The role of virtual data rooms (VDR) in helping to facilitate pharmaceutical sector mergers and acquisitions (M&A) deals was already well established prior to the Covid-19 pandemic.
However, the pandemic reinforced the value of VDRs in enabling efficient and effective deal processes as face-to-face due diligence was rendered near impossible.
For AstraZeneca, choosing the right VDR was essential – in 2016 the company had initiated a sustained divestment and partnering program and needed an improved VDR technology that would match the pace and purpose with which it intended to execute transactions. As it turned out, its decision also allowed it to maintain continuity in deal flow throughout the pandemic.
The global pharmaceutical giant researches, develops and commercialises prescription medicines across more than 100 countries and its products are used by hundreds of millions of people every year.
Medicines require extensive and complex investigation before getting to the stage of approval for use. In addition, drug development must be carried out within a rigid compliance framework of regulations from major regulators, such as the Food and Drug Administration in the USA or the European Medicines Agency in the EU.
Similarly, when the company’s business development (BD) team went to market for a virtual data room solution to carry out a host of M&A deals, compliance was an important consideration. Irrespective of transaction type, be it out-licensing, collaboration, externalisation or divestment, the platform they selected to communicate and transact deals had to be fit for purpose within this strictly regulated sector.
There are a number of critical considerations regarding the structuring and operations of a VDR which should drive the selection process for any company seeking to engage a VDR provider. Some of these are discussed in the following sections.
Most sell-side deals face challenges of territory separation, with potential acquirers or partners in multiple countries. VDR providers and their technologies need to accommodate client and acquirer operations across multiple time zones, speaking many languages and must be able to provide technical support at all times, while maintaining the highest security, performance and ease of use.
The AstraZeneca BD team was seeking a supplier that was able to provide a flexible solution; one that could handle one-to-one and one-to-many deals. The VDR needed to expand and contract as the deal required, and functionalities added or taken away.
In 2016, AstraZeneca launched a tender process based on the above criteria and, after a series of product demonstrations, compliance sign-offs and presentations in-person from prospective suppliers, they selected Sterling Technology’s VDR and formed an ongoing annual partnership.
Here is a list of the functionalities Sterling offered as a standard package, together with a flexibility that other bidders could not match as to custom-engineering the solution to multiple formats.
Security, usability and support
All parts of the platform where highly sensitive deal documents are stored, shared, uploaded/downloaded, queried by buyers and responded to by sellers, redacted, etc, are fully compliant with Europe’s General Data Protection Regulations (GDPR), so clients can be certain that all their information is strongly protected.
Information can be uploaded to the platform via simple “drag ‘n’ drop” functionality. Whole folder structures can be placed within the VDR quickly and easily, helping avoid delays in getting the deal going.
The question and answer (Q&A) process is very important in any type of M&A deal, and the Sterling platform has a fully transparent Q&A function that allows virtual conversations to be handled easily by the VDR manager. Questions from individual buyers or partners can be answered and shared exclusively with the party that asked the question, or with a wider audience in an anonymised way.
These virtual Q&A processes can then be augmented with conversations between potential partners, their lawyers and investors, and counterparts at the seller in order to complete their due diligence. A full audit trail and record of the Q&A are kept for compliance purposes and in case of post-transaction disputes.
The same VDR manager can control user access permissions across folders and documents allowing upload/download, edits or other markups, sharing, etc, from the VDR’s global software control interface. The VDR manager is able to grant differentiated levels of access to each user in the data room, based on their user role within the process.
Training and development
Comprehensive and ongoing training in the use of the VDR ensures the project hits the ground running and continues to speed ahead with the assurance of Sterling’s technical and customer support, which is available 24/7/365 in multiple languages to cover off any and all issues as quickly as possible to avoid costly delays.
Sterling’s VDR platform has provided AstraZeneca with more than 30 data rooms in the last year, as well as storing 120 terabytes of sensitive corporate information securely. Its exclusive annual contract allows Sterling to stand up a new M&A deal structure within a VDR very quickly, as the framework of a suitable VDR is always available, and ready almost immediately on demand.
This is also far more cost-effective than opening a new data room from scratch with every new deal, with its associated costs in time and user training. AstraZeneca is now an important development partner, helping Sterling with extensive R&D and testing of its new VDR solutions for the M&A market.