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Thought leadership: Benefits of the Austrian Private Foundation

The Austrian Private Foundation (PF) is a viable option to protect and preserve assets over generations, as well as to prevent the distribution of assets in the event of succession.

Establishing an Austrian PF enables the founder to align his/her assets with the founder’s wishes but separating the assets from the founder’s future fate. Due to the relative freedom of organisation under the Austrian Private Foundation Act (APFA), the Austrian PF and its structure can be adapted to the individual needs of the founder.

The main objective of an Austrian PF is to maintain the founder’s assets in the long-term (even after his/her death) in a professional way, to benefit certain persons or organisations in accordance with the founder’s wishes and to protect the assets (which may also include shareholdings and other interests in companies) from being divided up.

As a place to invest, Austria stands out due to its high level of economic, political, and social stability. Situated in the heart of Europe, Austria is a highly functioning and stable EU-state with a strong rule of law, quick court decisions and a business-friendly tax system, making it a favourable and secure location for wealth and inheritance management.

Wealth management

An Austrian PF may be established for both charitable and non-charitable purposes (eg the support of family members of the founder), and even self-serving purposes vis-a-vis the founder are possible.

Endowment of assets

Minimum cash in the amount of €70,000 must be endowed to the PF upon its establishment, while further assets can be transferred to the PF by way of additional or subsequent endowments. This method prevents the deed of foundation from publicly stating which assets are endowed to the PF.

Influence of the founder over the Foundation

An Austrian PF is represented by at least three directors, two of whom must be resident in the EU or EEA. The citizenship of the directors is not relevant.

Generally, beneficiaries and their close relatives must not be appointed as board members. Therefore, if close relatives of the founder are beneficiaries of the PF, the founder him/herself cannot be a board member either.

However, there are some other options for the founder to exert an influence over the board of directors, eg by an advisory board or similar structures.

If the founder’s right to amend and/or revoke the PF was reserved in the declaration of establishment, the founder may amend or revoke the private foundation at any time.

Inheritance management

Duration of the Foundation

Generally, the existence of the PF is independent from the founder and is not dissolved upon the founder’s death. The Austrian PF survives the founder and the endowed assets do not follow inheritance rules, but the structure established by the founder through the PF.

The establishment of an Austrian PF can prevent the fragmentation and division of a family business, family shareholdings or other family assets caused by succession. It can ensure that the founder’s lifetime work is preserved and managed in the desired manner after his/her death.

Beneficiaries and distributions

The founder is free in appointing beneficiaries of an Austrian PF, ie the recipients of distributions from the PF, irrespective of their family-relationship with the founder, their citizenship or their (current or future) place of residence. Furthermore, the beneficiaries may be natural or legal persons or both, whatever fits the founder’s wishes best.

Due to the fact that the APFA provides for the possibility of tying the beginning of the beneficiary status to certain conditions specified in the declaration of establishment (eg reaching a minimum age), the founder may influence the beneficiaries future sake by providing a respective ruleset.

An Austrian PF not only allows the founder to determine the beneficiaries, but also ensures that they are cared for in accordance with the founder’s wishes. Detailed provisions on the type, amount and frequency of the distributions to beneficiaries can be included in the declaration of establishment.

Tax aspects

The contribution of financial assets, shareholdings and other assets (eg artwork) to an Austrian PF is subject to a 2.5% transfer tax. As a general rule, the tax base is the fair market value of the assets contributed. Depending on the legal form, shareholdings can lead to a significantly lower taxation. The contribution of real estate, however, is subject to a real estate transfer tax of 6% based on a special value of the real estate.

The income of the PF is subject to corporate income tax (23% as of 2024). Similar to corporations, domestic and foreign dividends are generally exempt from corporate income tax. Income from financial assets (eg realised capital gains, interest received from bank accounts, from publicly offered bonds and from mutual funds) or income from the sale of private real estate are subject to an interim corporate tax. The interim tax will be credited when income is distributed to beneficiaries.

Distributions made by the PF to beneficiaries are basically subject to 27.5% withholding tax. Payments from the originally contributed assets, though, are tax neutral as soon as all retained earnings to date have been distributed. Similar applies if the Austrian PF is revoked or a Sub-Foundation is established. In an international context, tax consequences of distributions depend on the tax residency of the recipient. Irrespective of the taxation in the recipient’s residency state, Austrian withholding tax is in many cases reduced or eliminated.

Deloitte Austria as a one-stop-shop for Austrian Private Foundations

As tax and legal aspects drive all issues relating to PFs, Deloitte’s Tax and Legal practitioners in Austria offer clients a seamless one-stop-shop. Since the introduction of the Austrian Private Foundation Act, we have given advice and support to countless founders of PFs in Austria and assisted with all tax and legal aspects for structuring of assets. As part of the global Deloitte network, we understand global needs and demands, and are used to provide cross-functional advisory services for the benefit of our clients.

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Q&A: Cyril Amarchand Mangaldas

1. How does estate planning differ in India compared to other countries, especially in light of unique family structures and property laws?

Indian inheritance related laws are diverse and vary on a number of factors, such as the nature of the assets (movable or immovable), their location, and the personal law of an individual, which in turn is largely based on their religion. For instance, probate of a will is required only for individuals following a particular religion and if the immovable property is situated in a presidency town in India. Hindu succession law is also vastly different from Muslim or Christian succession law.

Therefore, succession planning depends on considerations of each family and individual. Some common considerations while succession planning include:

    1. family governance issues like passing on the corporate control and ownership,
    2. manner and modality of transmission of estate by the next generation family members, including those who are residing overseas in the context of the Indian foreign exchange control regime etc.

2. What are the key tax considerations for high-net-worth individuals in India, particularly in terms of wealth tax, income tax, and inheritance tax?

India does not levy any inheritance tax, wealth tax, or estate duties. Gifts received from specified relatives are also exempt from tax.

Capital gains tax is leviable on profits made from the sale of assets held as investments. The rate of capital gains tax, inter alia, depends on the nature of capital asset, its period of holding, residential status of the taxpayer, etc.

Regarding personal taxation, with progressive tax slabs and additional surcharges applicable to higher incomes, the highest effective tax rate is about 39%, or 42.74%, depending on the tax regime opted for by the taxpayer.

3. How have recent regulatory changes in India, like amendments to the Income Tax Act or the introduction of new financial regulations, affected private clients?

Individual taxpayers have the option to pay tax under two tax regimes. The new regime provides lower tax rates if taxpayers forego certain specified deductions/exemptions. Recently, the government simplified the new regime by reducing the number of tax slabs and also increased the tax exemption limit from INR250,000 to INR300,000. The highest surcharge rate was also reduced from 37% to 25% under the new regime. The new regime was further made the default regime.

The introduction of the new overseas direct investment regime has drawn a clear demarcation between overseas direct investment (ODI) and overseas portfolio investment (OPI). ODI is a strategic investment into unlisted or listed foreign entities, while OPI refers to portfolio investments into listed foreign companies. However, the very low limit of remittances by resident individuals remains unchanged at $250,000 per financial year. These routes are important, as they allow private clients to transfer and hold wealth overseas.

4. What specific challenges and opportunities do you encounter when managing legal affairs for NRI clients, especially in terms of cross-border wealth management and tax compliance?

NRIs are typically only taxed on their India-sourced income in India. NRIs are allowed to remit an amount up to only $1m, which is a major limitation.

Residential status in India is a key driver of estate planning. This depends on the physical stay of an individual taxpayer in India. For instance, any individual who spends more than 182 days or more in India in a financial year may be considered as a resident of India for taxation purposes, allowing for their entire global income to be taxed in India. Other considerations vis-à-vis residency apply under exchange control laws. Putting these together, NRIs can partake in sophisticated estate planning for their worldwide and onshore assets with careful management of their tax and foreign exchange residency.

5. With the increasing relevance of digital assets and technology in personal wealth, how is your firm adapting its practices to cater to these modern aspects of estate planning for your clients in India?

There is a lack of clarity regarding the classification of digital assets, and regulations regarding the same. The Indian government has generally been hostile to assets such as NFTs and cryptocurrencies.

From a tax perspective, taxation at 30% (plus applicable surcharge and cess) was introduced on income arising from transfer of virtual digital assets (which includes cryptocurrencies, and non-fungible tokens), from 1 July 2022.

6. In your experience, what are the most significant legal challenges faced by private clients in India regarding real estate and property transactions, considering the regional diversity in property laws?

In India, revenue records are found in a multiplicity of languages, depending on where the property is located. The process of dealing with local authorities can be a very strenuous and tedious experience. Even the rate of stamp duty leviable on an instrument differs in every state. The succession of real estate is often a complicated and time-consuming process in India, with local authorities having their own procedures (such as requirement of probate, legal heirship certificate, etc) for effecting transfer of assets and interests.

As a result, private clients need to rely on local on-ground consultants practising in the relevant jurisdiction to facilitate the process and last-mile completion.

7. How do you approach succession planning for family businesses in India, particularly in the context of traditional family structures and business dynamics?

In India, most family business (or indeed, most businesses generally) are still run by the patriarch – and succession typically follows to the eldest male child. Most shareholding is still individually held by the patriarch, who prefer to pass on the same under their will. Hence, family dynamics and the wishes of the patriarch are a key factor driving estate planning. Generally, male heirs have been preferred, but with changing times, female heirs and successors are becoming more common.

Private trust structures are getting more common, where the patriarch prefers to remain in charge of the trust set up for the benefit of the next generation.

8. What advice do you offer to high-net-worth individuals in India on compliance with foreign asset reporting and management, especially in the light of stringent regulations like the Black Money Act?

The Black Money Act was introduced with the intention of curbing undisclosed foreign assets and income. It imposes a 30% rate of taxation on the taxable value of the income or the asset undisclosed, and the penalties for non-disclosure could be up to three times of the tax computed. Apart from civil liabilities, the Act also allows for imprisonment for a period between three months to ten years.
In practice, the tax authorities typically conduct search and seizure operations when credible information of direct-tax evasion is brought to notice while the Enforcement Directorate is typically involved in identification of proceeds of crime generated, provisional attachment of assets, and filing prosecution complaints.

As a general approach, we strongly recommend all clients to disclose all their assets and incomes following the due process and requirements, rather than find themselves in a very one-sided defensive situation with the authorities.

9. Can you elaborate on the legal intricacies and advantages of setting up charitable trusts and foundations in India for philanthropic activities by private clients?

Public trusts in India can either be religious trusts or charitable trusts. Not all states in India have specific legislations for regulating such public trusts. Public charitable trusts are exempted from income tax (subject to satisfaction of prescribed conditions), but the preservation of this status, inter alia, requires for onerous disclosures and meticulous book-keeping
of accounts.

Depending on the state in which a public trust is established, there may be a high level of regulatory interference in the operations of such public trust. For instance, in Maharashtra, any disposal of an immovable property by a charitable trust is prohibited without the consent of the charity commissioner.

10. With the rapid technological advancements in India, how is your firm incorporating technology in providing legal services to private clients, particularly in areas like estate management and legal documentation?

True to our motto – ‘ahead of the curve’, we have a dedicated innovation team which continuously explores new tools which aid in enhancing the productivity in work. In the context of legal documentation, we use software named Ment, through which we have transformed high-value, business-critical, sophisticated documents into intelligent templates, allowing for a first draft to be produced rapidly and accurately by simply answering a questionnaire.

Kira, is another widely used software that identifies, extracts, and analyses text in contracts and other documents. We also use other AI oriented tools to extract relevant data, supporting caselaw, and helpful legal constructs to make the process of providing legal advice more productive.

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Foreword: Herbert Smith Freehills

‘Economic and geopolitical pressures continued throughout 2023, making the global business landscape a volatile one. It might even be asked whether disruption is simply the new business norm.’

Global themes in 2023 and outlook

The disruption felt globally at the end of 2022 continued to impact life sciences companies and investors in 2023.

On M&A and investment activity, deal volumes and values remained relatively flat at the start of the year, but there were signs of a recovery from the third quarter and a flourish of significant transactions announced at the end of the year, including AbbVie’s acquisitions of Cerevel and ImmunoGen, Bristol Myers Squibb’s acquisitions of Karuna and RayzeBio and Roche’s acquisition of Carmot.

Whilst there continues to be some uncertainty in the geo-political and macro-economic landscape going into 2024, big pharma and biotech companies are sitting on large amounts of dry powder and so long as looming patent cliffs and pipeline diversification remain strategic priorities, it seems likely that M&A and investment activity will bounce back during 2024, with particular focus on later stage assets and ‘hot’ areas and modalities such as obesity and cell and gene therapies. There is also considerable pent-up demand amongst financial sponsors which will support this trend, particularly if there is an easing of interest rates and credit markets during the course of the year.

IPO markets remained stagnant throughout the year and look to remain this way until Q3 2024 at the earliest.

Tech and AI remain hot topics for the industry, particularly in terms of AI’s potential impact on drug discovery and development and also the convergence of tech with healthcare across the life sciences value chain more generally. We expect investment in technology, pharma/tech collaborations and the evolution of regulation around AI to continue to be big themes in 2024. As innovation in this space accelerates, global regulators are faced with the challenge of balancing the facilitation of progress on the one hand and the protection of the public on the other. Different approaches are already emerging, ranging from the pro-innovation, sectoral stance being taken in the UK to the more consumer protection-focussed, horizontal risk-based approach of the EU.

Following on from the Inflation Reduction Act, 2023 also saw a number of important regulatory reforms that companies will be bracing themselves for in 2024, including the proposed overhaul of the EU pharmaceutical regulatory regime. Innovators in particular are concerned about the impact these reforms will have on R&D in the sector and they are further examples of the increasingly complex regulatory environment companies are having to navigate, and the pricing pressures that they continue to face, across the globe.

ESG and sustainability will continue to be major board room themes, as the volume and pace of ESG regulation intensifies all over the world. As well as continuing efforts to reduce the sector’s environmental impact, attention on other issues are coming into focus, such as the need to improve the affordability of, and access to, healthcare and the sustainability of supply chains.

As a closing reflection, 2024 looks set to be another pivotal one for the industry, with significant transformation and more disruption expected to come – including further potential policy changes following the elections that are due to take place in the US, the UK and numerous other countries during the course of this year. That said, the pandemic demonstrated the ingenuity and resilience of the life sciences industry with its ability to rapidly react, evolve and collaborate with great success. As these turbulent times remain, we are positive that the sector will utilise those strengths to embrace the challenge and are excited to see what 2024 will bring.

Herbert Smith Freehills
Exchange House
Primrose Street
London EC2A 2EG

T: +44 (0)20 7374 8000

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Lead partner: The year the United Kingdom becomes a globally leading life sciences hub?

Introduction

As part of its ambition for the United Kingdom to become a tech and science superpower by 2030, in 2023, the government announced a range of initiatives aimed at boosting investment and innovation in the life sciences sector. Innovators will have welcomed the R&D tax relief reforms whilst the Mansion House Compact (the largest UK pension providers committing 5% of their assets to unlisted equities by 2030) announced in July has provided some hope of alternative pools of capital to unlisted UK life sciences companies. Continue reading “Lead partner: The year the United Kingdom becomes a globally leading life sciences hub?”

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Interview with: David Gibson

Why did you decide to specialise in life sciences law, and what’s the best thing about being a life sciences lawyer?

I find the subject matter fascinating, and I am genuinely curious about new technologies and medicines and how they can be used, shared and applied to improve healthcare for patients across the world. We are often involved in helping our clients with strategic projects and transactions, partnering with other organisations and bringing products to market and to scale – often across different jurisdictions. As a transactional and projects lawyer, I enjoy working with clients to bring the commercial, financing, regulatory and other legal elements together: it is an area of law that has a bit of everything!

What do you see as the key challenges facing the life sciences sector?

There are so many great new technologies and medicines with potential to make a difference to populations and treatment pathways but key challenges remain in regulating them in a timely, effective, and uniform way across jurisdictions and in getting them adopted quickly by healthcare providers and systems with appropriate levels of reimbursement.

These are not new issues, but industry stakeholders need strong, consistent and clear regulatory and procurement guidance at national and international level – with well-resourced regulators that are agile and engage regularly – so that they can devote and allocate resources with as much confidence and conviction as possible.

What impact do you think AI is going to have on the industry, and the role of lawyers?

In life sciences, AI is already drawing faster insights from data sets – notably in diagnostics. We are also seeing it help to streamline manufacturing processes, to process information more quickly, to improve research and clinical trial data flows and to enhance product intelligence. As a tool, it is already having a significant impact, and has enormous and exciting potential to further transform, accelerate and enhance the work of the life sciences industry.

In law, on a similar note, AI is being used to streamline due diligence and contract drafting processes, and over time, it will no doubt influence and streamline other legal processes and aspects of the roles of lawyers, including, hopefully, reducing administration!

As lawyers, we will need to adapt our practices to work with it, and AI will prove an extremely useful and time-saving tool for many legal tasks. At the same time, we need confidence in its application. Most law firms are not there yet. As our understanding of AI evolves and as its regulation/testing moves forward, we will get more comfortable. My view is that lawyers should see AI as an opportunity to improve their practices and as a useful companion, rather than as an existential threat to the profession.

What do you think are the key skills you need to succeed as a lawyer in life sciences?

A combination of up-to-date regulatory knowledge and commercial and transactional drafting skills are key elements to succeeding in this area of law, but there is plenty of room to specialise across a raft of legal areas: eg IP, data protection and industry sub-specialties such as pharma and digital health.

My work is often international in nature, and it is important to develop cross-border knowledge and to work with colleagues and counsel in other jurisdictions to get precise local input. A healthy curiosity about the life sciences industry is always important but the key ingredients are making sure that you understand your client’s business, its strategy, and its preferences and needs for the work and advice that you are providing.

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Healthcare and pharmaceutical regulation in Portugal

The health sector in Portugal, which encompasses the pharmaceutical market, is a prominent and fast-evolving sector that has undergone significant growth in recent decades.

Sérvulo & Associados law firm is proud to have a highly specialised, experienced and well-balanced team in the life sciences field. The team covers all the main legal matters of the health and pharmaceutical industry, acting and providing guidance on a broad range of issues. These include patent trademark litigation within the pharmaceutical sector, but also advice on regulatory matters, data privacy for clinical research, and patient support programmers, as well as distribution and supply agreements to the industry.

The life sciences team at Sérvulo has a comprehensive knowledge of the legal and regulatory environment in Portugal and is a trusted legal advisor to numerous renowned brands. The team handles primary cases on patent litigation of generics versus reference medicine companies, including substances as Apixaban, Bortezomib, Fingolimod, Levonorgestrel, Sorafenib and Sitagliptin.

Sérvulo provides assistance and support to companies and associations in all relevant regulatory areas concerning medicinal products, such as medicines, medical devices, cosmetics, nutrition products and other related borderline products. This includes covering, inter alia, clinical trials and other clinical investigations, good manufacturing and distribution practices, authorisation procedures, advertising, publicity and information, reimbursement, pharmacovigilance, post-authorisation studies, and all other related issues.

Our life sciences practice is co-led by the equity partners Ana Rita Paínho and Miguel Gorjão-Henriques. The team also includes the junior partner Mariana Costa Pinto, two associates Francisco Marques de Azevedo and Paulo Meireles de Oliveira, and two junior lawyers Catarina Ferreira da Silva and Leonor Ruano Silveira.

1. Regulatory compliance: Can you explain the key regulatory compliance issues for life sciences companies operating in Portugal?

Compliance is a flag given extreme importance in any Portuguese company, especially in the life sciences sector which is governed by a stern legislation that guides these companies’ careful actions in the market.

Decree-Law no. 176/2006 of 30 August sets the legal regime for human use medicines and Decree-Law no. 145/2009 of 17 June the same for medical devices, along with EU Regulation 2017/745. Those regimes are then consolidated with an extensive set of further regulation, namely in market access, pricing, advertising, amongst others.

An interesting compliance issue that the industry tackles with is advertising. This is regulated, besides the above-mentioned legislation, by the general Portuguese Publicity Code (Decree-Law no. 330/90 of 23 October) and Decree-Law no. 5/2017 of 6 January which establishes general advertising principles for medicines and medical devices. Additionally, INFARMED (the National Authority for Medicines and Health Products), often issues informative announcements to shed light on advertisement rules in the sector.

Some blatant rules are the prohibition on advertising medicines subject to medical prescription, as well as medicines reimbursed by the National Health System and medicines containing substances defined as narcotics or psychotropics, under international conventions binding on the Portuguese state. Moreover, both medicines and medical devices advertising campaigns must be submitted to the INFARMED for evaluation and these campaigns shall not include a vast list of suggestions, guarantees, or incite to any unsafe attitudes from the consumers. As for medical devices, advertising them to the public is forbade if they require a health professional intervention. Furthermore, an extensive set of information relating to the medicine or medical device is mandatory to be included in the advertisement.

For those reasons and more, considering the contingencies attached to acting within the life sciences industry, it is quite a challenge for the providers to advertise medical products without breaching their obligations and potentially being issued large fines by INFARMED.

2. Intellectual property protection: How does Portuguese law protect intellectual property in the life sciences sector, and what are the steps to secure these rights?

The Portuguese Industrial Property Code provides a comprehensive set of relevant rules for the protection of inventions, not only regarding patents but also by consecrating the utility model’s figure as an available intellectual property right and by allowing the patent holder to obtain a supplementary protection certificate.

Patent infringement actions are to be brought before the Intellectual Property Court, including the filing of requests for preliminary injunctions. As for revocation, this is a common defence in infringement proceedings and presented as a counterclaim by most defendants in those.

In Portugal, the common challenge is for pharmaceutical patent holders to tackle with Law 62/2011 of 12 December: a special regulation that settles a regime for disputes between reference medicine companies and generics, allowing for the former to file a patent infringement action when in cause is the request of a market authorisation for the same drug, pursued by the latter.

The challenging task in the future will be how to make this whole established regime compatible with the integration of the Unified Patent Court, which is already in function and has jurisdiction in Portugal.

3. Product liability: What are the product liability risks for life sciences companies in Portugal, and how can we mitigate them?

The manufacture, export and distribution of medicines is subject to the rules and good practices set in the general regime of Decree-Law no. 176/2006. However, regarding the liability of producers, the general civil liability regime applies in conjunction with the regime of producer´s liability for faulty products, Decree-Law no.383/89 of 6 November (which transposes EU Directive no. 85/374/CEE).

The difficulty in the absence of a specific liability regime applicable to health products makes it difficult for the injured party to prove that all the requirements for liability have been met, especially the causal link between the administration of the medicine and the manifestation of the adverse reactions, since the evidence is extremely difficult to obtain.

Despite that, if life sciences companies are thorough in obeying the established regulations for medicines and medical devices production and distribution, namely, the clinical trials requirements, they will have a safe shield of protection for product liability actions.

4. Clinical trials regulation: What are the legal requirements for conducting clinical trials in Portugal?

Besides the principles set in Decree-Law no. 176/2006, clinical trials on medicines are regulated by the EU Regulation 536/2014 and Law 21/2014 of 16 April, the Clinical Investigation Law.

From 31 January of 2023, new applications for clinical trials must be submitted to the newly functioning EU Clinical Trials Information System, despite some medicine trials being subject to previous INFARMED authorisation, involving gene and cell therapy and genetically modified organisms.

Then it is up to INFARMED, as the chosen reporting member state, to analyse the application. All the process is regulated by Regulation 536/2014.

As for medical devices, the clinical trials on these are set in the EU Regulation 2017/745 (the Medical Devices Regulation) and in the general regime from Decree-Law no. 145/2009. Applications to conduct those trials must be filed within the member state in which the trial will be conducted, thus, the INFARMED.

5. Market access and pricing: How does the Portuguese healthcare system regulate market access and pricing for pharmaceuticals and medical devices?

Concerning market access, the process of obtaining market authorisations for medicines is thoroughly established in Decree-Law no. 176/2006. The market authorisation, once granted, is valid for five years with the possibility of a renewal, subject to an evaluation process on itself.

Regarding medical devices, as provided by Decree-Law no. 145/2009, no authorisation is required for their commercialisation, but the manufacturer must submit to the competent authority a notice of commercialisation accompanied by a compliance information within the legal provisions.

The pricing and state reimbursement for medicines and medical devices follows the rules established in Decree-Law 97/2015 of 1 June, without prejudice to their subsequent implementation in numerous ordonnances regulating the specific procedures for pricing arrangements and reimbursement.

Medicines not subject to reimbursement do not have pricing limitations but all other medicines (prescription and non-prescription) do so, being subject to the maximum price regime (procedure regulated by Ordonnance no. 195-C/2015, of 30 June) and cannot be marketed without obtaining a retail selling price. The maximum price is then fixed by INFARMED. The same applies for medical devices reimbursed and not reimbursed by the state.

As for state reimbursement, the common procedure is regulated by Ordonnance no. 195-A/2015 of 30 June and is solicited by the holder of the market authorisation. The power to decide on reimbursement is designated to the Health Ministry but commonly delegated to INFARMED. For the year 2023, this competence was delegated to INFARMED by means of an order (Order no. 5399/2023 of 10 May).

6. Emerging trends and legislation: What are the current emerging legal trends or upcoming legislation in Portugal that could impact the life sciences industry?

In addition to the challenges already mentioned, special mention should also be made to the EU Regulation 2017/746 on in vitro diagnostic medical devices and the previously mentioned EU Regulation 2017/745 on medical devices. These, unequivocally, will set a change in the regime established in Portuguese law (Decree 145/2009 and Decree-Law 189/2000 of 12 August for the legal harmonisation of in vitro diagnostic medical devices). These regimes have not yet met legislative amendments that take into account the regulations, which are in the pendency of the legislative process, ongoing.

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Interview with: Jaspreet Takhar

What made you decide to specialise in life sciences law?

I specialise in advising on digital health solutions – that means advising on the regulation of health data, digital health solutions (including AI solutions, software and medical devices), as well as contracting in this space. I genuinely find the digital health space as exciting as it gets! The legal landscape is changing at breakneck speed, and I spend a few minutes every morning scanning for new regulations, new announcements and new guidance. Hot topics for legal developments include the regulation of AI, the European Health Data Space, and local laws on medical confidentiality.

Digital health might sound specialised but you really need to be a ‘Jack of all trades’ (master of all) to meet client needs. On an average project, I may advise on a combination of data protection laws, medical device laws, consumer protection laws and contracting. You need a firm grasp of myriad practice areas and black-letter law but, more importantly, you need to be able to translate that into a holistic, practical narrative for clients on next steps and risk.

I also enjoy the spectrum of clients I get to interact with, from big tech and start-ups, to the traditional pharma and medtech players. Each of these clients have their own unique legal risk appetites, and their own range of pioneering products that they believe will change health outcomes for patients. It’s a real privilege to be involved in getting these products to market.

What do you see as the key regulatory challenges facing the life sciences sector at the moment?

The life sciences industry is as heavily regulated as it gets, and the regulatory landscape only ever seems to increase in complexity. Even now, EU regulators are preparing an avalanche of new laws that are going to have a monumental impact on pharma and medtech in the next few years.

The big one is the EU pharmaceutical law package, which represents the biggest overhaul of pharmaceutical laws in over 20 years. The package touches on everything from regulatory data exclusivity to orphan medicines and paediatric medicines. It’s a controversial set of proposals – there are significant concerns from industry that the net impact of the proposals will be to undermine Europe’s competitiveness and slow the development and delivery of new treatments in Europe. Critics point to the provisions around regulatory data protection as particularly disappointing – the proposals modulate and reduce the regulatory data protection period from eight to six years.

Then we have emerging laws that touch on data and emerging technology, like the EU AI Act and the European Health Data Space. Organisations in the digital health space are facing a regulatory landscape that is shifting under their feet – as the regulatory burden grows, they’ll need to invest heavily in compliance in order to keep a foothold in the European market.

What impact do you think AI is going to have on the healthcare industry?

I’ve been lucky enough to work with some of the real pioneers of AI in healthcare for almost seven years now, and have seen products all the way through from the ideation stage to market. Throughout these projects, I’m constantly in awe of the range of AI applications that our clients are working on, from AI for ophthalmology and diagnostic imaging, to drug discovery and robot-assisted surgery.

The real impact of AI in healthcare hasn’t hit us yet – we’re still on the precipice, but the impact will be huge. These use cases are the tip of the iceberg and it’s only a matter of time before the use of AI technology is routine across the patient journey. We’ll eventually stop talking about ‘AI in healthcare’ and just call it ‘healthcare’!

What do you think are the key skills you need to succeed as a life sciences lawyer?

You need curiosity – this is an area where the ‘right answer’ can change quickly as the technology and the law develops, and the only way to keep on top of this is through independent reading and research.

It also helps to have a few strings to your bow so your advice is practical and holistic. This means having a firm grasp of a few regulatory regimes, whether it’s medical devices, pharmaceuticals, data privacy, consumer laws, or cyber security. A single project can involve several (seemingly totally unrelated) areas of law, and thinking in a silo will not give you the whole answer. A successful life sciences lawyer can spot issues across practice areas.

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Interview with: Dr. Chris Boyle

What do you most enjoy about being a life sciences lawyer?

My passion for science led me to qualify and practice as a veterinary surgeon before I discovered that scientists and clinicians are uniquely placed to make a big impact in law, and I requalified as a life sciences lawyer. The best thing about being a life sciences lawyer is that I can harness my scientific interest and knowledge to serve clients on a far greater scale than I could in veterinary practice, to help them develop the health technologies and services of tomorrow. It is particularly helpful to ‘speak the same language’ when I am advising on matters that require interactions with healthcare professionals and regulators – for example it has proven key in assisting clients with NICE health technology assessments.

What do you see as the key challenges facing the life sciences sector right now?

As policymakers seek to overhaul life sciences legislation, one of the biggest challenges is to ensure that the life sciences sector remains attractive for investment, so that innovative new technologies can continue to be developed and made available to patients with unmet needs. Therefore, all eyes are turned towards the upcoming changes to the EU pharmaceutical legislation, particularly in relation to IP regulatory rights and exclusivities for orphan medicines.

What impact do you think AI is going to have on the industry?

AI is going to have a transformative impact on the life sciences industry. Health data is both being created, and is becoming accessible, on an unimaginable scale. AI is the key that will enable the sector to unlock extraordinary new innovations. AI brings opportunities and risks and, as landmark proposals for a new EU AI act attest, lawyers will play an important role in balancing the opportunities with the risks.

What do you think are the key skills you need to succeed as a lawyer in life sciences?

You don’t have to be a scientist to be a successful life sciences lawyer, but you need to be passionate about science, enjoy analytical thinking, have an enquiring mind, and have a deep understanding of the life sciences industry.

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Interview with: Zina Chatzidimitriadou

Why did you decide to specialise in life sciences law?

In 2009, in my previous life as a molecular biologist at the Cancer Research UK institute, I experienced the multiple issues and complexities facing researchers and people involved in the development of life-saving treatments and methods. Life sciences emerged as the natural field of law for me and, while I am biased, I believe it is the most exciting field of law.

It’s so topical, dynamic and varied, as it covers medicines, medical devices, digital health, AI, food, cosmetics and everything in between!

It is the one legal area that, one way or another, affects every single one of us and is, above all, human-centred. You really can make an impact as a life sciences lawyer, in health policy but also through access to innovative products for patients in need. Plus there is never a boring day, with a slew of new legislation, regulation and guidance coming out at EU and UK level on a daily basis!

What do you see as the key challenges facing the life sciences sector?

The life sciences sector has long been grappling with the Catch-22 of balancing costly and speculative research and development with ensuring accessibility to diagnostics and treatments for as broad a patient population as possible. The rising cost of innovation and new emerging regulatory frameworks and proposals pose hurdles to achieving this balance, so policymakers need to think about how the legislative proposals of today may affect the innovation of tomorrow. In addition, there is a high bar to gaining public trust when dealing with sensitive data. Public trust is required so overcoming this hurdle has become a priority for the industry.

What impact do you think AI is going to have on the life sciences industry?

AI is primarily being looked at for its potential to automate, streamline and accelerate processes and also to harvest large amounts of data speedily and accurately. The real promise of disruptive AI lies in the use of generative AI tools for a number of applications. It will become the norm across all operations of a life sciences company through assisting and automating: drug discovery, pre-clinical and clinical trials operation, marketing authorisation submissions and approvals and in the post-authorisation context.

I also believe it will be a game changer in diagnostics and precision medicine. I believe it will work as an aid to, rather than replacement of, healthcare professionals. I also believe we will continue seeing blurred lines between the concepts of digital health and AI, which are becoming increasingly intertwined as terms.

What impact do you think AI will have on the role of lawyers?

AI will continue to be used to streamline processes and more mundane tasks and free up time for more commercial and strategic work. In-house lawyers can be more agile to also manage their outside counsel and budgets, but also be more ingrained in other areas of the business. A space of great promise for the use of AI is for the purposes of sustainability and ESG objectives.

What do you think are the key skills needed to succeed as a life sciences lawyer?

Life sciences is one of the more technical areas of law, so curiosity and a healthy interest in continuous learning and ensuring understanding of technical contexts, such as cell/gene therapies, are key. Apart from helping to speak the same language as your clients, it also makes the job even more fun!

As an adviser, life sciences lawyers have to be pragmatic and embedded in the business on which they advise. It is important to be vigilant, able to respond immediately to matters as they come up (because they may genuinely have to do with ‘life or death’ situations) and also anticipate issues – often a change today may impact products and pipelines of tomorrow. Creativity is also important as the legislation can often be a few steps behind the scientific developments and therefore not clearly cover questions that arise.