Main Subject - Business

Revenue is vanity, profit is reality and cash is certainty. In medical analogy, revenue is the food, profit is the water and cash is the oxygen. You cannot pay rent with profit, you can only pay your rent with hard cash. Cash tal

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

ks, the rest walks.

Just as a critically ill person needs to be administered with fresh oxygen, an ailing company’s immediate lifeline is cash, cash and more cash. Fresh fund injections will provide the fillip needed to get the

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

Examples of combination products may in

system moving on an even keel as well as to create stable platforms for growth.

In almost every turnaround situation, there is a troubled project that is bleeding or draining cash at an accelerated speed. For a variety of unheal

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

thy reasons such as neglect, denial or mismanagement, these problems remain unresolved. The turnaround team need to apply the tourniquet and immediately stop the continuous haemorrhage and unrelenting outflow of cash. The turna

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

round team’s task is to stomp out the fire and slow down the rate of burnt-out. The West would call this “stopping the bull by its horns,” and the East calls it “catching the tiger by its tail.” The managers need to adopt this

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

Combination pro

approach during restructuring. Also they need to promote “corporate catharsis” to purify the system and set the tone of the mode of operation. It is no more business as usual.

Other cash flow problem arises when the bank recalls i

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

ts loan or terminate other lines of credit to the company. In Singapore, many small and medium size enterprises (SMEs) run into cash flow problems when the local banks cut or reduce the bank loans. In 2003, there was a record h

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

igh of 4484 individuals who were declared as new bankrupts. In the past there were six major local banks with banking officers who understood the sentiments and businesses of SMEs and had close banking relationships with them.

H

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

owever, in recent years with mergers and restructuring in the local banking scene, only four major banks remain with many of these banking officers retrenched and the bank loans to the SMEs drastically reduced. The banks’ underst

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

anding and rapport with the SMEs are lost. The new banking officers are stricter and loans are not given to SMEs, which exceed the banking credit facilities and do not provide proper accounting records. Also, the local banks ha

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

ve shifted their focus to other low-risk and fee-based services. The Singapore SMEs suffer from “corporate asphyxia”, deprived of its vital oxygen supply – cash.

The demands for funds will be there – paying the rental, workers’

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

Following aspects would a

salaries, bank loan and interests, implementing new technology, upgrading current equipment, reviving R&D, providing advertising support to brands, training people, acquiring competitors to add critical mass to the company, and

dd to the challenges in developing combination products:

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

so on – the list is endless.

Hence it is vital for the turnaround manager to find ways of improving short-term liquidity, cut costs and at the same time, negotiate new loans from the current lenders.

Measures to improve cash flo

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

w include - reducing inventory and disposal of obsolete ones, tightening stock control, increasing the selling price, divesting ventures that do not add value to the core business, reducing costs, finding refinancing, factoring t

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

he receivables, implementing sales and leaseback, exploiting hidden assets, recouping prepaid expense, renting out idle capacities and persuading the customer to pay cash and in advance as well as laying off/downsizing. Fresh f

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

unding is critical to jump starting the system. Avoid bankruptcy and improve your cash flow.

Every bad debt starts out as a slow repayment, so you need to be vigilant of your collections. Disproportionately high receivables and

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

Professional from academic institutions, pharmaceutical industries, health care indust

inventory are trouble signs. The balance sheet calls them assets. They should actually be called liabilities. Cash is an asset, you can buy many things with it. Mounting inventory or receivables is the first warning that the se

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

rvice or product is slipping while your income statement still shows profits. Also do not confuse external borrowing with positive cash flow. Proper accounting says it is, but this is short-term thinking. Only sales collected are

.

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

the authentic cash flow. All else is temporary or even worse.

Managing cash flow to meet working capital requirements is very important. With insufficient working capital, a business can wind up despite being profitable. On the

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

Companies that provide selfless information through particip

other hand, an unprofitable business can continue operations if it has sufficient cash to pay its creditors.

Though cash is not everything, its level of importance is the same as oxygen. Without it, you will certainly perish.

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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Main Subject - Cash is Oxygen During the Restructuring Process

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