Cases - Business

Most sales to commercial clients usually carry 30 to 60 day payment terms. This means that as a supplier, you m

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

ust deliver your products or services now. However, your client has between 30 to 60 days to pay you.

This cre

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

Examples of combination products may in

ates a significant challenge for owners of small and midsize businesses. The problem is simple. Your clients wa

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

t to pay you in 30 to 60 days, but you must pay rent, payroll and your suppliers now. As you can see, the math

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

does not work. Unless you have a substantial bank account, this leads to an almost impossible situation.

If yo

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

Combination pro

u are in this situation, it is also very likely that the bank will not be able to help you. As you well know, b

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

nks only lend to businesses that have three years of profitable operations and significant hard collateral. If

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

you do not qualify for bank financing, your best bet may be to consider factoring.

Factoring is a business fin

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

ancing tool that helps business owners who cannot afford to wait 30 to 60 days to get paid by their commercial

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

ustomers. Factoring provides you with the necessary funds to meet payroll, make rent and pay your suppliers on

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

time.

As opposed to bank financing, factoring is easy to qualify for. The main requirements are that you have

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

Following aspects would a

a profitable business with a strong roster of commercial clients. For the factoring company, your best collater

dd to the challenges in developing combination products:

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

l is the invoices from your strong customers.

Factoring is also easy to use. It enables you receive a substant

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

ial portion of your billings within a day of invoicing. It reduces the time you wait to get paid from 60 days t

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

o 2 days. The transaction is usually structured as a two installment sale of an invoice. The first installment,

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

called the advance, is paid to you immediately. The advance can be anywhere between 70% and 90% of the gross va

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

Professional from academic institutions, pharmaceutical industries, health care indust

lue of the invoice. The remaining portion (10% - 30%) is held as a reserve to cover disputes and charge backs.

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

The reserve is rebated as soon as the invoice is paid in full. The factoring company will charge a small fee fo

.

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

this service.

Factoring financing is an ideal tool for companies that are growing and that cannot afford to w

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

Companies that provide selfless information through particip

ait to get paid by the clients. It helps you to stabilize your financial situation and positions you for growth

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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