Article originally published in The Lawyer on October 14, 2010

Despite global economic conditions, deal-making by large pharmaceutical companies has remained relatively buoyant, say Daniel Pavin, Grant Castle and Alexandra Pygall.

Acquisitions in the pharmaceuticals sector are being driven by factors such as the need to replenish shrinking product pipelines, the need to maintain revenues as patents on top-selling products expire, and the strategic diversification of business lines and expansion into emerging markets.

Two general trends that may be observed, each of which is largely independent of underlying deal imperatives, are that buyers are becoming more risk averse and deal terms are becoming more complex. An illustration of the latter being driven by the former is the increasing use in life sciences M&A deals of structured or deferred consideration, payable only on the achievement of certain events or performance targets. Common terminology used in such acquisitions is ’earn-outs’, ’contingent value rights’ (CVRs) and ’contingent payment rights’.

Without a crystal ball, the outcome of future events crucial to the value of a target often cannot be determined, but the seller wants reward for its investment and the buyer does not want to pay over the odds. Contingent consideration structures based around milestones in the life of the target’s key products can help to bridge the ‘expectation gap’.

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Photo of Daniel Pavin Daniel Pavin

Daniel Pavin advises clients on a wide range of transactions involving intellectual property, technology and data.

He has extensive experience advising pharmaceutical, biotechnology, medical device and technology companies in connection with licensing, collaborations and other strategic agreements. He also advises clients in connection…

Daniel Pavin advises clients on a wide range of transactions involving intellectual property, technology and data.

He has extensive experience advising pharmaceutical, biotechnology, medical device and technology companies in connection with licensing, collaborations and other strategic agreements. He also advises clients in connection with investments, fundraisings and M&A.

Daniel has a particular focus on digital transformation in the life sciences and healthcare sectors, including digital health transactions, and data-driven and AI drug discovery and development projects.

Daniel is one of the leaders of Covington’s global, multidisciplinary Digital Health Initiative, which brings together the firm’s considerable resources across the broad array of legal, regulatory, commercial, and policy issues relating to the development and exploitation of digital health products and services.

Chambers UK notes, “Daniel Pavin has very strong legal and commercial acumen.” “Daniel Pavin is very knowledgeable about life sciences and the data and digital areas. He sits where tech and life sciences come together.” “He is incredibly knowledgeable. He is very inclusive and happy to draw colleagues into conversations.”

Prior to his legal career, Daniel worked as a computer programmer, developing microscope image processing software. He is the co-inventor of a patented invention in the field of social network analytics.

Photo of Grant Castle Grant Castle

Grant Castle is a partner in London, Brussels, and Dublin practicing in the areas of EU, UK, and Irish life sciences regulatory law. He supports innovative pharmaceutical, biotech, medical device and diagnostics manufacturers on regulatory, compliance, legislative, policy, market access and public law…

Grant Castle is a partner in London, Brussels, and Dublin practicing in the areas of EU, UK, and Irish life sciences regulatory law. He supports innovative pharmaceutical, biotech, medical device and diagnostics manufacturers on regulatory, compliance, legislative, policy, market access and public law litigation matters in the EU, UK, and Irish Courts.

He is one of the Co-chairs of Covington’s Life Sciences Industry Group and is Head of Covington’s European Life Sciences Regulatory Practice.

Grant regularly advises on:

  • EU and UK regulatory pathways to market for pharmaceuticals and medical devices, including in vitro diagnostics and on associated product life cycle management;
  • Pharmaceutical GxPs, including those governing pharmacovigilance, manufacturing, the supply chain and both clinical and non-clinical research;
  • Medical device CE and UKCA marking, quality systems, device vigilance and rules governing clinical investigations and performance evaluations of medical devices and in vitro diagnostics;
  • Advertising and promotion of both pharmaceuticals and medical devices; and
  • Pricing, reimbursement and market access for both pharmaceuticals and medical devices.

Grant also handles procedural matters before EU, UK and Irish regulators and UK and Irish market access bodies, where necessary bringing judicial reviews for his life sciences clients before the EU, UK and Irish Courts.

Chambers UK has ranked Grant in Band 1 for Life Sciences Regulatory for the last 21 years. He is recognized by Chambers UK, Life Sciences as “excellent,” “a knowledgeable lawyer with a strong presence in the industry,” who provides “absolutely first-rate regulatory advice,” according to sources, who also describe him as “one of the key players in that area,” whilst Chambers Global sources report that “he worked in the sector for many years, and has a thorough understanding of how the industry ticks.” He is praised by clients for his “absolutely first-rate” European regulatory practice. Legal 500 UK notes that he is “highly competent in understanding legal and technical biological issues.”