Investment Strategy

NewSpring Health Capital provides equity capital to healthcare companies within the life science, healthcare services and medical device sectors. The Fund focuses its investments in specific sectors of the healthcare and pharmaceutical industries, which include:

Biopharmaceuticals: Companies developing biopharmaceutical products or technologies, emphasizing the therapeutic areas of the central nervous system, cancer and oncology, and endocrine and metabolic disorders, among others.

Medical devices: Companies developing innovative medical devices, diagnostics, or drug delivery platforms.

Health care services: Companies offering novel healthcare services that generate revenue by executing cost-effective business models, including pharmaceutical distribution, outpatient and inpatient specialty services, health administration outsourcing, benefits and insurance management and healthcare informatics, among others.

Geography

The Fund emphasizes companies in the Mid-Atlantic region and Northeast corridor – a region rich in emerging biopharmaceutical, medical device, and healthcare service companies that present abundant opportunities. This region is home to a quarter of the U.S. population; ranked third in university science and research and development expenditures; ranked second for patent production; and ranked fourth for the total number of biotechnology scientists. Such factors create compelling opportunities for entrepreneurs, managers, operators, and investors in emerging healthcare and life sciences companies in the Mid-Atlantic region.

Demographic Factors

The investment team of NewSpring Health Capital believes that substantial opportunities for growth and investment exist now and in the foreseeable future for companies in the biopharmaceuticals, medical devices, and healthcare services fields. That perspective derives from significant U.S. demographic factors. For example:

• The U.S. population is aging: The proportion of individuals over age 65 is growing, as is their spending on healthcare, which is roughly three times as much per person as it is for those under 65.
• U.S. healthcare expenditures (including healthcare services, information systems, pharmaceuticals, medical devices, diagnostics and drug delivery systems) surpassed $1.6 trillion in 2002 and are expected to grow faster than the U.S. GDP, perhaps reaching $2.7 trillion by 2012 and $3.8 trillion by 2017;
• U.S. expenditures on pharmaceuticals have increased since 1998 at a compound annual growth rate of 16%. Prescription drug spending now accounts for approximately 10.4% of all healthcare spending, and is projected to exceed $200 billion in 2003.
• 80% of the global pharmaceutical industry has some presence within a 50-mile radius of Philadelphia.
• The U.S. medical devices market is estimated to exceed $268 billion in 2003.

NewSpring Health Capital also benefits from the expertise and experience of its value-added partners, sponsors, and advisors, which include: Barr Pharmaceuticals, a specialty pharmaceutical company that develops and markets proprietary and generic pharmaceuticals, emphasizing oncology, female healthcare (including hormone therapy and oral contraceptives), cardiovascular, anti-infective and psychotherapeutics; Commerce Bancorp, a banking institution with more than $26 billion in assets and a strong presence in New York, New Jersey and Pennsylvania; Greater New York Hospital Association, an organization of 270 hospitals and medical research centers, including all major medical and research centers (such as Memorial Sloan-Kettering, New York Presbyterian/Columbia/ Cornell, Mount Sinai, and NYU Medical Center) in the New York metro region.

The Fund maintains a Strategic Advisory Board comprised of scientific and business leaders, whose affiliations include the National Academy of Sciences, the National Institutes of Health, major U.S. research and medical centers and leading companies in the Fund’s target investment areas. The Fund selects advisors with a strong entrepreneurial outlook, including a desire and facility in translating scientific and medical advances into profitable commercial enterprises. The advisors include: Jean-Pierre Garnier, Ph.D., Chief Executive Officer of GlaxoSmithKline PLC; Eric R. Kandel, M.D., University Professor at the Center for Neurobiology and Behavior at Columbia University College of Physicians and Surgeons; Joshua Lederberg, Ph.D, Director of the Laboratory Molecular Genetics and Informatics at The Rockefeller University; Michael J. Wolk, MD, President of the American College of Cardiology.