Key Records Management Considerations During a Life Sciences Merger or Acquisition

Mergers and acquisitions occur regularly. In fact, 30% of world’s largest organizations are considering some merger or acquisition. The life sciences industry, in particular is characterized by frequent merger and acquisition activity.  In addition to mergers between large companies –think Pfizer-Allergan – smaller, early stage pharma and biotech companies are often purchased as their R&D efforts yield new drugs ready to go to market.

But the reality is that mergers and acquisitions are difficult to execute. There’s a lot that needs to happen with a merger/acquisition, not the least of which is combining and rationalizing IT systems. The need to carefully reconcile systems is especially critical for life sciences M&As because each company typically has a wide range of systems, from quality systems to LIMs systems to systems for managing clinical trial and drug application documents.

Records Management (RM) is a critical consideration during M&A activity, because as systems are combined or decommissioned, the records need to live on and be accessible and managed according to regulatory requirements.  By designing a RM strategy and solution that is effective, financially viable, and adheres to industry regulations before any M&A activity emerges, companies can make themselves not just more attractive, but more valuable.

Managing Records Across Systems

Every company has multiple business systems, with content and documents spread out across the organization. This makes information hard to manage and hard to find, and creates risks associated with applying regulatory processes consistently across disparate systems.

Consider, for example, the types of document-based systems that a typical life sciences company uses. They probably have a quality system for managing SOPs, and a systems for managing R&D activities such as a LIMS system and a system for managing lab notebooks. They almost certainly have an “eTMF” system for managing clinical trial documents and processes, and they may have a system for managing eCTD documents related to drug applications. And that is just the start of the list.

All these different systems spread out across the company cause challenges for records management. For example, a company must be able to find and deliver and preserve any document on a particular topic within a reasonable amount time in case there’s a subpoena requesting information about it.

Companies are also required to manage documents with a retention policy that is logical and consistent across all systems (for example, all documents of a certain type or family). With documents spread across many different systems, consistent application of retention policies can be a significant challenge.

A great RM system doesn’t replace all these different systems. Instead, it sits off to the side and keeps track of all the documents in all those systems, ingesting some and creating an index to others but leaving them in the systems from which they originated. This provides the ability to search across systems, place documents on hold, and manage retention policies for all records no matter what system they are in.

With a unified records strategy and solution, you can easily meet regulatory requirements without upending all the different systems you have. It also makes dealing with records in an M&A situation far simpler, since systems can be decommissioned or merged as necessary while retaining the records outside the source systems.

Dealing with Records When Moving to New Systems

Here’s a scenario that highlights the benefit of having a records management solution in place when moving to a new system.

You work for a large pharmaceutical company. One of the systems you manage is a Documentum system which stores your quality records, such as your SOPs (standard operating procedures), some old, some new. You want to move to a new system for managing these records, one that is new, better, faster and cheaper. Do you move all your records, both old and new? How do you move the old records and still ensure the regulatory requirements, such as audit records, are maintained? Do you keep the current system for the old records and use the new system for new records?

If you decide to keep the old system for the old records, then you have costs associated with two systems, two different places to find information, and so on. This is clearly not ideal.

A unified records management system provides a better solution. In this case, it can take the old records out of one system (ingest them) and store them in a standard format (such as PDF) with all the information they need, like the audit trail and versions. New SOPs are created and live in the new systems, but the SOPs created by the system being decommissioned remain available, searchable and are managed in accordance with consistent retention policies.

Now put yourself in the position of managing a merger or acquisition; a company with a records management solution in place makes a much more attractive candidate than one that has not made that investment.

What this Means for a Merger or Acquisition

In an ideal merger or acquisition scenario, both companies use the same business systems, the same records management systems, and have the same records management processes.

But of course that scenario doesn’t exist in the real world. In a merger or acquisition, there will always be duplicate systems doing the same function, but from different vendors and built on different platforms.

For example, one company may use Documentum for its SOPs and the other uses Veeva. Once merged, however, they only want to use Veeva. The question then becomes how do you merge the Documentum records into Veeva?

You basically have three options:

  1. Migrate everything from one system to the other – a very expensive and time consuming effort.
  2. Leave the old inactive records in Documentum and go back to it when you need them, even though there are costs associated with keeping a system operational (think upgrades!) just to access inactive records.
  3. Move the old Documentum records to a separate records management solution, migrate just the active records and use the new system for all new records.

The third option is clearly optimal. But it begs the question: How is this third party generic system cheaper or better? You still have to move all your records. Aren’t you simply moving from one proprietary system to another?

The answer is to look for key capabilities in the unified records management system. Here is a short list of requirements for a unified records management solution:

  • Records are stored in a non-proprietary format (a PDF which stores all the metadata like audit trail and version information with the PDF)
  • Can ingest or index records in other systems
  • Can search records whether ingested or indexed
  • Is able to take actions on records – such as legal hold
  • Applies retention schedules and triggers actions based on those schedules
  • Provides “tiered stirage” – the ability to move records with different access requirements to different storage technologies
  • Makes it easy to migrate them again if you needed to move them
  • Is CMIS (content management interoperability standard) compatible (an open standard that enables different document management systems to talk to each other)

Additional Challenges Life Science Companies Face with M&A

Life sciences is the most regulated industry other than nuclear in the United States, and as such mergers and acquisitions face challenges similar business transactions in other industries do not. 

  • Regulatory Requirements: We’ve already mentioned the regulatory challenges companies in the life sciences face. Everything from SOPs to clinical trial documents and processes must be carefully managed and stored to meet strict guidelines and laws.
  • Multiple Disparate Systems: Life sciences companies with revenues of over $100 million typically deal with at least seven or eight types of technology to manage records and documents. Some of these are custom built on platforms such as Documentum. Others are best of breed solutions that solve specific problems. And most of these companies do not have a global centralized records management architecture.
  • M&A Patterns in Life Sciences: In the overwhelming number of cases of M&A in life sciences, big buys small. What the mid-size company needs to be aware of, however, is how their approach to records management and regulatory compliance can make them more – or less – attractive and acquirable. 

Proper Records Management is Critical

Combining companies involves unifying systems and processes of many types. Records management is only one area that needs close attention — but is an area that can affect lots of other areas relating to IT strategy, flexibility and costs, as well as regulatory compliance risk.

For the life sciences industry, the amount of regulation and the vast quantity of records created means that integrating systems involves challenges relating to the migration, retention, and management of records. That means that whether you expect to be an acquirer or an acquisition target, creating a unified records management strategy and system can make the prospect of a merger far less daunting.

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