In the current era, the pharmaceutical industry is witnessing a surge in Mergers and Acquisitions (M&A). As a result, the concept of due diligence has gained significant importance. While there are similarities between audits and due diligence—specifically regarding the review of systems—their fundamental purposes are distinct.

Understanding these differences is crucial for Pharmacovigilance professionals navigating the complex landscape of corporate expansion.

Scenarios: When to Apply Which?

The context in which these two activities occur is the first major differentiator:

• Audits are typically conducted for affiliates, internal systems & processes, business partners, and vendors. They are a standard part of maintaining compliance and oversight.
• Due Diligence is triggered during specific high-stakes business events, such as product divestment or partial/complete M&A. In short, due diligence aids in decision-making for inorganic expansion. It is also utilized when qualifying suitable vendors and business partners before they undertake critical pharmacovigilance activities.

The Due Diligence Process: Speed and Strategy

Unlike routine audits, due diligence operates under tight constraints and high pressure.

• The Virtual Data Room: Generally, a neutral financial consultancy facilitates the bid invitation. This firm hosts a read-only electronic repository where necessary pharmacovigilance documents are stored.
• Stringent Timelines: Potential acquirers often have only 1–2 attempts to request additional information, meaning questions must be precise and strategic.
• Information Scarcity: Quite often, the only document provided is the Pharmacovigilance System Master File (PSMF). If you are unlucky, it may be provided without its critical annexes.

Pro Tip: For aggressive pharma companies, it is advisable to have dedicated resources or a pre-approved M&A checklist. This enables a “fast-track” due diligence process that can keep pace with business demands.

Key Differences: Audit vs. Due Diligence

The “Late Entry” Risk

Ideally, the pharmacovigilance team should be involved in the due diligence process right from the beginning.

However, due to the strict confidentiality of M&A exercises, the Pharmacovigilance team is often notified only after a decision has been made. This delay can have an adverse impact on the integration process following a successful bid. To mitigate risks, it is highly recommended that a successful bid be followed by a full-fledged audit, provided this condition is agreed upon in advance.