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Main Subject - Centralised And Decentralised Books
Inventory purchased by head office and sent to branches for them to sell can be invoiced to the branch at cost price or at an amount above cost (usually a fixed
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
retail selling price). Invoicing the goods sent by head office to the branches at cost reduces head office inventory by the same amount as that at which the inv
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
ntory was originally recorded in its accounting books. The transfer is not considered to constitute sales and therefore does not result in gross profit for the
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
head office. Branches receive goods at cost price and earn gross profit when goods are sold.
Where branch accounting records are kept by head office the inform
Where branch accounting records are kept by head office the inform
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
tion from head office's own documentation is supplemented by the information obtained from branch returns. In practice the branch returns will be summarised mon
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
thly and recorded in the relevant branch account in head office's accounting books.
Where various branches exist, a separate account should be kept for each, al
Where various branches exist, a separate account should be kept for each, al
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
hough in a manual system this can be done in columnar form for the sake of simplicity. In head office's books, the sales and various other accounts will be dist
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
inguished by the name of the branch.
The following are typical accounts provided in a centralised accounting system: (1) Branch inventory account, (2) Branch de
The following are typical accounts provided in a centralised accounting system: (1) Branch inventory account, (2) Branch de
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
tors account (if the branch sells goods on credit), (3) Branch bank and petty cash or cash accounts and (4) Branch profit and loss account.
When the head office
When the head office
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
trading account is prepared the cost of the goods sent to the branches is deducted from head office purchases. If this is not done, head office purchases will
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
omprise head office and branch purchases. This overstatement of purchase will result in an overstatement of head office's cost of sales and consequently and und
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
rstatement of the head office's gross profit percentage.
Since inventory is usually valued at cost in the financial accounting statements of an enterprise, the
Since inventory is usually valued at cost in the financial accounting statements of an enterprise, the
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
method of invoicing goods to the branches at cost is the easiest to apply, as both head office and branch inventory are shown at cost. Therefore, no further adj
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
stments are required.
In the decentralised accounting system, transactions between head office and the branch are recorded in the books of both. Where the bran
In the decentralised accounting system, transactions between head office and the branch are recorded in the books of both. Where the bran
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
ch keeps it own books, the accounting entries will be similar in many respects to those made by a sole trader. However, the branch capital is provided by head o
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
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
fice and therefore usually recorded by the branch as a credit to the 'head office account', with a corresponding debit in head office's books to "XX branch accou
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
nt'.
The head office account in the branch's accounting books and the 'branch account' in the head office's books are therefore reciprocal accounts, that is equ
The head office account in the branch's accounting books and the 'branch account' in the head office's books are therefore reciprocal accounts, that is equ
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
valent accounts that are maintained in different sets of accounting books and that have identical, but opposite, balances.
After all transactions, adjustments a
After all transactions, adjustments a
.
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
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
nd closing entries have been recorded in both sets of books, the head office account balance in the branch's accounting books should be the same as the branch ac
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
ount in the head office's accounting books (unless any transactions between the head office and the branch have not been recorded in one set of accounting books)
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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