Search for:

In brief

In our previous article in the healthcare transaction series (link), we highlighted the need to review a target’s supply chain as one of the key areas and issues that one should pay attention to when carrying out a due diligence investigation on a healthcare & life sciences (HLS) target. This exercise in revisiting one’s supply chain in light of the COVID-19 pandemic and emerging industry trends, including (among others) digital transformation, will ensure that the company’s supply chain is resilient, compliant, and ready to meet the challenges and opportunities in the HLS industry.


In depth

In this article, we will look at how the traditional HLS supply chain is changing and the key emerging trends and players in this area.

  1. Digital transformation. Arguably, one of the most important factors affecting the HLS supply chain is digital transformation, which has no doubt been accelerated by the global pandemic. We can see efforts to digitalize from almost every aspect of the supply chain – from the “upstream” portion of the supply chain, such as clinical trial and research with some aspects becoming digital and various governments and organizations starting to issue various regulations and guidance in this area, to the “downstream” portion of the supply chain, with “track and trace” technology being deployed during the logistics and distribution of the products. Additionally, the delivery of drugs and treatments to patients using technology, with e-pharmacy, telemedicine, AI and advanced robotics allowing remote treatment of patients and drug delivery.
  2. Increased collaboration. Even before the digital transformation trend, there was already a growing collaboration between different parties involved in the HLS industry. With the emergence of increasingly sophisticated products and therapies in the HLS industry, the development of new drugs are expanding to other various manufacturers – with biotech startups out-licensing the rights to the R&D to MNCs after certain phases of successful clinical trials and the rise in number of CROs. The manufacturing of drugs is also increasingly outsourced, with the trend for many drugs to be manufactured in Asian countries, including Thailand, under contract manufacturing arrangements.
  3. New entrants. Moreover, with digital transformation, new entrants such as tech companies and new medical device companies, become important partners in the industry. These new entrants may oftentimes have differing priorities to traditional HLS players (who are experienced with heavy regulations and compliance in the industry) and bridging this gap can become a key factor on how these relationships are successfully managed.
  4. Rapidly changing regulatory requirements and compliance. With the pandemic, we have seen regulators loosening or relaxing some requirements to accelerate regulatory clearance or procurement of certain products and equipment needed in the fight against COVID-19. Leniency at this time does not, however, imply less stringent enforcement on part of the regulators. Safety and consumer protection remain of paramount importance, particularly with the increased utilization of digital platforms and solutions that are progressively replacing traditional marketing and promotions, making enforcement in this area even more vigilant and raising a number of legal issues that operators need to be aware of.
  5. ESG. It is also difficult to deny that HLS companies (like other companies) are now faced with tougher environmental controls and regulations and greater public scrutiny than ever before. With both emerging regulations in various countries and investor pressure demanding a greater degree of ESG compliance and transparency, it is important for HLS companies to ensure that its supply chain is ESG compliant and that this is reflected in their policies and SOPs, including those of their vendors and suppliers.
Author

Peerapan Tungsuwan is a corporate and M&A partner in Bangkok office with specialties in highly regulated industries, including the healthcare industry. She is currently Chair of the AEC Healthcare Harmonization Sub-committee of Baker McKenzie's Asia Pacific Healthcare Industry Group, of which she was head from 2007-2013. Within the Bangkok office, she heads the Healthcare Industry and Natural Resources Groups and co-leads the Mergers & Acquisitions practice group and Japan Advisory Group.

Author

Yuthana Sivaraks joined Baker & McKenzie in 1995 and became a partner in 2004. Prior to working with the Firm, he served as a judge advocate in the Royal Thai Navy. He is currently a member of various practice groups in the Bangkok office, including those for IT/Communications, Intellectual Property and Corporate & Commercial. In addition to practicing law, Mr. Sivaraks is an active visiting lecturer on IT, telecommunications, intellectual property and trade competition law for a number of Thai universities and institutions.

Author

Panyavith assists major local and multinational clients in a range of heavily regulated industries, such as healthcare & life sciences and petrochemical, on large complex mergers and acquisitions, private equity transactions, joint ventures, corporate restructurings, and post-acquisition integration projects. With his technical and commercial astute, Panyavith has often been involved in a number of pioneering projects, helping clients navigate the challenges of uncharted waters and emerging opportunities with innovative solutions.

Author

Praween Chantanakomes is an associate at Baker & McKenzie’s Bangkok office. He was admitted in 2008. He is currently active in the Corporate & Commercial, Mergers & Acquisitions, Environment, Natural Resources, and Pharmaceuticals practice groups.

Write A Comment