Industry-specific advisory for companies in the Life Sciences sector

published on 11 November 2020 | Reading time approx. 5 minutes

Interview with Dr. Barbara Klaus

Dr. Klaus, what is actually hidden behind the winged word “life science” and which companies are operating in this sector?

The term “Life Sciences” covers all sciences that deal with processes or structures of living organisms, i.e. not only biology but also related fields such as Medicine, Medical Technology, Biomedicine, Biochemistry, Molecu­lar Biology, Biophysics, Bioinformatics, Pharmacology, Geochemistry and Nutritional Science. Life Science Companies work in these fields and develop or market products and services that are manufactured to elu­ci­date these sciences. The Life Science industry includes, e.g., pharmaceutical and medical device companies, nanotechnol­ogy companies, food companies, chemical companies as well as companies active in biotechnol­ogy, cosmetics and agriculture. Life science products cover a wide range, starting with pharmaceuticals and medical devices, food and feed as well as food contact materials, also other consumer products such as cosmetics, textiles, toys, furniture, detergents and cleaning agents; in addition, also geochemical products such as fertilizers and pesticides, can be mentioned as examples.

How would you describe the current opportunities in the life science industry?

The life science industry is characterized by specialization and internationalisation and the development of targeted products. Not least the Covid-19 crisis clearly demonstrates the importance of this industry. The demand for products from the chemical and pharmaceutical industries as well as medical technology companies and the food industry (e.g. for “healthy” foods and dietary supplements) has risen sharply, even though there may have been a drop in sales due to the lockdown and the resulting postponement of operations as well as declines in exports. In any case, it has been shown once again that life science products are extremely important..

Just think of vaccines that are being developed and drugs that are being tested or even reinvented . In addition, there are diagnostic products such as tests for detecting an infection with SARS-CoV-2, respirators, protective masks and clothing, corona warning apps, plastics for packaging to extend the shelf life and protect food from contamination, and disinfectants, which are now increasingly being produced and marketed by companies in the cosmetics and personal care industry

Companies that were previously active in other industrial sectors have also taken the opportunity and created completely new business lines for products whose demand has increased as a result of the corona pandemic. This has also proved to be an accelerator of digitization, especially in the healthcare sector. Companies that have also invested in their digital transformation so far, including a large part of the life science and consumer goods industry, are the main beneficiaries of this.

This all goes hand in hand with a new awareness of the absolute necessity to promote environmental pro­tection and avoid or at least recycle waste. This was already recognized by the European Commission before the outbreak of the Covid pandemic in Europe. The European Green Deal presented on 11 December 2019 contains a roadmap to make the EU economy more sustainable. The intended link between climate protection and economic growth thus represents an opportunity for innovation, especially for the life science sector.

What challenges do these opportunities pose for the life science industry?

These new developments do indeed present us with major legal challenges. Companies operating in the life science sector must respond to these challenges in an equally innovative and competent manner. The con­ventional legal framework must be applied to new situations. The Covid pandemic in particular is a clear example of this. For instance, traditional competition and antitrust law continues to apply unchanged; however, the changed market conditions caused by Corona must be taken into account in its interpretation and application. The problems in the health care system caused by the exceptional situation as well as the worldwide lockdowns have made it necessary to rely on digital communication, e.g. in the communication with and towards patients. In doing so, the already existing legal framework conditions must be taken into account, in particular Data Protection, Therapeutic Advertising Law and Conventional Fair Competition Rules.

Despite the exponential increase in the demand for personal protective equipment such as protective suits and goggles as well as medical devices such as surgical masks and Covid-19 tests, these products may not simply be imported or marketed in the EU without being verified on their legal conformity. Instead, strict health and safety requirements and quality specifications apply. Only recently, the legal framework for medical devices was reformed. Companies that want to take advantage of the economic opportunities created by the increased demand for such products must adapt to the new regulations accordingly.

The complexity of Life Sciences Law results not least from the fact that it is an interdisciplinary cross-sectional matter: In addition to regulatory requirements, numerous regulations of Conventional Business Law must also be observed. For example, Trademark Law plays a major role for life science companies in the marketing of their products. Furthermore, anyone wishing to offer and advertise innovative products – such as Cannabidiol products to name just one of the many examples – on the market should first deal with possible Criminal Law risks in addition to regulatory issues. Due to the complexity of the regulatory environment in the life science sector, it is also advisable to consider the internal delegation of entrepreneurial duties to avoid liability risks. In addition, appropriate compliance management is important, in order to comply with the wealth of legal requirements.

Also worth mentioning, in the context of the business activities of life science companies, legislative projects at EU and national level must always be taken into account with foresight. E.g., it can be foreseen that in view of the targets announced in the European Green Deal, further measures for the sustainable use of resources will follow in addition to the Waste Legislation Reform currently being implemented. This will result in increased environment-related duties, especially for the life science industry. But here too, challenge and opportunities belong together like two sides of the same coin: environmentally friendly behaviour can be communicated in a targeted manner in product and company-related advertising. Green Claims are permissible as long as they do not end in Greenwashing. This demarcation of boundaries is often a tightrope walk, whereby we are back to the challenges that life science companies have to face, especially with regard to their communication for sales promotion purposes. This is especially true for the pharmaceutical and food sectors. While strict advertising rules have long been in place for medicinal products, nutrition and health-related advertising for food is also increasingly regulated. A current example is the new voluntary nutritional labelling “Nutri-Score”.

Further measures relevant to the life science sector are expected in the light of the European Green Deal for the use of chemicals in both commercial and consumer products. This is for the purpose of both environmental and health protection. Numerous mechanisms to achieve these goals are already in place. One need only think of the newly established SCIP Database for articles containing substances of very high concern to ensure appropriate waste treatment. Or the reform of the fertilizer legislation to facilitate market access for organic fertilizers produced in accordance with the circular economy.

From our consulting practice we also know the complex issues involved in internationalisation, which is an important tool for economic growth in the life science industry. After all, it is not only the sector-specific legal requirements in the respective marketing country that have to be examined. Knowledge of foreign trade law, e.g. in connection with export control, is also required. If internationalisation is concerned with the acquisition of companies based in Germany by foreign investors, in the wake of the corona pandemic, special attention must be paid to the extension of the investment review to critical areas of the healthcare sector.

Dr. Klaus, how can Rödl & Partner support companies in the life science industry in their complex work?

As you can see, hardly any other industry is as diverse as the life sciences with its wealth of products, services and sciences. Just as diverse are the legal questions that companies operating in this sector have to face in order to ensure the necessary compliance. Not only legal expertise, but also technical and scientific knowledge is required to evaluate and be able to assess complex issues. Rödl & Partner is a internationally positioned company with many years of consulting experience in all areas of Business Law. In the field of life sciences, which touches on a multitude of legal areas, we combine the know-how of our specialized lawyers and offer companies in this industry competent and interdisciplinary advice and legal representation. As global legal advisors with 109 offices in 49 countries of our own, we also ensure cross-border and comprehensive advice for internationally expanding life science companies by offering expertise in specialized areas worldwide. Practical and from one source.