Legal Due Diligence for Pharmaceutical and Bio Companies

Law firm Veat conducted legal due diligence for a pharmaceutical and biotech company at the request of a venture capital firm (hereinafter "client").

Legal Due Diligence (LDD) is an important procedure to thoroughly check the legal status of a company before planning an investment or concluding a major contract. Especially in the pharmaceutical and biotech industry, professional legal due diligence is necessary because legal risks exist in various areas such as research and development, manufacturing, and sales. Based on the characteristics of the pharmaceutical and biotech company, we thoroughly analyzed the current situation, identified legal risk factors, provided solutions for stable operation, supported investors to clearly recognize the company's risks, and enabled stable investments.

In particular, Law firm Veat meticulously reviewed the company’s capital raising, research and development, and legal issues related to manufacturing and sales in this legal due diligence. Also, as a company producing pharmaceuticals, we verified pharmaceutical-related licenses such as pharmaceutical manufacturing, item approval, GMP (health functional food) approval, and inclusion of state strategic technology, and reviewed numerous research and development and sales contracts.

Based on its extensive know-how in investment and legal due diligence, Law firm Veat performed the legal due diligence for this pharmaceutical and biotech company efficiently and professionally.

5 Points for Legal Due Diligence of a Pharmaceutical and Biotech Company

1. Review of Capital Raising Method
If a company relies heavily on dividends to shareholders and the issuance of general bonds for capital raising, there is an advantage of increasing the flexibility of capital raising, but there may be issues such as adjusting the interests of shareholders, legal regulations arising from the issuance of bonds, and the protection of creditors.

2. Review of Pharmaceutical Manufacturing Licenses
For pharmaceutical and biotech companies that manufacture pharmaceuticals, it is necessary to review the status of pharmaceutical manufacturing licenses, item approvals, and GMP (Good Manufacturing Practice) approvals and state strategic technology. It is necessary to review whether GMP (health functional food) approved facilities comply with safety and quality management standards.

3. Review of Research and Development and Sales Contracts
The pharmaceutical and biotech industry concludes various contracts in the process of developing new pharmaceuticals through research and development (R&D) and commercializing them. We review numerous research and development contracts and sales contracts, checking for any legal issues in the contract terms and ensuring that the company is legally protected by appropriate clauses.

4. Review of Patent and Intellectual Property Protection Status
Intellectual property is a core asset of the pharmaceutical and biotech industry, and patent and intellectual property protection are important. It is important to understand the status of protection of patents and other intellectual property held by the pharmaceutical and biotech company, and to verify any lawsuits and legal issues related to infringement. If intellectual property is not adequately protected, there is a risk that competitors may use the technology without authorization, which may reduce the company’s competitiveness.

5. Review of Safety & Health & Environment (SHE) Regulations Compliance
Safety & Health & Environment (SHE) regulations are essential conditions to prevent safety issues and environmental pollution that may occur in the pharmaceutical manufacturing process. It is necessary to review compliance with related regulations, and it is also essential to provide recommendations for solutions to reduce potential legal risks in the future.

Legal due diligence for investment is an important step to determine the success of the investment, and it is a stage to provide investors with reliable information by meticulously reviewing the company’s financial structure, operational risks, and intellectual property protection situation, and to build a trustworthy relationship between the company and investors. Law firm Veat provided legal advice to both the company and investors by thoroughly analyzing the special needs of a pharmaceutical and biotech company and the regulatory requirements related to pharmaceuticals, in addition to the basic role of legal due diligence in the advice process.

If you need legal advice regarding legal due diligence, pharmaceutical and biotech, or investment, please contact Law firm Veat.

Thank you.
Law firm Veat