Audits and Due diligence in Pharmacovigilance

In the present era, we are witnessing quite a lot of mergers and acquisitions (M&A) in the pharma industry. As a result, the concept of due diligence is gaining a lot of importance. Although there is some similarity between audits and due diligence with regards to the review of the systems, the purpose is different!

Scenarios

While audits are considered for affiliates, systems & processes, business partners or vendors, due diligence may be considered during product divestment and partial or complete M&A. In short, due diligence aids in decision-making for inorganic expansion. Besides, due diligence is also considered while qualifying suitable vendors and business partners for undertaking pharmacovigilance activities.

Tools and Processes

Generally, you would have a financial consultancy firm which is a neutral party involved in the invitation of bids. This company facilitates a read-only electronic repository where the necessary pharmacovigilance documents are saved. The potential acquirers have only 1-2 attempts to request additional information for decision making and the timelines are stringent.

For aggressive pharma companies, it is advisable to have dedicated resources or create an M&A checklist which is useful for a fast-track due diligence process.

Quite often, the only document provided for due diligence is the Pharmacovigilance System Master File (PSMF). If you are unlucky then it will be without the annexes.

Audit Vs Due Diligence

An audit outcome is followed by root cause analysis and corrective and preventative actions. However, this is optional in case of due diligence.

An audit is followed by a detailed audit report which is shared with the auditee while a due diligence is followed by a due diligence report which is generally informal, and the party might never know what was identified during the process.

Multiple companies might perform due diligence at the same time and with the same objective. Thankfully, this is not the case with audits and inspections.

            It will be ideal if the pharmacovigilance team is involved in a due diligence process, right from the beginning. However, due to the confidentiality of the exercise, the Pharmacovigilance team might be notified only after a decision is made. This can have adverse impact on the integration process which follows a successful bid. A successful bid may be followed by a full-fledged audit provided this is agreed in advance.

A successful bid following the due diligence does not guarantee the outcome. However, it is a great learning experience!