Common Pitfalls – Regulatory Re-registrations
In the M&A or carve-out, the deal makers typically do not fully appreciate the re-registration workload or timeframe. This
task typically falls to technical executives after the deal is signed. All too often, the acquiring firm has limited staff
and minimal budget to manage the implementation in every country.
Regulatory considerations include the following:
» State licenses for drug manufacturer/distributor
» Certificates of Authority, Free Sale, and Origin
» FDA notifications such as:
» New Drug Establishment License
» Change of Ownership of an Application
» Transfer of IND Ownership
» Transfer of Drug Master File (DMF) Ownership
» Change of Drug Listing Information with Labeling
» International regulatory requirements in each country of business
Any of these can vary from a simple fax notification to a year of re-registration, product testing, and new government approvals.
Understanding the re-registration process early can curb any potential revenue delays. By anticipating the potential delays,
quantifying costs, and identifying gaps in testing or technical data the acquiring organization can factor these costs in
to the deal price or the post-transition agreement. For example, the TSA may require the seller to manufacture product and/or
maintain the registration for sufficient periods of time that varies by country. The buyer would then aggressively manage
the re-registration process to complete the approvals prior to the expiration of the agreements.
Common Pitfalls – Quality & Regulatory Systems for a "Newco"
Another common mistake, especially in carve-outs, is for the new company, "Newco," to blindly adopt the legacy company's quality
and regulatory systems without regard to their smaller size or scale. While the legacy company has established quality and
regulatory departments with employees to implement the procedures, the Newco finds itself with few, if any, quality/regulatory
personnel and a full plate of required procedures. They are suddenly "not following their own procedures," a risky situation
for anyone facing FDA inspection (which is often triggered by a change of ownership).
Some solutions include engaging experts to right-size the new quality and regulatory systems to fit the Newco size or negotiate
with the legacy company to develop the right-sized quality/regulatory system on behalf of Newco prior to the split. In all
cases, Newco needs to quickly establish, and show progress towards, a plan demonstrating their compliance intentions.