FDA Transparency Initiative Could Reshape Acquisitions: Attorneys

FDA's expanding transparency initiative could significantly change how pharmaceutical and biotechnology companies evaluate potential acquisitions, giving buyers greater access to regulatory information that could influence asset valuations, purchase agreements and the allocation of financial risk, according to attorneys at Arnall Golden Gregory (AGG).

Earlier this month, FDA unveiled a new Transparency Roadmap (FDA Webview 10/2) that calls for expanded public disclosure of complete response letters, clinical study reports, inspection records and other regulatory information as part of a broader fiscal year 2027 transparency initiative. The roadmap builds on FDA’s 2025 initiative to publicly release complete response letters (CRL). FDA said it intends to expand that effort while protecting confidential commercial and proprietary information, according to a post by FDA acting chief of staff and deputy commissioner for strategic initiatives Lowell Zeta.

Speaking on a 10/22-posted FDA Watch podcast, AGG corporate partner Brian Terras said the agency's recently announced transparency roadmap could have a fundamental impact on regulatory due diligence by making more official FDA records available to prospective buyers.

Historically, buyers relied heavily on information supplied by sellers to assess regulatory risks, including inspection findings, manufacturing deficiencies and FDA communications. Greater public access to CRLs, Form 483 inspection observations and other agency records could allow buyers to independently verify representations about an acquisition target's regulatory status.

"I think what we're going to see is much more specific representations about specific investigative findings, specific information that may have been contained in a CRL, for example, in a purchase agreement that governs the transaction," Terras said. He cautioned that the extent of the changes remains uncertain, but said additional disclosures could alter how buyers and sellers allocate regulatory risk in acquisition agreements.

AGG's Food and Drug Practice chair Alan Minsk welcomed the greater transparency while warning that implementation could create new complications involving confidential commercial information and incomplete regulatory records. Minsk noted that the absence of a publicly available inspection record would not necessarily establish that a facility has no outstanding regulatory problems. Records could remain undisclosed because an investigation is ongoing or because FDA has not yet processed them for release.

"Everything is in the implementation and execution," Minsk said.

The attorneys also identified regulatory unpredictability as an increasingly important factor in pharmaceutical dealmaking. Terras said regulatory due diligence has become central to determining acquisition values, particularly for development-stage companies whose future revenue depends on FDA approval or other regulatory decisions. "Regulatory diligence has become valuation diligence," he said.

According to Terras, pharmaceutical and biotechnology acquisition activity has strengthened since late 2024, with larger companies increasingly looking at late-stage assets to replenish product pipelines and offset revenue losses from patent expirations. Buyers are also relying more heavily on contingent consideration arrangements, under which additional payments depend on milestones such as FDA approval. Such agreements can bridge valuation differences between buyers and sellers but may generate disputes if regulatory outcomes differ from expectations.

The attorneys also discussed the importance of manufacturing compliance in acquisition assessments. A drug or device may have FDA approval or clearance, but problems at a third-party contract manufacturer could interrupt production, delay approvals, trigger recalls or undermine the commercial value of the acquired asset.

Terras said buyers should examine postmarketing obligations, manufacturing arrangements and the ability to continue operating the acquired business, rather than treating FDA compliance as a simple question of whether a product is approved or subject to enforcement action.

Both attorneys said regulatory and quality assurance personnel should be involved early in transactions. The discussion also addressed artificial intelligence, which Terras said is becoming an additional due diligence consideration as buyers evaluate whether acquisition targets have adequate policies and controls governing AI use.

The discussion was the fourth installment of an FDA Watch podcast series featuring AGG attorneys and hosted by APCO worldwide director Wayne Pines.