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Partnerships in the healthcare and life science market in times of a pandemic - dos and don'ts

By Christoph von Burgsdorff - Partner at Luther Luther Rechtsanwaltsgesellschaft, Hamburg and Robert Burkert - Associate Luther Rechtsanwaltsgesellschaft, Hamburg
10 June 2021

The globalisation of the market, the grow ing number of players and high innovation pressure have signific antly increased what is demanded of companies in the healthcare and life science market. To cope with these demands, numerous companies are turning to partnerships, especially during the current pandemic, in order to combine their strengths, know-how and resources with a partner.

Roche and Regeneron, BioNTech and Pfizer, and CureVac and Bayer are prominent examples of partnerships that were engaged during the pandemic. A partnership is an ideal way for small, as well as large, companies to pursue their interests and create synergies. Companies that aspire to enter the healthcare and life science market can benefit from the reputation and know-how of established companies. Established companies, in turn, use the innovative power of smaller and younger companies to stay competitive or extend their market share.


The choice of the appropriate legal structure is crucial for the success of the partnership. Two forms frequently used in practice are the partnership agreement and equity joint venture ('joint venture'). Depending on the partners' interests, either kind of partnership can be better suited to their needs. Hence, it is mandatory to know the advantages and disadvantages, as well as the prerequisites, of the alternatives in order to make the right choice.

By concluding a partnership agreement, the participating companies form the contractual grounds on which they commit themselves to cooperate; however, what each partner brings to the table must be precisely defined, which means each partner's contribution to the partnership. The partners remain independent of each other in their legal capacity and decision-making, and remain separate legal entities. This has the advantage that the establishment of the partnership is less costly and time-consuming. Aside from the formation of the contract, no further steps are needed; in particular, the incorporation of a new company is not necessary. Additionally, because the partners are not intertwined by a joint corporation, the partnership agreement can, in general, be terminated at relatively short notice. For the same reasons, there is usually no joint market presence.

However, partnership agreements may contain substantial liability risks, which must be taken into account when drawing up the contractual agreement. For example, in the worst case, the partners may be held jointly liable on a personal level because, under certain circumstances, their partnership may be considered a non-limited commercial company under German law. In this case, the liability of the respective partners would not be limited, and they would be jointly liable, even though it was their intention to avoid joint responsibility. The reason behind this liability risk is the fact that, under German law, to establish a cooperation, only a common purpose is needed (eg, a joint market Legal Intellectual Property & Production presence, joint research and development or joint distribution efforts). If such a joint purpose is established, the partners are associated as corporations under German statutory law; especially since written articles of association are not required. If the partners then enter or act in the market, joint liability will be established.

DOSSIER Read the rest of the dossier on PHARMAnetwork magazine

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