Onboarding Research and Development Partners—Inventory Counts

For companies in highly regulated industries (HRI), acquiring the research firms that develop technologies, solutions or products that they use or sell can be complicated. The process ties up lawyers, accountants and human resource personnel for months, if not years.

In our experience, one area that is often not given sufficient attention is the merger of physical elements, such as parts and finished inventory. Unless the research is intellectual property alone, there will likely be raw materials, components, prototypes and products over which the parent company is taking control. In HRIs  whose primary deliverable is a product— pharmaceutical, tobacco, aviation and motor vehicle industries, for example—merging physical inventories presents an array of challenges not unlike maintaining the chain of custody over evidence.

Did the research firm adhere to the same high standards of traceability and storage used by the parent company? If not, what methodology will be used to evaluate the inventory and determine if it can safely and compliantly be merged into the parent firm’s storage facilities?

The best way to ensure compliant merger of the parent and research firms is for both entities to be using best practices for their entire production ecosystem, from materials handling and storage to maintenance, repair and operations (MRO) inventory, before the merger takes place. All traceability protocols should be up to date, and all processes well documented and aligned between the parent company and the research firm.

Despite the amount of work involved, this advance preparation is well worth the effort. As many companies in highly regulated industries can attest, a single misstep regarding proper materials and product storage can open the firm to massive fines, monetary damages and sanctions.