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M&A and medical devices presentation

This presentation describes regulatory hurdles to keep in mind when acquiring / selling medical devices companies with CE certificates to prevent them from becoming invalid.

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M&A and medical devices presentation

  1. 1. Medical Devices M&A session Erik Vollebregt
  2. 2. Session Agenda • What to look for in due diligence? • Interaction with notified body • Concept of significant change • Most common costly misunderstandings
  3. 3. Ideal world
  4. 4. Real world
  5. 5. MDR is good for M&A ❤️ ❤️ ❤️
  6. 6. M&A preparation for regulatory consequences • Define objectives of M&A transaction – Do we only want tech and/or people? Or a functional CE marked company? – How will we integrate target? – Any big innovations in the next year? • Define and plan what is needed in – Preparation phase – Transaction phase – Implementation phase
  7. 7. What to look for in DD of a company with CE marked medical devices? • Management review shows awareness of MDR/IVDR • Company has an MDR / IVDR transition plan and is (well) underway with transition • Company has plan B and C in case transition plan assumptions do not pan out • Company is engaging with notified body for transition roll-out and has relevant audit dates planned • Company has informed and prepared supply chain and suppliers for MDR/IVDR changes
  8. 8. What to look for in DD of a company with CE marked medical devices? • Company understands economic operator regime and is enaging with its supply chain about the consequences • QMS is ISO 13485:2016 at least, and gap assessment against MDR/IVDR has been made • Company has a Brexit contingency plan • Company has clinical data and CERs at at least MEDDEV 2.7/1 Rev 4 level / has plan for collecting IVD analytical, scientific and clinical performance data
  9. 9. What to look for in DD of a company with CE marked medical devices? • If devices are dependent on equivalence, Company has sufficient access to data going forward in terms of MDR • Evidence of compliance with wildly different national HCP / HCO interaction rules • Company has implemented General Data Protection Regulation (GDPR) and has integrated privacy / security by design in its product / services development
  10. 10. When interaction with Notified Body? Preparation Phase Transaction Phase Implementation Phase Internal Review Selection Process/ Pre Negotiation Due Diligence Purchase Agreement Negotiations Closing / Transfer of Control over Target Integration / Post-Closing Activities Pre-Closing Phase / Implementation Conditions Precedent Verify status and consequences of changes implemented!
  11. 11. Preparation phase • NB can respond to questions and discuss scenarios – What if we move manufacturing? – What if we want to change legal manufacturer on label? – What if we change certain suppliers? – What if we want to bring this product portfolio under our NB? – Etc.
  12. 12. Transaction phase • More specific, questions related to DD • NDA signed • Permission • Confirm certification in good standing – Audit reports – Product reviews – Outstanding non-conformities – History of certification • NB view on regulatory landscape for specific devices
  13. 13. Implementation phase • Present regulatory / compliance planning to NB • NB will focus on changes: – Labelling – Legal manufacturer / EU authorized representative – QMS – Critical suppliers – People / competence – Organisation – Responsibilities and authorities vigilance process • Set expectations on interactions and time lines • Execute
  14. 14. Typical subjects of discussion • Labelling changes as result of M&A • Manufacturing consolidation • Notified body consolidation • Changes to QMS • Products under review at notified body
  15. 15. MDR and ‘significant change’ • Many many companies will rely on extending existing (AI)MDD certificates part May 2020 as ‘soft transition’ strategy under article 120 (3) MDR • Concept of ‘significant change’ still not crystalised • Determines M&A structuring for all manufacturers that rely on soft transition • anything other than a shares transfer without reorganization will likely cause a significant change that will lead to instant loss of certificates • Merger pre-closing or post-closing commitments must be carefully drafted as not to cause a significant change • Notified bodies have no time to anything quickly in view of MDR deadlines
  16. 16. Significant change impacted Significant change impacted
  17. 17. MDR and ‘significant change’ What is a significant change? • ‘Anything that requires printing a new certificate’ • NBOG 2014-3: Changes to product, QMS and product range can be significant (Annex II, 3.4 and 4.4 MDD; Annex IX, 2.4 MDR)
  18. 18. Most common costly misunderstandings • CE mark is transferable – No, certificates are personal to manufacturer, product, operations and QMS • M&A lawyers / legal department know what they’re doing – They can do M&A deals of unregulated widget companies, but they often do not understand regulatory implications in sufficient detail • We can fix things quickly with the notified body because it’s a service provider – Not at this point in time because they are way too busy with other things
  19. 19. Most common costly misunderstandings • We can defer MDR remediation until 2024 – No you cannot, even in case of (AI)MDD recertification large parts of MDR apply as of 26 May 2020 • We can sit out an existing certificate if the notified body changes – No, you have to relabel all product for the new notified body’s number • National law is irrelevant – Medical devices law is still for a large part national law in the EU – All HCP / HCO interaction rules in the EU are national law that varies wildly between countries
  20. 20. Most common costly misunderstandings • IVDR issues are years and years away – Not if you are among the 85% of IVDs in the market that cannot rely on soft transition and still needs to collect (additional) performance data • We will do General Data Protection Regulation at some point but not now – That means that all your data collected so far has been obtained illegally, and is therefore useless
  21. 21. Resources • https://medicaldeviceslegal.com/2011/01/09/ regulatory-considerations-typically- overlooked-in-medical-devices-ma- transactions/ • https://www.bain.com/insights/global- healthcare-private-equity-and-corporate-ma- report-2019-medtech/ • https://easymedicaldevice.com/medical- device-compliance-merger-acquisition/

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