2021 LS&HC Horizons - Flipbook - Page 25
Life Sciences and Health Care Horizons 2021
25
Bridging the gap: Partnering transactions between pharma and diagnostic
companies
As precision medicine expands its reach
across therapeutic areas, pharmaceutical
and diagnostic companies have come to
recognize the need to partner effectively with
one another to deliver both therapies and
companion diagnostics to patients. Both sides
have to stretch beyond their respective comfort
zones in order to strike deals with which both
sides can live, given the historical differences
between pharmaceutical and diagnostics
companies in areas like product development,
intellectual property protection, and dealmaking, generally.
One of the challenges that exists in a
companion diagnostic (CDx) development
agreement is ensuring availability of the
diagnostic. Where a pharma company is
relying on a companion diagnostic to launch
its product, it needs assurance that the
diagnostic is validated and cleared for use,
and available at the time of the drug’s launch.
However, where the sale of a CDx is simply
not commercially viable, a CDx collaboration
needs to strike a balance between both parties’
interests. Further, the pharma company
needs ongoing protections against any lapse
in availability of the diagnostic, which may
include the ability to partner with another
diagnostic manufacturer to replace the
original diagnostic.
Most diagnostic manufacturers appreciate the
pharmaceutical partner’s vulnerable position.
In situations where the assay incorporates the
diagnostic company’s proprietary know-how,
the diagnostic company would be reluctant
to commit to a technology transfer or provide
the partner (or worse yet, a competitor) with
data or materials that would enable the test to
be replicated. This is a particular concern for
diagnostics companies that have limited patent
protection with respect to their assay, relying
heavily (as many diagnostics manufacturers
to) on trade secret protection. Such an
obligation may be wholly unacceptable if it
applies in contexts like regulatory delays,
force majeure events, and delays due to the
drug company, but is no easier where the
assay is simply not commercially viable due to
jurisdiction-specific reimbursement or supply
chain challenges. The situation is different,
of course, where the pharma company
contributes significantly to the development
of the assay, or where the assay is specific to
its product.
Bridging this gap demands a nuanced
understanding of each party’s key concerns
and areas of exposures including commercial,
regulatory, and IP risks; experience with
industry customs and practice; and creatively
drafted contractual provisions that align
both parties’ incentives toward ensuring the
commercial success of both parties’ products.
Cullen Taylor
Partner, Northern Virginia
cullen.taylor@hoganlovells.com
Arne Thiermann
Partner, Hamburg
arne.thiermann@hoganlovells.com
Jörg Schickert
Partner, Munich
joerg.schickert@hoganlovells.com
