acquisition furthers Merck’s strategy of diversifying its healthcare portfolio.

First-ever IPO of a Swiss company on Euronext

We represented GeNeuro, a Swiss biopharmaceutical company, and underwriters Bryan Garnier & Co and Société Générale, in GeNeuro’s IPO and listing on the regulated market of Euronext in Paris. This is the first-ever IPO of a Swiss company on the Euronext.

Complex cross-border deal creates global biomaterials leader

Our team advised France-based Keensight Capital on its complex cross-border partnership with Italian group Tecres and German company aap Biomaterials to form Italian holding company Demetra Holding, a world leader in bone cement and biomaterials. The transaction involved crucial legal and tax private equity mechanisms, including the acquisition of aap Biomaterials by Keensight, followed by the creation of a joint holding company with Tecres. This innovative LBO created a holding company that controls two leading independent players in three different jurisdictions.

Advising 8 of the 10 largest pharma companies