• Legal and Regulatory Compliance. Ensure that the continuation fund adheres to all relevant legal and regulatory requirements. Given the highly regulated nature of the healthcare industry, it is crucial to navigate and comply with healthcare-specific regulations, including understanding and addressing any changes in healthcare laws that may impact the portfolio companies. Compliance with patient data security and privacy laws, FDA regulations, and other industry-specific standards is paramount. Potential risks and challenges associated with regulatory approvals, clinical trials, and market access, among others, can significantly impact the success of healthcare investments. • Reimbursement Landscape. Assess the reimbursement landscape for the healthcare products or services offered by the portfolio companies. Changes in reimbursement policies and healthcare payment models can influence the financial viability of healthcare investments. • Technological Innovation. Stay attuned to evolving healthcare technologies and innovations. Continuation funds in healthcare often involve companies at the forefront of medical advancements, and it is crucial to understand the competitive landscape and potential disruptions. • Long-Term Commitment. Recognize the longer time frames typically associated with healthcare investments. The continuation fund structure should align with the extended development timelines often required for healthcare companies to bring products to market and provide sufficient capital to support these ongoing development needs. • Communication and Transparency. Maintain open and transparent communication with existing and incoming investors throughout the process. Clearly articulate the rationale behind the continuation fund and make comprehensive disclosures about the process, mechanics, risks and obligations of each of the interested parties. • Exit Strategy. Develop a well-defined exit strategy for the continuation fund, taking into account the optimal timing and method of realizing returns for investors, along with the unique market dynamics of the healthcare sector. This may involve an eventual sale, public offering, or other strategic options for the portfolio companies. By incorporating these considerations, stakeholders in a healthcare continuation fund can navigate the complexities of the industry and maximize the potential for successful, long-term investments. 2. Diversity of Offerings and Agility is Key for Pharma Services Companies BY SHANNON WILEY Drug commercialization, distribution, and reimbursement are among the most complex and highly regulated industries. With the effects of the Inflation Reduction Act’s Drug Price Negotiation Program on the horizon for 2026, a heavily vertically consolidated drug commercialization channel, continued compressed margins for healthcare providers, and macro-economic trends constraining drug utilization, we expect biopharma and investor focus in 2024 to be on pharma services companies that offer dynamic solutions to clear the pathway for patient access and extend the vitality of a product throughout its life cycle. Post-launch drug and biologic strategies will likely take into consideration the following industry trends: • Distribution and Reimbursement Challenges. Pharmacies and pharma services companies that have the agility to successfully navigate distribution and reimbursement challenges are key elements of a successful channel strategy. Cell and gene therapies are perhaps the most complicated use case, but drugs that have both medical and pharmacy benefit coverage or are not self-administered also present challenges. This flexibility should extend to managing logistics and cold chain, navigating board of pharmacy regulations, clearing complex reimbursement challenges under both medical and pharmacy benefits, coordinating with prescribers and administration sites, and often, ensuring Risk Evaluation and Mitigation Strategies compliance.
2 | BASS, BERRY & SIMS
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