10 January 2017

Cross-Border Listings: A Guide for Healthcare Companies

Healthcare companies undertaking capital raisings have a wide range of stock exchanges to choose from throughout the world. Major international finance hubs can be attractive listing venues for biotechnology, pharmaceutical, healthtech and other healthcare companies considering cross-border capital raisings to address their corporate financing needs, whether for research & development of novel sciences or general business operations.

Our guide highlights four international stock exchanges—in Australia, Hong Kong, London and the United States—that have been especially active in cross-border capital raising for the healthcare industry in recent years.

pharmacy healthcare

Key Issues for Healthcare Companies

Biotechnology, pharmaceutical, healthtech and other healthcare companies should be aware of the following key issues often encountered by industry peers undertaking the process of capital raising and listing on a stock exchange. In particular, listings of healthtech companies, which reflect the convergence of healthcare and technology, raise additional issues that need to be addressed as part of any listing.

Restructuring prior to listing
The business and corporate structure of a healthcare company’s operating group is an important issue to consider at the onset. In some jurisdictions, investors may favor healthcare companies that are narrowly focused on a key therapy or product over those that offer a wide range of products. For example, a number of established healthcare companies have spun-off key operating divisions in recent years as a means of attracting investors. Investor preferences such as these—which may shift over time—can factor into a healthcare company’s structuring decisions early on in the listing process. For corporate governance, tax or marketing reasons, a healthcare enterprise may determine to re-incorporate out of its home jurisdiction to another location. Companies that wish to take advantage of more flexible governance requirements or a different tax structure will often explore a re-incorporation in conjunction with an initial listing.

IP protection 
The pathway for a healthcare company obtaining intellectual property protection in the form of a patent for a new drug or therapy is well trodden, but obtaining intellectual property protection has historically been a challenging business issue for healthtech companies. However, in many jurisdictions, technology software and computer programs can now be protected by both copyright and patent law ‒ provided that the invention has not been disclosed except subject to appropriate confidentiality restrictions. Accordingly, it will be important for healthtech companies with novel technology to ensure that at least an application for any technology invention is made before publicly disclosing key information as part of any IPO.

Privacy and data protection
Data is extremely important to many healthcare and healthtech companies, with there being an exponentially increasing number of ways in which such organizations can collect, store, use and potentially disclose personal or sensitive information. Given the importance of such data to their business model, healthcare and healthtech companies must ensure regulatory compliance with privacy and data protection laws. With each country having its own implementation and enforcement systems, it is important that healthcare and healthtech companies have appropriate policies, systems and process in place for ensuring regulatory compliance as part of any listing.

Prospectus disclosures
Healthcare and healthtech companies, particularly those focused on novel therapies, technologies or approaches, should be mindful of a number of specific prospectus disclosure issues that commonly arise. One of the most challenging aspects for a healthcare company to undertake in the prospectus is how best to explain a novel science, technology or product that it is seeking to exploit, including the indications for which the science, technology or product is being developed, and any difficulties in distributing and marketing it.

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