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Funeral homes, assisted living facilities, campgrounds and other special purpose properties represent one of the most difficult commercial loan situations which will be c

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

onfronted by a business owner. Unique properties are not easily understood by traditional lenders, so the most common solution involves finding a non-traditional lender f

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

Examples of combination products may in

or funeral home financing as well as commercial financing for other special purpose properties. Such non-traditional lenders will be appropriate for purchase situations a

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

s well as refinancing and new construction.

KEY REASONS FOR DIFFICULTY IN ARRANGING COMMERCIAL FINANCING FOR SPECIAL PURPOSE PROPERTIES

(1) By definiti

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

on special purpose properties are not similar to other commercial properties. This makes many lenders uncomfortable due to the likely difficulty of finding another owner

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

Combination pro

for a unique commercial property should it be necessary due to a loan default.

(2) For funeral homes and many other special purpose commercial properties, most of the bu

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

siness value is represented by non-real estate assets. With traditional commercial lenders that focus on commercial real estate loans, it is almost impossible to get a lo

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

an based on the real estate value and the business value. For example, it is not uncommon to have a situation in which the real estate for a funeral home is valued

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

at less than one million dollars while the overall business value is in excess of three million dollars.

(3) Because commercial financing is so difficult to arrange for

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

special purpose properties such as funeral homes, assisted living facilities and campgrounds, sellers of such properties are generally willing to provide substantial sel

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

er financing to assist the buyer in acquiring the business. However, many traditional lenders do not recognize or accept seller financing as a means of reducing down paym

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

Following aspects would a

ent requirements for special purpose properties.

(4) Many lenders simply do not understand the business complexities associated with a special purpose property. As a res

dd to the challenges in developing combination products:

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

ult, it is not uncommon for these lenders to attach onerous and expensive requirements such as business plans and environmental reviews. In most cases such lenders do not

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

even want to make the business loan but will use undesirable loan requirements as a means of appearing to approve a loan when in fact they have disapproved the loan by a

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

dding commercial loan terms that they do not expect a commercial borrower to accept.

COMMERCIAL LOAN SOLUTIONS FOR SPECIAL PURPOSE PROPERTIES

For a bu

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

siness borrower facing the situation described above, the highest priority should be to locate a non-traditional commercial lender that engages in the following commercia

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

Professional from academic institutions, pharmaceutical industries, health care indust

l loan practices:

(1) Openly welcomes special purpose properties and routinely finances such properties.

(2) Provides commercial financing for both the business and rea

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

l estate.

(3) Accepts substantial seller financing.

(4) Does not add special requirements to the business loan for special purpose commercial properties.

(5) Has a his

.

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

tory of making loans for the specific type of property under consideration.

(6) Can accommodate both small and large commercial loans for special purpose commercial prop

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

Companies that provide selfless information through particip

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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