In the first post of our ‘Kick Start your Healthcare Reorganisation’ series we focus on the planning phase of a reorganisation in the healthcare and life sciences sector in the context of spin offs, carve outs and other solvent group restructurings.
It goes without saying that when preparing for a large reorganisation there is a significant amount of planning required to ensure seamless transition and continuity of supply chain. The industry is heavily regulated which means planning becomes even more critical to success.
In our experience advising on complex healthcare carve-outs, spin-offs and stand alone reorganisations, some of the common issues grappled with at the early stages of planning are:
- identifying the universe of assets and liabilities to be transferred, particularly in the context of shared contracts and co-mingled services whereby a clean split is not straight forward;
- determining where transitional services or contract manufacturing (intra-group or between third parties) may be required to facilitate and support ongoing business operations;
- mapping the extent to which critical healthcare products need to be stockpiled or other steps taken to ensure continuity of supply whilst complying with the regulatory requirements of a change to the ownership of, or in the supply chain for those products;
- considering the impact local regulations may have on timing of completion of steps globally and the need to plan for ‘delayed markets’, including labelling, import/export logistics and distribution arrangements, many of which become subject to a TSA to ensure a smooth transition;
- where the reorganisation causes a change in the regulatory landscape, preparing the business for new regulatory requirements post reorganisation;
- ensuring that both businesses continue to have the relevant knowledge, expertise and regulatory personnel to operate in their markets, particularly where employees transfer in, and more importantly, where employees transfer out of the respective businesses; and
- ensuring that IP rights are transferred alongside relevant products, or that IP licence arrangements are in place for the transitional period, to ensure the respective businesses have the right to develop, manufacture and sell such products immediately post-reorganisation.
Early planning is key to success, and we recommend that steps are taken to engage stakeholders from across the business and advisors at the earliest opportunity.
If you would like to discuss in more detail any plans your business may have for a reorganisation, please contact Rakesh Rathod, Charlotte Nolan and Katie Sewell or your usual Baker McKenzie contact. We would be delighted to assist.
In our next post we will move into the implementation phase of a healthcare reorganisation.
Click here to view the first post in this series – Kick Start your Healthcare Reorganisation (1 of 4)