Useful Advices - Business

Usually the defining moment for a small to mid size distributor or wholesaler is when they get a huge order from their best customer. It is not unusual for a large customer

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

to place a few small test orders, and if everything works well, to follow up with a stream of massive orders. This is the kind of situation that can truly grow a company a

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

Examples of combination products may in

d help it reach the next level.

However, this can also present a very significant challenge. Distributors and wholesalers usually buy the products from suppliers in order

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

to re-sell them. And, suppliers always require to be paid either upfront or with a letter of credit. Large distribution companies can usually get terms or a letter of credi

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

without a problem, allowing them to buy the product from the supplier easily. However, this can present a very big challenge for small and mid sized businesses that cannot

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

Combination pro

obtain financing. At its worst, you may not be able to fulfill the order, forcing the client to go to your competitor. The fact is that a big order can either be a blessin

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

, if you have the financing, or a true nightmare if you don’t.

When faced with a very large order, most business owners try to go to the bank to obtain financing. If their

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

business meets banking criteria, such as having three years of financial statements and showing significant profits, financing can be usually be obtained. But, if the busi

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

ess is new or has not reached profitability yet, there is little chance – if any – of obtaining any bank financing at all.

However, that doesn’t mean you have to turn you

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

r client away. It just means you need to try a different financing avenue.

Purchase order financing, a long standing financing tool in the trade industry, may be the right

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

solution for you. It enables you to fulfill large orders from credit worthy clients by providing you with the financing you need to fulfill the sale. By providing you with

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

Following aspects would a

the necessary financing and letters of credit, you can pay your suppliers and deliver the big order to your customer. In the end, you end up realizing significant profits a

dd to the challenges in developing combination products:

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

d growing your company.

It is important to note that purchase order financing is not a bank loan and usually not offered by banks. However, it is easier to qualify for tha

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

n many types of financing. It has two very simple requirements. First, the client placing the order must be credit worthy. Large companies and state and federal government

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

ntities usually work well. Second, your profit margins on the sale should be close to 30%. As opposed to a usual banking arrangement, the purchase order financing company m

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

akes its financing decision based on the credit and stability of the company paying for the order rather than on your credit. This is a big difference and enables small and

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

Professional from academic institutions, pharmaceutical industries, health care indust

mid sized distributors to easily qualify for this type of financing.

Most purchase order financing arrangements also include a receivables factoring agreement. Although no

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

t widely known, combining these two types of financing usually allows you to reduce the total transaction cost. It’s an industry trick that works well at maximizing your pr

.

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

fits. Because of this, be sure that when you seek purchase order funding you work with a company that also offers accounts receivable factoring.

Purchase order financing i

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

Companies that provide selfless information through particip

s an ideal tool for small and mid size distributors, wholesalers and re-sellers who are making big sales and getting ready to take their company to the next stage of 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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Useful Advices - Purchase Order Financing: A Tool to Finance Distributors and Wholesalers

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