The regulatory glance has never been stricter for Pharmaceutical and Life Sciences sector. Recent years saw compliance failures bringing draconian fines, reputational crises, and overwhelming media attention. OFAC BIS, DOJ and the FCPA consolidated rigorous measures on various levels, and even after the pandemic, the sector is likely to face challenges. Pharmaceutical and Life Sciences companies face multiple risk factors that interact with and aggregate each other. From manufacturing to distribution and marketing, from pitfalls in export / import operations to license violations, risk categories vary widely.
The energy industry has never been far from risks stemming from corruption, terrorism financing, sanctioned jurisdictions, and designated entities.
Law and accounting professionals are required by law to screen clients before providing services.
Negligence, lax reporting habits, opaque practices, understaffing and underestimation of the potential of criminal abuse have so far kept the High Value Goods and the Arts Market a side note for regulation.
The regulated industry is all about adequate, knowledgeable management of a variety of risks.
Insurance is an industry where awareness or the lack of it establishes the criterion for success in compliance.
Innovation and mobility are at the heart of disruptive online banks, alternative payment systems, and FinTechs who transform the face of banking and finance.
The infrastructure & construction industries are at the very centre of the intersection of political interest, strategic moves, trends, and economic growth.
The regulatory glance has never been stricter for Pharmaceutical and Life Sciences sector.
The increase in value; low barriers of entry, the prestige and the sense of security that comes with property ownership have so far rendered real estate an irresistibly attractive investing option.
It is a given that an industry with sizeable budgets, in close contact with decision makers overseeing entire healthcare systems in countries must remain airtight in the face of corruption and bribery.
However, the risks that threaten pharmaceutical operations are manifold, not limited to corruption. Pharmaceutical companies operate sophisticated supply chains. Thorough due diligence of each unit, in means of scope of services offered, functions and transactional history, is vital.
Mergers and Acquisitions constitute yet another risk category for pharmaceutical and medical companies. Pharma companies who acquire companies with alarming records, or with previous violations end up integrating risk into their operations.
Exemptions and Licenses, moreover, are not easy to manage. Sanction regimes accommodate several carve-outs, licenses, and exceptions for the export of pharmaceutical products most of which are regarded no to be risky. But even ‘exempted’ supplies are dangerous when routed to certain sectors or entities such as military hospitals. Unforeseen limitations, decisions that exceed authorisations, and misinterpretation of licenses result in cases of unintended violation.
Indirect exports and rerouting of products constitute another category of risk – unscrupulous Third parties can divert products destined for “clear” countries and forward them to designated destinations. International operations need to remain vigilant in identifying any flagged third parties. Furthermore, certain pharma supplies and medical devices happen to be “dual goods” forbidden for export, as they are used for the proliferation of WMDs or military end use. Companies need to go through periodic revisions and updates of dual goods regimes published by several countries. A nuanced, extensive, and well-grounded risk profiling should inform all decisions.
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