Actual - Real Estate

Traditional bank and institutional lending has become outdated in some respects and does not always meet the needs of potential commercial customers. Private investor funding has filled many of the gaps while makin

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

g investing easier and profitable for all parties involved. Although private funding is not actually lending by definition it is still a highly viable alternative.

The typical traditional bank loans take 3 to 6 mo

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

nths to close. The obvious constraint is if your deal needs to close before 3 months or if the seller is anxious to close in a fast time frame. Private funding typically takes 30-90 days to close and the right mix

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

f information, opportunity and “right-time-right-place” has seen private deals close in a manner of days!

Most commercial lenders have very specific guidelines on documentation of the source of income or proof of

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

asset ownership. Obtaining these documents from the current owner(s) is a big challenge if not impossible. Tax returns and additional personal information are sought but few are willing to open up their finances to

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

just anyone. Private investors tend not to look at past performance of the property but seek a good analysis of what the future potential is. Be prepared with a sound business plan! Many borrowers can’t qualify f

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

or traditional commercial loans if they have existing high business expenses. Again, existing financials need to be examined by the bank to determine if prior performance indicates worthiness for the loan. This tim

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

it’s your financials under the microscope. This type of information is useful in proving yourself to private investors but not required.

Special business properties such as mobile home parks, restaurant /bars, ca

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

sh businesses, new development construction projects, nursing homes, assisted living centers, etc. may be outside of the traditional lenders interest. The reasons differ but are often related to the perceived risk

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

r lack of knowledge about the type of investment. Again, private investors are more interested in your plan and its soundness rather than the category of property.

Relative short balloon payments on special purpos

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

e business loans are fairly common with traditional loans, some due in as little a 3 years. If your business plan does not specifically show how returns on the profitability of the property will support the balloon

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

payment the loan is often denied. Private funding may also have balloon payments but you can always seek a different structure that fits your needs and plan rather than trying to plug your plan into an institution

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

way of doing things.

Assumability of the loan is not often offered with commercial loans. If your plan for the property includes later selling it for a profit you need to consider how potential buyers will financ

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

e the purchase from you. If you cannot transfer the loan to a qualified buyer you will be at the mercy of them obtaining a loan from an institution and meeting all of their requirements. This is time consuming and

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

ostly for the borrower creating a delay in you moving on. Conversely, private funding can often be structured so that you may transfer your existing agreement to another without any of the constraints.

Banks and l

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

ending institutions often monitor their investments by requiring ongoing financial reporting requirements. Although they are not a partner in your venture they behave like they are. Until you break free from the lo

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

n this monitoring relationship will continue. Private funding investors may also require periodic financial reports but as long as the agreed terms of the funding are being met they may have little interest.

Some

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

institutional lenders still require the borrower to live in the same state as the property. In today’s realm the reasons for this requirement are lost. Legal issues may be a bit easier to deal with because of the r

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

quirement but not enough to limit the borrowers to properties in their own state.

There are many more differences between traditional loans and private funding. The differences usually favor the non-traditional pr

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

ivate funding world. You may pay slight more for private funding overall but if you can’t qualify for a traditional loan, or the timing will not work you should not even consider cost when comparing the two options

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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