Why IT Systems are “Critical Path” in a Life Sciences Acquisition

By?Ed Morris , Senior Executive Advisor at Global PMI Partners

Post-merger integration in any sector is a heavy lift. The transfer of personnel, payroll, bank accounts, permits, licenses, etc., requires meticulous planning. However, the Life Sciences sector1 ?presents additional and unique challenges. In many cases, Life Sciences involve maintaining the production of physical products, some of which are lifesaving.?In these environments, shutdowns or disruptions are not an option.

Business operation is paradoxical. Departments such as Quality, Regulatory, Shop Floor and Research are both highly siloed and yet interdependent, in addition to having to factor in the complexity of maintaining GxP2 ?compliance.

Given the specialized knowledge required to navigate this complicated landscape, what workstream would you consider to be the most difficult to manage during a post-merger integration? Believe it or not, it is IT Systems.

At a time when Information Technology has become so commoditized, it is hard to imagine why IT is so difficult. Technologies like WiFi and Cloud storage have become so ubiquitous, we rarely give it a second thought.?However, there are many challenges to consider.

A few years ago, I led the acquisition and transition of 8 pharma manufacturing sites in 6 countries spanning the US, UK, and Europe. As you can imagine, there were a lot of moving parts. However, IT systems by far consumed the most time and effort. Modern pharma and med device operating departments are automated. Many executives, focused on closing the deal, did not realize what it would take to build and transition to a new IT landscape to maintain production.

Regulatory Compliance

Life Sciences companies generate massive amounts of data. From regulatory filings to collecting, processing, and analyzing data, they generate thousands of terabytes of data per year. Unlike other industries, Life Sciences companies cannot simply select and install a commercial software application of their choosing.?As every QA professional knows, any IT system that is directly, or indirectly associated with pharmaceutical or medical device product development, testing, or distribution, must go through a rigorous documentation and testing process known as Computer Systems Validation in compliance with FDA and EU regulations, such as 21 CFR Part 113 ?and Annex 114 .?The premise being that all GxP records generated must be attributable, legible, contemporaneous, original, and accurate (ALCOA)5 ?for the life of the record. Without this guarantee, Life Sciences companies are in jeopardy of an enforcement action by the FDA.

I learned this first-hand as a Certified Quality Auditor when tapped to perform a For-Cause audit due to a software defect in a patient randomization system. Beyond drug development, IT consumes a large part of pharma’s operational and capital budgets. Big pharma has historically invested billions in IT systems, often heavily customized and integrated with other internal and external systems.?These complex infrastructures make it difficult to carveout an asset for divestiture.?Whether the asset being solid is a product or a physical manufacturing site, systems and data must be transferred to the new owner. This takes planning.

The Schedule Ballet

Schedule pressure is formidable on the buy side of an acquisition due to the need to maintain operations while the systems and data that support production are being transferred. This typically is facilitated through a Transition Services Agreement (TSA), whereby the seller allows the new entity to remain on the current IT systems while the buyer stands-up new applications to replace them.?However, the duration of the TSA is often very brief (1 year or less). One year may seem like sufficient time to install software to the uninitiated. However, planning for multiple, critical systems being installed, configured and validated?simultaneously?can make this timeline aggressive.?Installation of an ERP system alone often takes a year or more with an added complication that pharma companies have several systems that must work in unison including: ERP, Chromatography, Quality Management and Process Control.

Controlling Scope

The fastest way to implement a GMP system is to avoid customization at all costs. This reduces testing and validation. However, this is not as easy as it sounds. First, influential users will resist vocally, claiming that the department won’t be able to function (most often this is the Finance Department). They will insist that transactions can’t be processed without the automatic transfer of orders, which will otherwise have to be done manually.?Oh, the horror!?The same is true for all departments. Not necessarily because they want an “easy button”, but it may also necessitate changing their Standard Operating Procedures which can present a dilemma. Big pharma systems are almost always interfaced to many other internal and external systems. When you disconnect one of these interfaces, something important usually breaks which can bring production to a grinding halt. The key to allaying fears is to explain the entire journey at the project kickoff. Let them know that this is only Phase I with a goal of completing before expiration of the TSA. Customizations and integrations can always be done in a subsequent phase once the primary goals have been achieved.

Common Goals

Vendor selection and management play a vital role in accelerating the schedule.?There are contracts to be signed, payable accounts to be set up, resources to onboard, scope to be determined, the list is almost endless. Also, keep in mind that your vendor’s Sales Rep is financially incentivized to increase scope. The user community will be all too happy to approve a larger, more complex solution as they think it will make their lives easier. However, this “romance” typically sours when a schedule is missed and/or a budget is exceeded, and inevitable finger-pointing begins. All of the systems must be production-ready at the same time. A complicated dance indeed. If you are planning more than one acquisition, it behooves you to establish a strategic relationship with your IT vendors. Efficiencies can be gained by developing a blueprint based on experience working with each other.?Any vendor who insists on upselling during this time is not a partner in good faith.

Team Size

While most administrative workstreams only require a single resource or two, Pharma software applications are highly specialized. Therefore, you are going to need at least 2 technical SMEs and 1 operational member from the site, per system. Multiply that by the number of systems, and you can see how quickly things can get complicated. In my experience, pairing up a project manager with a site department lead brings the best results. In many cases, a Computer Systems Validation team will be integrated with each work stream.?It is the responsibility of the Transition Program Manager, backed up by the Executive Team, to control the scope of each workstream if schedules and budgets are to be met.

Typical Pharma IT Governance

A Life Sciences project plan is multi-tiered with multiple workstreams. The exec team needs to be 100% on board with a minimalistic strategy and not cave when the torches and pitchforks inevitably come calling. The ideal situation is to design an architecture BEFORE the deal is closed. Unfortunately, this is not always possible due to confidentiality.

In summary, the following are the tenets of a successful Life Sciences Integration:

Schedule is king?– Ensure each workstream can complete on or about the same date.

Simplicity?– Scope should be kept to an absolute minimum to reduce risk. Fit-for-Purpose should be the mantra of the entire project.

Vendor Management?– The number one cause of IT project failure. Many vendors have long lead-times and proprietary implementation methodologies which may not align with your project goals. It is best to know this in advance.

Communication?– Make clear from day 1 the goals, milestones, and schedule and repeat it often. Ensure you never hear the words, “You didn’t tell us that”.?It may be worthwhile to have a dedicated resource for status reports, escalations, and announcements.

Finally, select an experienced Transition Manager who has a holistic view. Because unlike Mick Jagger, time is not on your side.

[1] ?Pharmaceutical, Biotech and Medical Device companies

[2] ?Good Manufacturing, Clinical, Laboratory, Practices

[3] ?Electronic Records, Electronic Signatures

[4] ?Eudralex Volume 4, Guidelines for Good Manufacturing Practices

[5] ?FDA Guidance to Industry for Data Integrity, April 2016