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Main Subject - Calculate Brofit Breakeven Using Goal Seek
Breakeven is a financial term to describe a business or project
where the sales revenue is equal to total expenses
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
. It is simple
to calculate if the expenses incurred are fixed, i.e. it does not
change as the revenue changes.
; 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
But in most projects/businesses, this
is not the case. The expenses usually make up of a fixed component and
var
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
iable component.
The existence of variable expenses complicates the calculation of breakeven point. This is becau
The existence of variable expenses complicates the calculation of breakeven point. This is becau
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
e the variable cost will increase as
the number of units sold increases. The answer can be calculated
by workin
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
g out the total gross profit of the unit sold to be equal to
the total fixed expenses.
If the unit cost of the va
If the unit cost of the va
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
riable expenses changes not by equal amount
with every unit sold (could be due to step cost, i.e. the cost increas
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
es
only when it reaches certain quantity, e.g. quantity discount given),
then the breakeven calculation would be
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
ome much more complicated.
In the example below, the net profit decreases by $72 because the step cost increases
In the example below, the net profit decreases by $72 because the step cost increases
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
from $150 to $250 when it hits the 20 unit mark. Then the
profit increases by $28 when the quantity sold increases
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
from 20 to 21.
You can use Excel to create multiple columns to find out the breakeven quantity for the project.
You can use Excel to create multiple columns to find out the breakeven quantity for the project.
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
And Excel can replicate the model quickly if
you know how to use absolute reference to make the formula reference
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
o
the unit value column as the model is coped across columns.
But there is an even easier way to find the answer.
But there is an even easier way to find the answer.
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
That is
to use Goal Seek, a function provided by Excel. Here is how to use Goal
Seek to find the breakeven poin
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
t.
- From the menu, select Tools -> Goal Seek.
- Fill in the boxes as shown below:
- Set Cell is reference to the net profit cell D15.
- To Value is to instruct Goal Seek to set the net
- Click OK and Excel will return the status of test. In 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
>
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
rofit to
zero by changing the value in certain cell, which in our example
is the quantity. (You can use goal see
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
k to find out other net profit targets too)
.
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
ur
example, a solution was found. The quantity is 52.
Note: If Goal Seek cannot find a solution the f
Note: If Goal Seek cannot find a solution the f
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
irst time, you can try
again. You may be surprised to find a solution when you run Goal Seek
the 2nd or 3rd time
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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