Achieving Stability Through Innovation and Compliance

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• How can I manage complex labor and employment shifts?
• What are the key considerations for protecting IP through supply chain changes?
• How can I navigate dynamic compliance requirements around data and AI?
• How can I protect transactions through supply chain shifts?

As supply chains shift and vendor arrangements evolve in response to tariffs, life sciences companies must adapt to increasingly intricate and intertwined challenges across operational and commercial needs.

Manufacturing relocation, technology adoption, and new vendor partnerships require careful oversight of labor, compliance, human rights, and union matters. Protecting IP and data is vital against brand, legal, and cyber risks. Early IP registration, strong contracts, audits, and compliance help manage regulations and reduce Anti-Money Laundering (AML) and anti-bribery risks, keeping supply chains resilient and promoting innovation.

How can I manage complex labor and employment shifts?

Shifting manufacturing sites or integrating advanced manufacturing technologies — such as automation or AI-enabled equipment — demands careful management of workforce transitions, upskilling, and compliance with a broad spectrum of labor regulations across multiple jurisdictions.

Melissa Allchin, Partner, Chicago, notes that “Organizations should prioritize workforce mobility, talent acquisition, and retention of employees with specialized technical and regulatory expertise to ensure operational continuity and supply chain efficiency.” Issues such as cross-border employee transfers, evolving skills requirements, and adherence to domestic and international labor standards are central concerns.

Where organized labor is present, supply chain changes — such as outsourcing or shifting production—can trigger union negotiations or industrial action. Companies must also remain vigilant about human rights compliance within their own operations and among suppliers, especially when working with contract manufacturers or third-party vendors.

Disputes arising from workforce reductions, compensation adjustments, or shifting employment terms can disrupt manufacturing timelines and increase operational costs, directly impacting supply chain reliability. 

Companies that embed labor strategy within broader supply chain management frameworks view labor transformation as an opportunity for innovation — ensuring the workforce remains not just a line item, but a driver of sustained success in a changing global market.

Melissa Allchin, Partner, Chicago

 

What are the key considerations for protecting IP through supply chain changes?

Protecting innovation, IP and data through supply chain shifts is key. IP protection can reduce or eradicate the risks of conflicts that arise over patent rights or compliance disputes, especially when multiple entities collaborate or multiple jurisdictions are involved.

From copyright, trademarks and market licensing to trade secrets, IP protection is crucial at every stage of the product’s life cycle. This includes safeguarding proprietary information during regulatory submissions, manufacturing, and marketing. Ultimately, guarding IP is vital to unlock revenue through licensing, driving business growth, and attracting investors while protecting against unauthorized use, even for small components, ultimately securing long-term ROI on R&D.

When it comes to enforcing IP rights across multiple jurisdictions Indradeep Bhattacharya, Partner, London, notes that “variances in legal standards and differing enforcement mechanisms can be further complicated by slow judicial/administrative processes and conflicting decisions. We are seeing this currently play out across Europe where the patent and trade secret landscape has changed significantly over the past five to six years. It is therefore important for companies to stay abreast of the evolving legal landscape. Those who are strategic, have folded additional considerations into their decision-making processes in their innovation pipeline and go-to-market considerations in their key markets”.

Given potential shifts in manufacturing and testing locations in response to new tariffs, a strong IP protection strategy can help to secure future profitability and growth. Key steps include:

• Registering IP early, especially for new products and markets.
• Having clear contractual provisions to curb adverse impacts to changes in supplier, manufacturing and commercial or third-party activity.
• Building relationships with authorities to improve enforcement readiness and response.
• Coordinate IP enforcement or defensive strategies across all key markets.
• Having regular audits, clear internal policies, and robust agreements with vendors and contractors.

How can I navigate dynamic compliance requirements around data and AI?

On the data privacy and cybersecurity front, ensure compliance with data privacy laws such as General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA) throughout changes to supply chain locations and vendors. When it comes to clinical trials – specifically the acquisition, use, transfer and storage of patient data, these regulations impose strict requirements on how personal data is collected, stored, and shared. Specific attention is also needed when trials, testing and transfer of data is required across multiple jurisdictions, each with specific regulatory requirements.

The digitalization of supply chains increases the risk of data breaches, incidents and cyberattacks. Companies must implement robust cybersecurity measures to protect sensitive data and maintain regulatory compliance. Such measures should include adequate safeguards to ensure that third party processors meet the security requirements and protocols.

Carolina Pardo, Partner, Bogota

 

The exposure to loss and/or misuse of confidential information, trade secrets and more can be mitigated with frequent review of protocols and measures.

Legislation such as the EU AI Act further compounds compliance requirements for medical devices intended for the EU market. The act introduces a risk-based framework for AI systems, with high-risk AI subject to stringent requirements around the protection of fundamental rights as well as AI-specific risks like algorithmic bias and model drift.

“Where an AI system is a medical device (or a safety component of a medical device), third-party conformity assessment is required under EU Medical Device Regulations (MDR/IVDR) and the EU AI Act,” says Jaspreet Takhar, Counsel, London. Overlapping requirements regarding technical documentation, risk and quality management will result in more cost, time and effort for device companies bringing innovative products to the EU market.”

Quick actions for risk mitigation include:

• Conducting a gap analysis between MDR/IVDR and AI Act requirements.
• Engaging early with Notified Bodies to confirm AI Act designation plans.
• Preparing for AI-specific risk mitigation and human oversight protocols.

How can I protect transactions through supply chain shifts?

As organizations adjust to new regulatory landscapes or respond to supply chain transformation prompted by shifting tariffs, they often must diversify manufacturing and distribution networks — frequently working with unfamiliar third-party vendors across multiple jurisdictions. This amplifies anti-money laundering (AML) and anti-bribery risks as rapid transitions can create significant compliance blind spots if due diligence is not sufficiently thorough.

Merging supply chains and compliance standards can expose organizations to hidden legal and ethical risks if thorough due diligence is not conducted, resulting in the unintended absorption of hidden compliance failures, legal liabilities, or entrenched corrupt practices from acquired entities.

“Without robust compliance strategies, companies may be exposed to considerable regulatory, reputational and business risk,” notes Lip Kian Ang, Principal, Singapore. “The challenge is compounded in regions where regulatory enforcement varies or where business practices may not align with international compliance requirements and expectations, increasing the vulnerability to compliance lapses.”

Tariffs and trade barriers may force healthcare and life sciences companies to pivot quickly in their sourcing or distribution strategies, which can result in reduced oversight and increased susceptibility to illicit financial activities or unethical practices such as bribery, kickbacks, or facilitation payments.

Without robust AML controls and anti-bribery programs integrated end-to-end, organizations may face severe regulatory penalties, loss of market access, and lasting damage to their credibility.

Lip Kian Ang, Principal, Singapore