Useful Articles - Business

There are two kinds of capital: debt and equity. Both kinds are typically used by a company during its lifetime. Lenders have different objectives than investors a

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

nd therefore look at different factors about a company when deciding whether or not to invest or make a loan.

Debt Debt is money borrowed, which must be

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

Examples of combination products may in

epaid at a set time period and generates income for the lender over that time period. Lending sources include not only banks, but also leasing companies, factoring

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

companies and even individuals.

Lending sources look primarily at two factors: how risky the loan is; and whether the company can generate sufficient cash to pay

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

he interest and repay the principal. The growth potential of the company is secondary; the primary considerations are the track record and asset base of the compan

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

Combination pro

. Usually the debt must be secured against the assets of the company and very commonly must also be secured against the assets of the owner of the company, also ca

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

led a personal guarantee.

Assets of the company are not usually given full book value in securing a loan. In other words, if your inventory has a book value of $5

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

,000 (or it cost you $50,000 to produce that inventory) a lending source will only give you 50% to 75% of that value. The reason is that the lending source is not

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

n your business and would have to quickly liquidate the inventory, rather than selling it at market prices.

Accounts receivable, or money that is owed to you from

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

customers who have previously purchased your product but not paid for it yet, are also discounted. Using the same example, $50,000 worth of accounts receivable ma

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

only be worth 60% to 70% of that value to the lending source. Customers may not pay the full amount owed, or feel they have to pay for the product at all, if an o

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

Following aspects would a

tside lending source is demanding payment. And so on.…with equipment, land, buildings, furniture, fixtures and what ever other assets the company has, the same gen

dd to the challenges in developing combination products:

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

ral rule applies.

The lender often requests that the personal assets of the owner of the company are pledged as a contingency and as a gesture of faith by the own

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

r. Obviously, if the owner of the company does not believe in his/her own company's ability to repay the loan, why should the lending source?

Equity Equit

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

capital is money given for a share of ownership of the company. Equity can be provided by individual investors, sometimes known as "angels", venture capital compa

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

ies, joint venture partners, and the sweat equity and capital contribution of the founders of the company. Equity providers are more interested in the growth poten

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

Professional from academic institutions, pharmaceutical industries, health care indust

ial of the company. Their objective is to invest an amount now and reap the rewards of a 5 to 1, or even 10 to 1, payoff in three to five years. In other words $10

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

,000 now will be worth $1,000,000 in three years if invested in the right company.

Since the objectives of investors are different from lenders, the factors they

.

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

valuate in determining whether to invest are different from lending sources. Investors like to put money in companies that have the potential for rapid growth. Gr

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

Companies that provide selfless information through particip

wth potential is based on the quality of management of the company, product brand strength, barriers of entry to competitors and size of the market for the product

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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Consider your life as a business enterprise. Overshadowing everything else is a business goal and a strategy to reach that goal.

Calendars are of the essence in people's lives. We all need a calendar to be display in our home and office. But what is the true essence of a calendar? A calendar is useful in organizing the day to day activities of the people. It also serves as a bookmark of time, giving the people with the pertinent details of history.

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