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Cases - Purchase Order Financing For Resellers and Trading Companies
Are you a reseller, importer/exporter or own a trading company? Most resellers make their money by buying products
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
from their suppliers at a favorable price, and then selling them to their customers for a markup. The business mo
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
el is simple, clean, and above all, profitable. Many companies can easily pull margins of 15% to 30%. And I have e
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
en seen companies with margins that are close to 100%.
So the business model is good. But it’s also challenging.
So the business model is good. But it’s also challenging.
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
hy? Well, when you buy from a supplier, they always want immediate payment or payment by letter of credit. Coupled
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
with this is the fact that your customers always want to pay in 30 to 60 days. Many times, this payment timing dis
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
repancy creates major problems.
When this happens, most business owners will run to the bank and try to get a bus
When this happens, most business owners will run to the bank and try to get a bus
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
ness loan. But business loans are very hard to obtain. Many businesses – especially small and mid sized businesses
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
– will fall flat on their faces when they go to a bank for financing. But there is an alternative.
There is a fin
There is a fin
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
ncing product that will provide you with the funds (or letters of credit) to pay all your suppliers. This enables
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
ou to deliver the order and make the sale. And, as opposed to a business loan, it’s easy to obtain. This product i
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
s called purchase order financing.
Purchase order financing allows you to purchase products from your suppliers,
Purchase order financing allows you to purchase products from your suppliers,
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
sing the financing company’s money, and then resell them to a third party. The biggest requirement is that you hav
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
non-cancelable purchase orders from solid commercial or government customers.
Purchase order funding can be very
Purchase order funding can be very
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
helpful if your company is turning away orders because it lacks the financial wherewithal to deliver on them. The
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
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
ransaction is usually very simple. Once you have a purchase order, you call the factoring financing company. They
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
rovide you with the letters of credit (or similar instruments) to pay your suppliers. With that in hand, you go ah
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
ad and deliver on the order and invoice your client. The transaction is settled once your client pays, usually 30
.
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
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
o 60 days later.
Many times, purchase order funding is combined with invoice factoring (also known as receivable
Many times, purchase order funding is combined with invoice factoring (also known as receivable
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
actoring). This allows you to lower your overall cost of financing, making the transaction more profitable for you
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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