Friday, July 19, 2024

Banking on Life Sciences in North Carolina


This is the thirty-first in a series of informative monthly articles for North Carolina businesses from PNC in collaboration with BUSINESS NORTH CAROLINA magazine.

As home to the largest research park in the United States, three Tier 1 research institutions, a favorable business environment  and a robust startup ecosystem that attracts its fair share of venture capital activity, North Carolina has leveraged this cross-section of competitive strengths to build a thriving life sciences landscape of global renown.

According to the North Carolina Biotechnology Center, North Carolina today is home to 830 life sciences companies that employ 75,000 highly skilled workers, with an additional 2,500 companies supporting this vital sector.

And as life sciences organizations with a presence in North Carolina continue to produce cutting-edge research and life-changing technologies, the banks that serve this vital industry are innovating solutions of their own to help facilitate success, growth and sustainability for this meaningful sector.

Delivering banking, capital markets and corporate finance solutions within a sector as dynamic and nuanced as life sciences requires the support of bankers with specialized industry knowledge and experience. Raleigh-based Rich Brown, who leads PNC Bank’s national Pharmaceuticals & Life Sciences corporate banking group, is one such banker.

Rich Brown

As head of this specialized group, Brown serves as the senior PNC executive for a coast-to-coast book of business with a focus on pharmaceuticals, life sciences, medical devices and pharma services – collaborating with PNC Corporate Banking relationship managers in key markets across PNC’s footprint to help provide tailored financing and banking solutions to pharmaceuticals and life sciences companies. 

He brings to this role a multi-faceted background in banking, venture capital and technology as he helps life sciences companies navigate an environment that is anything but linear. “Being a trusted banking advisor for pharmaceuticals and life sciences companies is about so much more than reviewing financials and recommending a solution,” says Brown. “There are so many industry-specific variables and nuances to consider – from underlying market drivers, to intellectual property and patents, to reimbursement dependencies and regulatory developments.”

Among the industry segments for which Brown and his team have delivered innovative financing solutions is pharmaceutical services & technologies – and, specifically, contract research organizations (CROs), which originated in North Carolina and provide clinical trial management support for pharmaceutical, biotech and medical device companies and institutions.

To help optimize the capital structures of CROs – organizations that, by design, deliver contract-based work and traditionally hold minimal physical assets – PNC Bank was a pioneer in structuring and implementing accounts receivable securitization credit facilities, which have helped some organizations optimize their capital structures, enhance profitability and support their strategic objectives, says Brown.

At the most basic level, an accounts receivable securitization is a committed capital facility used to finance or monetize a company’s accounts receivable portfolio. This financial application is designed to efficiently leverage the value of a company’s accounts receivable portfolio into a low-cost, committed financing platform, which is customized to meet the parameters and needs of each company.

“An accounts receivable securitization can be a meaningful component of a CRO’s debt capitalization stack because it can serve as a tool for achieving expense savings, cash flow improvement and reported leverage reduction,” says Brown. “Securitizations typically deliver interest rate savings relative to other sources of committed financing and also can be used for balance sheet improvement, such as working capital and leverage ratios, when accounted for as a sales or monetization program.”

And in the life sciences industry, which is rife with M&A activity due to a range of factors driven by patent life considerations, it is not uncommon for organizations to consider using the proceeds of accounts receivable securitizations to pursue strategic transactions or refinance debt, says Brown.

A veritable economic engine, the life sciences industry contributes more than $88 billion in economic impact statewide, according to a November 2022 report prepared for the North Carolina Biotechnology Center.

And, as Brown notes, the tremendous scale and growth of the industry represents a remarkable success story that underscores the contributions of visionary leaders. “I have had the privilege to work with many leaders of life sciences companies who skillfully create unique value propositions, innovate new technologies and realize commercial success,” he says. “There are many leaders in North Carolina who have achieved this trifecta, and their respective bodies of work serve as inspiration for what our region can accomplish.”



These materials are furnished for the use of PNC Bank and its clients and do not constitute the provision of investment, legal, or tax advice to any person. They are not prepared with respect to the specific investment objectives, financial situation, or particular needs of any person. Use of these materials is dependent upon the judgment and analysis applied by duly authorized investment personnel who consider a client’s individual account circumstances. Persons reading these materials should consult with their PNC account representative regarding the appropriateness of investing in any securities or adopting any investment strategies discussed or recommended herein and should understand that statements regarding future prospects may not be realized. The information contained herein was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy, timeliness, or completeness by PNC. The information contained and the opinions expressed herein are subject to change without notice. Past performance is no guarantee of future results. Neither the information presented nor any opinion expressed herein constitutes an offer to buy or sell, nor a recommendation to buy or sell, any security or financial instrument. Accounts managed by PNC and its affiliates may take positions from time to time in securities recommended and followed by PNC affiliates. Securities are not bank deposits, nor are they backed or guaranteed by PNC or any of its affiliates, and are not issued by, insured by, guaranteed by, or obligations of the FDIC or the Federal Reserve Board. Securities involve investment risks, including possible loss of principal.

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