Magazine Article | January 9, 2018

In M&A, The Devil's In The Details ... Of Your Insurance Policy

Source: Life Science Leader

By Dan Brettler

In today’s competitive marketplace, many pharma companies are diversifying their offerings and investing in early-stage technologies. Diving into a new business segment, line of product, or service can be risky. While the financial investment may be considerably less than targeting a later-stage firm with proven products, prioritizing R&D potential means seeing products through development, clinical trials, and approvals. Many companies overlook crucial details in their insurance policies — a potentially expensive mistake.

Companies that don’t emphasize risk management and insurance due diligence while adding exposures from new products or services to their policies will see the far-reaching impacts on their budgets. They may be surprised when year-over-year financials come due for review, and the acquisition budget has been reconciled. The suppositions factored for adjusted insurance costs may be way off base. This can be costly in terms of premium overruns and also direct cost of claims. Not to mention, it could be embarrassing.