Six Steps to Kick-Start Pharma Due Diligence Process

Six Steps to Kick-Start Pharma Due Diligence Process

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Last week I had the pleasure of participating in a webinar discussion with a couple of experts in pharma due diligence from Eli Lily: Mike Myers and Scott Simmons.

Mike and Scott were the latest participants in a series of webinars that Inova has hosted on best practices for partnering in the pharma industry. During this session, the pair led nearly 300 attendees through both the philosophical and practical components of pharma due diligence and answered questions on everything from adapting Lilly best practices to smaller firms through to technology and software choices.

While there was a lot to take away from the webinar, it was the rigor that Mike and Scott recommended bringing to due diligence projects that stood out for a me. Whether you are big pharma, small biotech or somewhere in-between, with varying size of diligence teams, these best practices will ensure you maximize efforts and don't miss critical validations that can jeopardize a deal. Indeed, the six questions that the pair presented that inform their due diligence process are worthwhile adopting from the outset of any due diligence process.

First and fundamentally, make sure that the team is aligned on diligence project objectives and clear about the sort of agent that you are assessing. Depending on whether it is a large molecule or a small molecule, a device, or technology platform, you’ll need to assign different teams and different experts. The themes in each case will be a little different, and you’ll want to have all of your bases covered before sending out data for assessment.

Second, you kick off a due diligence process by asking do we agree with the partner’s perspective? An affirmative answer here sets you on a smooth path forward, but even a negative response is useful. Knowing where to anticipate issues or what areas will need the deepest dive is good information to have on hand as you start your assessment.

Third and related, it’s worth asking whether you can trust the partner’s perspective? Trust of a perspective implies something different than agreeing with that perspective. Trust demands a personal or professional regard that goes beyond ‘that sounds right’ to ‘I believe them’. Of course, while a successful due diligence process should offer great reason to trust by its conclusion, the earlier that trust emerges the smoother things will be.

Fourth, and no matter the level of trust, it’s worth asking whether you have assigned the best scientific minds to think through the chain of events presented. From the original data through the observations, the conclusion through to the predictions and hypothesized next steps, you’ll want to assign the best minds you have to consider the experimental design and results. Where you’re lacking specific expertise, this is the point that you outsource to a trusted consultant with the experience you need.

Fifth, think ahead and ask how might this deal impact implementation. Should the deal go through, there are going to be some impacts on projects and business plans across the organization. As a result, it’s worth assigning project managers to capture the scientific inputs and implications on the wider business early and keeping them in the loop throughout the due diligence process.

Sixth and finally, consider how you can include networking in the due diligence process. In pursuing the due diligence process you’ll want to bring in Functional Area (FA) experts, record their perspectives, and circulate them across the entire due diligence team. It’s important, too, that these expert perspectives are aligned with the leadership teams of the FA teams before the final recommendations are made.

There was plenty more packed into the webinar, of course, and if you happened to miss out, you can catch a replay here.

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This article was originally published on LinkedIn on September 1st, 2020 by Shanker Shrestha, Senior Solutions Consultant at Inova Software.

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