Main Subject - Business

One of the fundamental financial statements of a business is called the balance sheet. In layman’s terms, what are the different components of the balance sheet?

The nature

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

of the balance sheet is that it is similar to a financial picture of the organization at a certain point of time (as opposed to an income statement which is over a period of t

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

Examples of combination products may in

ime). For example, the balance sheet can be as of December 31, 2006, or whatever is the close of the fiscal year. Balance sheets can be determined monthly or at other interv

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

als as well. Balance sheets contain “permanent” information, as opposed to “temporary” information on an income statement. For example, cash is a permanent account, that is,

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

an ongoing part of the business. Revenues (sales) and expenses are temporary accounts, determined for specific fiscal years and then those accounts are closed out to the bala

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

Combination pro

nce sheet.

The balance sheet equation is assets equal debts plus owner’s equity. An asset is some type of property you need in your business. Cash, real estate, equipment,

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

vehicles, inventory and the like are required to run a business. There are claims on this property: who owns what and that comprises the debt and owner’s equity sections. De

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

bt is how much the bank (and other creditors) owns of your assets and owner’s equity is how much you own. So the grand total of the property (assets) will equal the claims of

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

the bank and the claims of the owner.

Now that we’ve defined the basic components of the balance sheet, let’s look at each section in a little more detail, starting with asse

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

ts. We’ve given some tangible examples of what assets can be, but they can be intangible (not physical) as well. An example of an intangible asset is accounts receivable, th

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

at is, amounts your customers owe you but have not yet paid. That is an asset, because some day that cash will be realized. Another type of intangible is a prepaid expense.

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

Following aspects would a

It may be required for you to take out a 3-year insurance policy, paid upfront. You’ve already paid for this service but have not yet received the benefit of insurance cover

dd to the challenges in developing combination products:

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

ge for the entire three-year period and in the meantime that is considered an asset.

Debts are also known as liabilities. In addition to owing money to banks, your business

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

could own money to suppliers. This is called accounts payable. A more formalized statement of something owed is called notes payable. Money owed on a mortgage is called mor

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

tgage payable. Payables that are due within one year are called current payables; payables that are due longer than one year are called long-term payables.

Owner’s equity (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

r capital) can be explained in terms of your home mortgage. Your house is the asset and how much you owe the bank is the liability. What is left is the owner’s equity. This

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

Professional from academic institutions, pharmaceutical industries, health care indust

logic can be applied to your assets in total; subtract what is owed to the bank and the result is owner’s equity. There are different types of owners, depending on business t

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

ypes. A sole proprietorship is a single owner, as contrasted with a partnership where there is more than one owner. If a business is incorporated, this section is referred t

.

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

o as stockholder’s equity and common stock will be involved.

In summary we’ve looked at the balance sheet complete with the goods a business has (the assets). Claims by othe

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

Companies that provide selfless information through particip

rs on those goods are considered to be liabilities and the net result is owner’s equity. That is why the balance sheet balances. Assets equal liabilities plus owner’s equity

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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