Usha Sharma – Mumbai
Lex Witness recently organised its third annual edition of the Pharma Legal and Compliance Summit (PLCS) in Mumbai. The event provided a platform to the pharma regulatory fraternity, both Indian as well as global, to discuss various legal issues and challenges related to the industry.
The day-long event saw the presence of eminent speakers from the pharma fraternity who discussed about the recent regulatory affairs in the domestic market. The inaugural session provided a brief description of pharma compliance practices and its requirements in India.
The summit was chaired by AS Kumar, General Counsel and Counsel and Executive Vice President, Dr Reddy’s Laboratories. The other speakers and panelists included Debolina Partap, Vice President and Head Legal, Wockhardt; Jayshree Swaminathan, Chief Executive Officer and Head Legal Compliance Chess Management Services; Sanjay Kumar, Head Legal, Piramal Imaging SA; Sanjay Sharma, Associate Director, Regional Security – Asia Pacific, Global Security Group MSD – Merck, Sharp & Dohme Corp; Ghanshyam Hegde, Associate Director – Legal, Abbott India; Vinod Kumar Dhall, Former Chairman, Competition Commission Of India and Executive Chairman; J Sai Deepak, Senior Associate, Saikrishna and Associates and Harpreet Singh, Partner, Governance Risk and Compliance, Pricewaterhousecoopers.
The panel discussion focused on mergers and acquisitions (M&A) and foreign direct investment (FDI). It also touched on the government’s move towards encouraging FDIs in the pharma sector and allowing 100 per cent brownfield and greenfield investments with specific guidelines.
Kumar highlighted the importance of exercising caution while signing an agreement with unions. Giving an example of the US, he said, “In the US, unions are strong and pharma companies should do their own research before signing up an agreement with respective unions before closing an M&A or foreign direct investment (FDI).”
Partap discussed on inbound investment. In the last five years there have been a total 30 M&As, worth over $30 billion in the industry. During 2013-14, 25 per cent of M&As world over were done in the pharma sector. She also stressed on analysing the risk assessment strategies before accomplishing a deal and said, “As soon as companies receive the flayer (a note from a buyer), they need to set up an M&A committee to discuss about M&A related activities. Also when you do a risk assessment, focus on the regulatory changes which are likely to happen in the near future.”
She spelled out the importance of term ‘Know your Partner’ and elaborated on the need for it. She also said that it is necessary to know about key aspects like company’s total years’ of existence, its marketing strategies etc. that being followed by the other company (the one you plan to acquire).
She also shared a pharma company’s case study wherein both the buyer and seller did not realise the regulatory changes which were in process for amendment. Due to the ignorance, the companies had to wait for more than a year to get regulatory clearance, which ideally would not have taken more than six to eight months time.
Hegde presented the outbound investment spectrum of the pharma sector. “Companies need to do quality analysis of process of documentations, marketing practices and IPR related activities for due diligence before finalising outbound investments and also needs to build safeguards. Besides these, one of the key things that investor needs to consider is the protection provided by the state government to investors,” informed Hegde.
Dhall informed about the basic precautions that need to be taken into consideration while following the procedures for applying government clearance. “Pharma is a very sensitive sector for the commission. And I would like send a message to the pharma community that when companies are approaching CCI they should come along with detailed information,” said Dhall. He also briefed about the usage and requirements of the long and short forms.
The key takeaway of the event was that there is a need for clarity when it come regulatory affairs in the pharma sector.