Useful Advices - Business

Effect of Expenses

The last article examined how to calculate your realistic billable hours. If you remember, we arrived at approximately 1100 hours in

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

a year. To earn our mythical $46,000 per year, you needed to bill at a rate of $42 per hour. Now we need to take into account the expenses of running a bus

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

Examples of combination products may in

iness and see where those put our hourly rate.

Most costs fall into three general categories: business and office expenses; salary and personal taxes; a

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

nd, benefits and profit margin. In this article, we will concentrate on the first category, business and office expenses.

Everyday expenses are part of

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

oing business, and these must be reflected in the prices you charge or you will not be in business for long. Expenses to consider are rent for office space

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

Combination pro

. If you are home-based, you will still have an increase in utilities, such as gas and electric over your regular household bills. You will have telephone

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

costs, postage, copying costs, stationery, office supplies, subscriptions and possibly, membership dues.

You will also need to make periodic upgrades to

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

your office equipment and furniture. Items such as computer hardware and software; fax machine, copier, filing cabinets, telephone headsets, etc. All of th

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

ese items add to the hourly rate you charge for your services. You must have a good estimate of what these costs total each year or you will end up cheatin

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

g yourself. If you do cheat yourself, you are going to drastically increase your stress levels and lose much of the enjoyment of running your own business.

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

Let's plug some numbers into our costs and see how they affect our hourly rate.

Rent $600 per month x 12 = $7200

Utilities $100 per month x 12= 1

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

Following aspects would a

200

Telephone $100 per month x 12 = 1200

Postage $100 per month x 12= 1200

Copying $50 per month x 12 = 600

Stationery $25 per month x 12 = 300

dd to the challenges in developing combination products:

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

Supplies $50 per month x 12 = 600

Upgrades $150 per month x 12 = 1800

Furniture $50 per month x 12 = 600

Yearly Total = $15,300

The yearly

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

total comes to $15,300, divide this by 1100 billable hours and you get approximately $14 per hour. Now add this to the original $42 per hour and you can se

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

that you need to charge $56 per hour to cover your hoped for $46,000 per year income plus your expenses. If you are home-based, you can subtract the $7200

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

per year in rent or about $6.50 per hour from the $56 above.

I have made a number of assumptions in arriving at these figures, your costs may be more o

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

Professional from academic institutions, pharmaceutical industries, health care indust

r less, but this will give you an idea of what to look for and how to calculate your expenses. If you have any questions, write to me or give me a call and

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

I will go over your situation with you.

Remember, in order to be fair with yourself and your customers, your prices must reflect the true cost of doing

.

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

business. Do not ever apologize for your prices. You need to charge enough for you to live on and enough to stay in business to service the clients that ha

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

Companies that provide selfless information through particip

ve come to depend upon you. If some of your customers can't understand this, change your customers, not your prices.

Copyright 2000, DeFiore Enterprise

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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