Subjects - Business

A potentially profitable business can fail because of poor management of cash flow. Equally, an unprofitable business can enjoy a period in which is ha

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

s plenty of cash before the bills arrive!

Cash flow and profits are two very different concepts:

- A business makes a profit if, over a given period

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

Examples of combination products may in

of time, its rebenue is greater than its expenditure. A Business can survive without making a profit for a short period of time, but it is essential th

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

at it earns profits in the long run.

- Cash Flow relates to the timing of payments and receipts. Cash flow is important in the short term as a busines

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

s must pay people and organisations to whom it owes money.

Unless a business manages the timing of its payments and receipts carefully, it may find it

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

Combination pro

self in a position where it is operating profitability but is running out of cash regularity. This could be because it is forced to wait for several mo

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

nths before receiving payment from customers. In the meantime, it has to settle its own debts.

Why do businesses forecast cash flows?

Businesses unde

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

rtake cash flow forecasting for a variety of reasons:

1) To make sure that they do not suffer from periods when they are short of cash and are unable

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

to pay their debts by forecasting cash flows, a business can identify times at which they are may not have enough cash available. This allows them to m

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

ake the necessary arrangements to overcome this problem.

2) To support applications for loans businesses often require loans when they are first estab

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

lished and when growing. Banks and other financial institutions are far more likely to lend money to a business that has evidence of financial planning

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

Following aspects would a

.

Constructing cash flow forecasts

Although cash flow forecasts differ from one another, they usually have three sections and are normally calculated

dd to the challenges in developing combination products:

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

monthly. An essential part of cash flow forecasting is that inflows and outflows of cash should be included in the plan at the time they take place.

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

1) Cash in - The first section forecasts the cash inflows into the business, usually on a monthly basis. This section included receipts from cash sales

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

and credit sales. Credit sales occur when the customer is given time to pay: Normally sixty or ninety days.

2) Cash out - The cash out (expenditure)

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

section will state the expected expenditure on the goods and services. Thus, a typical section might include forecasts of expenditure on rent, rates, i

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

Professional from academic institutions, pharmaceutical industries, health care indust

nsurance, wages and salaries, fuel and so on. The net monthly cash flow is calculated by subtracting the total outflow of cash from the total inflow.

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

3) Net monthly cash flow - The final section of the forecast has the opening balance and the closing balance. The opening balance is the businesses cas

.

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

h position at the start of each month. This will, of course, be the same figure as at the end of the previous month. The net monthly cash slow is added

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

Companies that provide selfless information through particip

to the opening balance figure. The resulting figure is the closing cash balance for the month. It is also the opening balance for the following month.

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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