Useful Advices - Business

There are two main types of financing for a business, debt or equity financing. Debt financing tends to be the type of financing you receive from a traditional bank loan and equity financing tends to be financing you

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

receive from venture capital into your business from outside investors. The benefit of debt financing is that it is finite and you will pay down the debt over time to a zero sum balance without any further obligation t

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

Examples of combination products may in

o the lender. The down stroke to debt financing is that traditional lenders will take a hard look at your business including how long it has been in existence, income from operation, expenses and will require hard asse

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

s for collateral for the loan. Additionally, lenders will most certainly want you (and any other principals of the organization) to personally guarantee repayments of the loan. Another disadvantage of debt financing i

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 that your organization will be burdened with some other type of regular payment (usually a monthly payment) depending on the terms and conditions of the financing and this can absorb critical cash flow, especially wi

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

Combination pro

h small business.

The benefit of equity financing or venture capital is that you will be receiving money in exchange for equity in your business in the form of stock or some other form of equity like percentage of inc

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

ome or gross/net sales. A primary benefit of this type of financing is that typically there is no monthly payment requirement to investors. Instead, you are giving up ownership interest, most often, permanently.

Tradi

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

tional lenders, banks for example, will look at your business much differently than venture capitalist. Bankers want a zero-risk or near-zero risk position when they provide financing and will rely almost completely o

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

the operating economics of the business with little regard for “potential future growth”. They want to see strong cash flow backed up by hard assets before they do a deal—the ingredients that most small business lack

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

or they wouldn’t be seeking financing, right? Venture capitalist, on the other hand, tend to consider the management team and the potential future growth of the business more heavily than actual operating numbers, es

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

ecially for small business with large potential but few sales and little or no operating history. Although these two lender types vary in their approach to analyzing a business for funding, you can be sure that careful

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

Following aspects would a

scrutiny of you business will be conducted…

Besides the actual operating economics and pro forma analysis, both types of lenders will look closely at two particular documents: 1. Your business plan. 2. Your bank or

dd to the challenges in developing combination products:

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

loan request package. These two documents, if assembled correctly, can make the difference between success and failure when dealing with either lender type.

There are plenty of free SBA related materials that tell yo

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

how to create blue-chip, boiler plate business plans but they tend to be written for perfect businesses and not the average Joe who is less than picture perfect. If you are seeking some type of financing for your bus

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

iness I strongly suggest that you visit our site and check out our business e-books. We have several that cover a variety of topics and there are specifically two that will be a real treasure for you to own. One is ca

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

led Power Planning (a powerful report on writing a wide variety of business plans) and How To Raise Money For You Business (teaches you how to assemble professional loan requests packages). They are priced at $5 each

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

Professional from academic institutions, pharmaceutical industries, health care indust

and can be worth millions in the hands of the right person. I am not trying to hype product, I am simply giving you a heads up.

The secrets to getting financing from either type of lender is a closely held secret by

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

financial and business brokers for a number of reasons. Chief among them is it forces people like you to do business with them and they earn commissions. The SBA materials, while good, do not have the street savvy to

.

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

get the job done in most cases. The proof is in the pudding—what has the SBA ever done for you? The SBA is just another government back bureaucratic nightmare for most. We also have some links for venture capital fir

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

Companies that provide selfless information through particip

ms in our business links area located on our site on the Smart Link Zone page—it’s all-free.

Give it some thought…. Your future may depend on it.

To your success! Copyright © 2006 James W. Hart, IV All Rights reserve

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 - The Difference Between Debt And Equity Financing

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