Main Subject - Business

This segment will explain the essentials of how a bank evaluates the inventory that is offered as collateral for a business loan or an operating line of credit. As explai

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

ned in the segment on equity, this is not supposed to be a text book course, but explains briefly what you will encounter in the real world of business finance.

These c

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

Examples of combination products may in

mments are not for the retail business; they apply to wholesalers, importers and manufacturers.

The amount of money the financial institution will be prepared to lend yo

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

will depend a great deal on the amount and ease of realization of the inventory collateral you can offer to cover the loan, in case there is a default in repayment.

It

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 not just the amount of the collateral, but the quality of the collateral, and whether it would realize enough to repay the loan if there was a liquidation of the busine

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

Combination pro

s.

A typical example might be that your main collateral for a $1 million loan application is your inventory of widgets. The widgets will cost you $1,250,000 and you expe

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

t to sell them for a total of $2,000,000 which would gain you a $750,000 profit. You would think your bank would be pleased to approve the loan.

These are some evaluatio

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

techniques related to the inventory that the bank will utilize before the credit approval decision can be made:

**Quality of the widgets: What percentage, if any, are d

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

maged and non-saleable? Are they a seasonal item and, if so, are they carried over from the last season, or are they current? Are they a basic necessity or a gimmick tha

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

may not last? Are they easily saleable?

**What would be a reasonable liquidation value of the inventory, after auction and liquidation expenses? Is there a ready marke

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

for them? Will one have to store them at an expense, and attempt to sell them in the next season? Would the liquidation value cover the loan? Would the bank have to incu

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

Following aspects would a

r any expenses to render the inventory saleable? Will custom duties have to be paid before the inventory is released from bond, in the case of importers?

**What percent

dd to the challenges in developing combination products:

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

ge of your existing inventory, if any, is covered by customer orders? Or is it purchased on speculation, in the expectation that orders will come in?

**When was the la

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

t physical count done of the inventory? Was the count supervised by the auditors? Is the dollar value based on GAAP ? (generally accepted accounting principles)

**Depen

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

ing on the nature of the widgets, how often does the inventory turn over each year. Is it comparable to the industry average?

It is unusual for a bank to finance more th

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

n fifty percent of the cost value of inventory, because of the risks involved. However, if you are an importer and you require the bank to open letters of credit for you

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

Professional from academic institutions, pharmaceutical industries, health care indust

suppliers, the bank may provide higher financing if you can show that a substantial portion of the inventory being bought is against customers' purchase orders. Your bo

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

rowings, as shown in your cashflow projections, should also be within the line of credit approved for your business. Always keep in mind, when making your credit applica

.

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

ion, that bankers hate surprises! Give them all the information they need to make a credit decision upfront. If there is any negative aspect, bring it up and explain how

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

Companies that provide selfless information through particip

ou plan to deal with it.

Additional segments will deal with collateral other than inventory, as well as other aspects of commercial finance you will find useful to know

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

HTTP = HTML link (for blogs, profiles,phorums):
<a href="http://www.mainsubjects.org.ua/article/1863/mainsubjects-Banking--Inventory-Collateral.html">Banking - Inventory Collateral</a>

BB link (for phorums):
[url=http://www.mainsubjects.org.ua/article/1863/mainsubjects-Banking--Inventory-Collateral.html]Banking - Inventory Collateral[/url]

We all love the idea of being our own boss, setting our own working hours and answering to no-one but ourselves. However, many of us are afraid that we don't have what it takes to be a success. For most of us the fear of failure stops us from following our dreams but I can show you how to turn your dreams into a reality in just six easy steps.

Quick tips to help New College Graduates navigate successfully in their new careers.

If you're thinking of getting into the medical billing field, you'll probably want to know what your chances are of getting a job. What you're about to read is a general idea of how easy or hard it will be to find work in the various medical billing fields.

Tags

Links

Main Subject - Banking - Inventory Collateral

Related Articles: