Organisation:
RHTLaw Asia LLP
Resource Link:
Published in 2021, Link
My Key Takeaways
For healthcare businesses, I often hear M&A/business combination as commonly cited approaches for their growth plans in Singapore (SG) and Southeast Asia (SEA).
Key highlights and my takeaways from the insightful Singapore chapter of the Healthcare M&A report by RHTLaw Asia LLP:
1) For early stage companies, a common M&A approach is VC funding or joint venture (JV) between the target company and investor. For later stage companies, common business combinations are “share sale” & “business sale” (Qn 1).
2) Share sale is a relatively straightforward process. No capital gains tax in SG and only stamp duty for shares transfer (0.2% of the higher of the consideration paid for the shares or the net asset value of the shares).
3) Business sale is for entities like SG healthcare institutions not limited by shares but by guarantees or incorporated as non-profit societies. 7% GST for supplies plus stamp duty for transferred real estate.
4) It takes around 6-18 months to complete a healthcare combination – examples of documentation for acquisition of private hopital assets (PHMCA license, landlord consent etc) (Qn 2)
5) Legal due diligence to consider for healthcare combinations – if you collect a significant amount of patient data, do ensure compliance with SG’s Personal Data Protection Act 2012 (Qn 4).
6) Post-completion undertakings best practices [Qn 11]
- Restreint of trade to avoid your vendors re-entering the market as your competitor!
- Non-solicitation agreements for potential acquirors to protect the target company’s talent pool from rivals’ poaching
- Interim services provision
Make sure that the rest of your agreements are in-line with the Competition and Consumer Commission of Singapore’s (“CCCS”) Competition Act.
7) No general restrictions on type of entities or individuals that can own healthcare businesses in SG. No specific restrictions either for directors, beyond general ones like not being an undischarged bankrupt. The healthcare sector is highly regulated so do prepare for relevant Singapore Ministry of Health licenses, permits & approvals [Qn 14].
8) Pricing structures – more common in SG are “Purchase price with price adjustments on completion” based on factors like net cash/debt or inventory levels and product returns. Less common is “lock box mechanism”/fixed purchase price. Avoid profit guarantee structures as they’re incompatible with SG medical ethics rules. (Qn 23)
9) Details of valuation methodologies in SG – income, market or cost/asset approach [Qn 24]
Heartened that despite Covid-19, the volume of transactions has not been impaired & the healthcare sector has performed well with a high number of deals. [Qn 29].
Human Health & Potential is also one of the key pillars in the SG government’s S$25B (~€15.7B) RIE budget to support public R&D from 2021 to 2025.
SG’s pharmaceuticals industry is also expanding with 1H2021 announcements like Germany’s BioNTech (new SEA RHQ & mRNA vaccines plant) & France’s Sanofi (€400M vaccine plant).
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Looking forward to more healthcare innovation conversations!
My LinkedIn post here.
About Zhilin SIM
Having worked and lived in Singapore, the Nordics, China, Spain, UK, I’m now based in Paris.
I’m fluent in English, French and Mandarin, and I’m learning Arabic because it’s a beautiful and fascinating language.
My team creates and supports one-many initiatives connecting Corporate and Startup ecosystems in Europe to business and innovation opportunities in Singapore and Southeast Asia.
I’m passionate about horticulture, watercolour, startups/tech as well as French cuisine, Peranakan kueh techniques and other global cuisines.
Feel free to connect with me if you think my network in Europe and Asia could be of benefit to your business and innovation activities.
