A Growing Force

This is not the first time that the pharmaceutical and biotechnology industries have faced difficult markets and reduced access to capital. Previous market upheavals have been characterized by Darwinian dynamics, with larger, cash-rich companies often devouring smaller, less robust companies. Some smaller companies have found synergies with one another that enable them to evolve in direction and scale into a new entity that can survive in a more challenging financial environment.

Today, royalty monetization and revenue interest financing have the potential to generate substantial, immediate capital injections that can have a transforming effect on healthcare companies. Moreover, with the ability to raise several hundred million dollars, these transactions are now more than just a blip on the radar of large and mid-sized pharma companies. While many of the big players have sufficient cash reserves to weather the current financial crisis, their ability to access additional capital outside the equity and debt markets gives them unparalleled flexibility in deploying their financial resources and managing risk.

Walter Flamenbaum can be reached at wflamenbaum@paulcap.com
; Lionel Leventhal can be reached at lleventhal@paulcap.com
; John Leone can be reached at jleone@paulcap.com
. All three are partners at Paul Capital Healthcare.