Legal finance for the pharma & life sciences sector

As a result of research conducted with 400 lawyers and finance professionals across industry sectors, Burford gained key insights into the business and legal trends impacting GCs and CFOs at pharma and life sciences companies. Some major trends, explored further below, include that companies in the pharma and life sciences sector reported the highest budgets as well as a higher likelihood of increase in the use of hourly fees.

The enactment of the America Invents Act as well as the Biologics Price Competition and Innovation Act has led to the emergence of more patent-related litigation, including an increase in monetization strategies for companies’ patent assets. As the pharma and life sciences sector faces increasing cost pressures, companies in the industry are seeking innovative solutions to manage legal risks and optimize financial resources. Finance and legal leaders in the sector are recognizing the value of legal finance in freeing up capital for investment in areas such as research and development and other growth drivers. The adoption of legal finance by pharma and life sciences brands also allows those companies to manage risk and extract value from valuable IP assets.

Burford recently conducted research into economic impacts on different industries and their litigation portfolios. For senior in-house lawyers and finance leaders at companies in the pharma and life sciences sector, the key takeaways were: 

• With 30% of finance and legal leaders saying they spent over $15 million on litigation and arbitration in 2023 alone, pharma and life sciences  has the biggest reported litigation budget across industries.

• GCs and CFOs at pharma and life sciences companies are four times more likely than the industry average to say  they could reallocate $50 million or more elsewhere in the business by financing litigation and arbitration.

• GCs and CFOs at pharma and life sciences companies were the most likely to say they have seen an increase in hourly fees over the last 15 years, which could partially account for their inflated litigation budgets.

• More than half finance and legal leaders at pharma and life sciences companies agree that GCs and CFOs should champion the use of legal finance to help their companies optimize the value of their litigation and arbitration assets.

At its core, legal finance enables businesses in the pharma and life sciences sector to maximize their recoveries in commercial disputes and to ensure they can fully leverage their legal assets, which can free up capital for investing back into the business, including R&D.

There are numerous ways pharma companies can leverage legal finance to generate value from their litigation and arbitration assets—without impacting control of their disputes.

• Fund claims and recoveries: Burford takes on the financial burden of paying lawyers to pursue meritorious high-value claims, allowing businesses to pursue meritorious cases without incurring upfront costs.

• Eliminate downside risk: Legal finance provided by Burford is non-recourse, meaning that the investment and return are contingent on a successful outcome. This allows businesses to lock in guaranteed minimum returns and shift legal risk off their books.

• Manage cash flow: Burford can accelerate expected entitlements from pending claims and awards, providing companies with the flexibility to time cash flows according to their desired schedules, enhancing liquidity and working capital.

• Identify opportunities: Leveraging proprietary data and industry-leading insights, Burford can assist legal teams in setting priorities for their commercial litigation and arbitration portfolios. This helps businesses identify the most valuable claims and allocate resources effectively.

• Manage exposure: Burford can provide a hedge for litigation risk in the company’s portfolio. This allows businesses to mitigate the potential financial impact of litigation and protect their interests.

• Enforce judgments: Through funded enforcement and asset recovery, Burford can help businesses transform unenforced judgments and non-performing loans into cash.

Colibri Heart Valve, founded by cardiologists Dr. David Paniagua and Dr. David Fish, needed capital to pursue a patent infringement suit against Medtronic, who was selling their artificial heart valve technology (called transcatheter aortic valve implantation, or TAVI) without compensation. Burford provided non-recourse financing to fund Colibri's legal fees and expenses for the litigation, allowing them to enforce their patent rights and continue their ongoing clinical research and development while the case progressed. The litigation resulted in a successful outcome, with a jury awarding Colibri $106 million in damages.