Research Trends and Conclusions: Life Sciences 2011
With the benefit of over 14 years of research and thousands of votes from clients and private practitioners, Who’s Who Legal takes a closer look at developing trends in the life sciences legal marketplace worldwide.
The number of expert life sciences practitioners included in this book has remained at steady levels over the past three editions - in light of the considerable economic upheavals of the past 24 months, this is a testament to the vitality of the life sciences bar. Before drawing conclusions regarding the constitution of this edition, however, one obvious yet rather necessary point to raise is that with such a broad range of practitioners engaged in the field, peer comparisons across the sector as a whole cannot be made in a linear fashion. In the analysis of our findings we give full consideration to the varying degrees of visibility that practitioners have in the field as a result of the areas of practice in which they specialise. Our findings are divided into four areas - transactions, intellectual property, regulatory and product liability, though there is of course, much crossover between each.
Transactions
Transaction-related life sciences practitioners have experienced a consistently busy time sheet throughout 2010. With research-based pharmaceutical companies looking to acquire and develop their own generic lines, many contributors attest that the anticipated increase in pharmaceutical M&A activity has come to pass in the 12 months that have preceded the publication of this edition. In the UK, a pressure on the national budget and a squeeze on drug pricing is expected to drive further consolidation, and as the pharmaceutical giants look to fill their pipelines, lawyers internationally are set to enjoy this upward trend. According to figures reported by IBM Global Business Services, whereas financing for traditional research and development sectors has been dampened by pervasive economic uncertainty in 2010, activity in the life sciences has defied this shortfall experiencing a recovery in levels of investment. Steps are still tentative however. Lawyers describe an increase in drafting partnership and joint venture agreements as a means of sharing risk and pooling financial resources. Life sciences companies with the cash on balance to buy are also being increasingly strategic in their acquisitions. Several sources highlighted an increase in pharmaceutical companies that are looking develop lines in the generics market exploring the viability of targeted acquisitions in emerging economies. Their legal advisors highlight India as a destination of interest to originator companies looking to establish distribution lines. This trend is borne out in our research, which finds increased numbers of life sciences practitioners in the country. As demonstrated below, lawyer inclusions have doubled on last year’s results alone, reflecting elevated levels of work.
Buoyant activity in China continues to drive growth in the legal market in south-east Asia. Lawyers both in-house and private practice stressed the importance of location in this region. Singapore is a salient example. After a decade of concerted government investment into clinical research infrastructure, Hoffmann-La Roche’s US$95 million strategic alliance, the Roche-Singapore Hub for Translational Medicine, underscores Singapore’s position as a centre for research and innovation, and appeal to leading pharmaceutical and biotech companies seeking to accelerate drug discovery in Asia. Our research highlights the increased exposure, experience and international recognition that life sciences lawyers in Singapore are experiencing – partner inclusions for Singapore have quadrupled over the past three editions.
In pursuance of their strategic aims, balancing cost, risks and opportunity will continue to form weighty considerations in the business planning of companies looking to explore opportunities in the region. In Taiwan, a strong medical device culture coupled with government incentives aimed at biotech companies provides the signs for a promising future market in this developing area. Legal teams are building their expertise in preparation and two new names make the list this year. As neighbouring countries Thailand, Malaysia and Vietnam also increase in legal numbers, many contributors highlight Asia’s ascension of the pharmaceutical value chain, developing both the experience and infrastructure needed to attract and support the global biotech industry.
IP Litigation
High financial stakes, a wave of products coming off patent and a steady flow of originator and generic disputes, sees patent litigators on their feet more than ever. Sources in the EU also describe a continuing caution in the conclusion of settlement agreements between originator and generic companies with a second monitoring exercise announced on 17 January 2011, and although the first found a decrease in potentially problematic agreements, as one leading source summarises: “it indicates that companies are right to be careful”.
Indeed, lawmakers on both sides of the Atlantic have had a busy start to the year. At the time of writing, the debate surrounding the issue of damages returns to the US congress in the Patent Reform Act 2011, leaving several intellectual property officials fearing a loss in the value of their companies’ patents. If successful, lawyers are likely to find themselves engaged in bringing and defending challenges at earlier stages for an increased number of patent actions. Presenting the possibility for submissions of prior art during scrutiny by the Patent and Trademark Office and a cap on the level of damages, many sources further point to a deterioration of the “patentee friendly climate” that has been criticised in recent years. Observations to the same effect in the UK signal that the pendulum may have now swung.
As expected, firms with a strong litigation portfolio perform excellently in our findings for high-end work. With a rising workload and ever more technical challenges, several of the most highly-nominated practitioners in our research are predominantly engaged in patent litigation, and unsurprisingly, all of those for the industry’s leading companies. Whereas the higher visibility these lawyers enjoy comparative to regulatory practitioners must be given some consideration, with tough competition, highly sophisticated clients and multi-jurisdictional disputes to co-ordinate, a strong litigation practice is lifeblood for the life sciences sector, and as the pressure to handle as much legal work in-house continues, litigation is notably an area in which law firms can, and do, successfully tout their expertise.
Our research uncovers an even split between multinational firms and the highly-specialised IP boutiques. This trend is evident throughout our international findings. For EU-based practitioners, and London lawyers in particular, co-ordinating multi-jurisdictional suits has been a strong feature of their practice, with delays of up to six years in opposition proceedings before the EPO also encouraging parallel litigation in national courts. As demonstrated below, this is also a sector in which IP-only practices with an international network fare well.
The full-service IP model has yielded strong results for global firms whose “network of ability” earns favour with multinational clients. The benefits are particularly evident in the transatlantic tie-up between Hogan & Hartson LLP and Lovells LLP whose strengthened combined life sciences bench sees the pairing elevated into our top trio of firms.
Indeed, the composition of the highest-tier of life sciences firms has undergone significant change, most notably over the past 12 months, and just as firms are consolidating, they are fragmenting too. By way of example, Hoyng Monegier was formed from Howrey LLP and Powell Gilbert LLP from Bristows. As our findings demonstrate, this is an area in which firms can and do, successfully sub-specialise; where industry focus is everything. The terrific recognition that boutique firms enjoy in the uppermost tiers of our research is inescapable, signalling that less, sometimes really is more.
Product Liability
Activity in the medical device sector is also providing a steady stream of work for a range of life sciences practitioners. The worldwide licence and collaboration agreement signed between Novartis and Proteus Biomedical, in which Proteus will receive US$24 million of cash and equity investment demonstrates the expanding opportunities to be had in the area. Regulatory lawyers and litigators are also seeing the benefits of increased medical device work.
Home of the world’s most sophisticated plaintiff’s bar, product liability practitioners in US note an increasing emphasis on trying to establish a failure to test. Many sources highlight the practical difficulties that these bring, being often difficult for a jury to assess. As product liability litigation grows, our research uncovers its rising popularity with firms that have not traditionally engaged in this practice area. Much of this is attributed to life sciences work increasing in prominence generally, and the desire for traditionally corporate-heavy practices to cross-sell expertise to clients, as one leading source comments: “The stakes are so high, firms want to make a concerted effort for these companies”. Defending these cases requires a tremendous range of expertise, as another source highlights: “Product liability cases have become a multi-ring circus, calling in efforts from Congress to Wall Street”. Demonstrated below, as New York firms receive greater recognition and California-based practices return to form, we see more even levels of practitioners between these three main states than in previous years.
Competition and Compliance - The Regulatory Ruck
In the words of one leading industry practitioner “you can’t practice life sciences without a thorough understanding of the regulatory framework”. The aforementioned Hogan Lovells merger is a powerful example of the concerted efforts firms are making to increase their global regulatory bench strength. In the US, the implementation of President Obama’s 2010 health care reform is expected to keep lawyers busy through to 2014 and has further ignited debate as to how anti-trust law and increased government regulation will coexist. Leading sources engaged in advising senior government officials anticipate a greater antitrust role, owing not least in part to the need it will generate for the government to increase its share of health-care spending.
The widening ambit of antitrust regulation is generating increasing demand for competition practitioners specialising in the health care field. With different signals from competition authorities around the world to interpret and limited guidance to work from, these lawyers are in much demand. Our research uncovers a strong correlation between firms that have a sturdy stand alone competition practice and firms that fare well in this aspect of our life sciences research. Arnold & Porter LLP, Covington & Burling LLP, Hogan Lovells and Sidley Austin LLP’s regulatory know-how performs very strongly both here and in our competition edition.
Regulatory Compliance
Implementing networks of communication and creating internal avenues for whistle-blowers has now become an integral part of business for in-house lawyers and private practitioners alike. The need for companies to implement their own tailored compliance regimes is highlighted in guidelines issued by the Australian Competition and Consumer Commission, stressing the need for programmes to reflect an organisation’s circumstances, regardless of size. In an era of budget-tightening and downward pressure on fees, sources note that companies are conversely more compelled to spend on compliance training, learning lessons from fines, litigation costs and private damages actions. The sheer scope of many companies’ operations means that they must be alive to the related implications of their actions in multiple and contrasting jurisdictions. Firms with a life science cross-disciplinary practice and an international network fare well in meeting this demand.
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All in all, it continues to be an active and exciting time in the life sciences industry. Whilst the number of practitioners included in this guide have remained unchanged over the past three editions, the legal market is undergoing a terrific evolution. Battling patent expiries, regulating new industries and chartering emerging markets, life sciences lawyers will need to be as innovative as the clients that they represent.