This presentation describes regulatory hurdles to keep in mind when acquiring / selling medical devices companies with CE certificates to prevent them from becoming invalid.

1. Medical Devices
M&A session
Erik Vollebregt

2. Session Agenda
• What to look for in due diligence?
• Interaction with notified body
• Concept of significant change
• Most common costly misunderstandings

3. Ideal world

4. Real world

5. MDR is good
for M&A
❤️ ❤️ ❤️

6. M&A preparation for regulatory
consequences
• Define objectives of M&A transaction
– Do we only want tech and/or people? Or a
functional CE marked company?
– How will we integrate target?
– Any big innovations in the next year?
• Define and plan what is needed in
– Preparation phase
– Transaction phase
– Implementation phase

7. What to look for in DD of a company
with CE marked medical devices?
• Management review shows awareness of
MDR/IVDR
• Company has an MDR / IVDR transition plan and
is (well) underway with transition
• Company has plan B and C in case transition plan
assumptions do not pan out
• Company is engaging with notified body for
transition roll-out and has relevant audit dates
planned
• Company has informed and prepared supply
chain and suppliers for MDR/IVDR changes

8. What to look for in DD of a company
with CE marked medical devices?
• Company understands economic operator regime
and is enaging with its supply chain about the
consequences
• QMS is ISO 13485:2016 at least, and gap
assessment against MDR/IVDR has been made
• Company has a Brexit contingency plan
• Company has clinical data and CERs at at least
MEDDEV 2.7/1 Rev 4 level / has plan for
collecting IVD analytical, scientific and clinical
performance data

9. What to look for in DD of a company
with CE marked medical devices?
• If devices are dependent on equivalence,
Company has sufficient access to data going
forward in terms of MDR
• Evidence of compliance with wildly different
national HCP / HCO interaction rules
• Company has implemented General Data
Protection Regulation (GDPR) and has
integrated privacy / security by design in its
product / services development

10. When interaction with Notified Body?
Preparation Phase Transaction Phase Implementation Phase
Internal
Review
Selection
Process/
Pre
Negotiation
Due
Diligence
Purchase
Agreement
Negotiations
Closing /
Transfer of
Control
over Target
Integration /
Post-Closing
Activities
Pre-Closing
Phase /
Implementation
Conditions
Precedent
Verify status and consequences of
changes implemented!

11. Preparation phase
• NB can respond to questions and discuss
scenarios
– What if we move manufacturing?
– What if we want to change legal
manufacturer on label?
– What if we change certain suppliers?
– What if we want to bring this product
portfolio under our NB?
– Etc.

12. Transaction phase
• More specific, questions related to DD
• NDA signed
• Permission
• Confirm certification in good standing
– Audit reports
– Product reviews
– Outstanding non-conformities
– History of certification
• NB view on regulatory landscape for
specific devices

13. Implementation phase
• Present regulatory / compliance planning to NB
• NB will focus on changes:
– Labelling
– Legal manufacturer / EU authorized representative
– QMS
– Critical suppliers
– People / competence
– Organisation
– Responsibilities and authorities vigilance process
• Set expectations on interactions and time lines
• Execute

14. Typical subjects of discussion
• Labelling changes as result of M&A
• Manufacturing consolidation
• Notified body consolidation
• Changes to QMS
• Products under review at notified body

15. MDR and ‘significant change’
• Many many companies will rely on extending existing (AI)MDD certificates
part May 2020 as ‘soft transition’ strategy under article 120 (3) MDR
• Concept of ‘significant change’ still not crystalised
• Determines M&A structuring for all manufacturers that rely on soft transition
• anything other than a shares transfer without reorganization will likely
cause a significant change that will lead to instant loss of certificates
• Merger pre-closing or post-closing commitments must be carefully
drafted as not to cause a significant change
• Notified bodies have no time to anything quickly in view of MDR
deadlines

16. Significant change impacted
Significant change impacted

17. MDR and ‘significant change’
What is a significant change?
• ‘Anything that requires printing a new certificate’
• NBOG 2014-3: Changes to product, QMS and product range can be
significant (Annex II, 3.4 and 4.4 MDD; Annex IX, 2.4 MDR)

19. Most common costly
misunderstandings
• CE mark is transferable
– No, certificates are personal to manufacturer, product,
operations and QMS
• M&A lawyers / legal department know what they’re
doing
– They can do M&A deals of unregulated widget companies,
but they often do not understand regulatory implications
in sufficient detail
• We can fix things quickly with the notified body
because it’s a service provider
– Not at this point in time because they are way too busy
with other things

20. Most common costly
misunderstandings
• We can defer MDR remediation until 2024
– No you cannot, even in case of (AI)MDD recertification
large parts of MDR apply as of 26 May 2020
• We can sit out an existing certificate if the notified
body changes
– No, you have to relabel all product for the new notified
body’s number
• National law is irrelevant
– Medical devices law is still for a large part national law in
the EU
– All HCP / HCO interaction rules in the EU are national law
that varies wildly between countries

21. Most common costly
misunderstandings
• IVDR issues are years and years away
– Not if you are among the 85% of IVDs in the
market that cannot rely on soft transition and still
needs to collect (additional) performance data
• We will do General Data Protection Regulation
at some point but not now
– That means that all your data collected so far has
been obtained illegally, and is therefore useless

22. Resources
• https://medicaldeviceslegal.com/2011/01/09/
regulatory-considerations-typically-
overlooked-in-medical-devices-ma-
transactions/
• https://www.bain.com/insights/global-
healthcare-private-equity-and-corporate-ma-
report-2019-medtech/
• https://easymedicaldevice.com/medical-
device-compliance-merger-acquisition/