The healthcare sector is a highly regulated environment, with all key areas (e.g. production, licensing and marketing) subject to strict regulation, whilst it takes significant time and financial investment to bring new products to market.
In this context, the uncertainties caused by fluctuations in the rebate due from pharmaceutical companies to the NHS under the Pharmaceutical Price Regulation Scheme (“PPRS”) and significant price pressure and competition from generic drugs, following the expiry of patents, both continue to represent material risks to sponsor strength.
Furthermore, sponsors are responding to these pressures through M&A activity and formal joint-venture or supply agreements, to choose types of treatment or disease to focus on.
We advise a number of clients in this industry and help to ensure trustees act while their sponsors are in a strong position; assess and respond to the impact of transactions; and put in place adequate covenant monitoring frameworks to be able to spot and react to these risks and uncertainties before they crystallise.