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Main Subject - Importance of Trade Finance & Structured Trade Finance for Importers and Exporters of Commodities?
Trade finance is the method importers and exporters of commodities and goods use to finance their business. Basically, trade finance has been in existence for many thousands of years - a
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
nd one can trace the roots of trade finance and structured trade finance right back to the early days of China and the silk route, Mesopotamia and Europe. Trade Finance was around long b
; 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
efore Europeans settled in America and long before the world’s stock markets were born!
Today, trade finance is a massive, multi-billion dollar business. As the world trades more and mo
Today, trade finance is a massive, multi-billion dollar business. As the world trades more and mo
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
e goods and commodities are bought and sold, so more and more banks and financiers are needed to lend money to finance the purchase and sale of these goods and commodities - right across
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
the global supply chain.
How is trade finance and structured trade finance useful?
Take an example: imagine you are a trader in cocoa beans in Cote d’Ivoire, buying beans locally and
How is trade finance and structured trade finance useful?
Take an example: imagine you are a trader in cocoa beans in Cote d’Ivoire, buying beans locally and
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
elling them to foreign buyers. To make your purchases, you will need to have money to buy the cocoa up-country in Africa, prior to their export. Where will you find money to make these p
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
urchases? And supposing you are the international buyer; the shipper, purchasing from cocoa traders all over West Africa - how will you finance your transactions, which at any one time m
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
ay exceed your cash reserves? What might be supported by your bank who, if they are traditional lenders, will only lend against your balance sheet?
This is where trade finance and struc
This is where trade finance and struc
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
ured trade finance is useful – your business can grow and develop if you use the services of a specialist trade finance department who will structure trade finance structures can be tail
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
ored to your needs, using the collateral of the goods you are trading, rather than your own balance sheet or other assets.
What is the basis of trade finance and structured trade financ
What is the basis of trade finance and structured trade financ
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
?
Goods and commodities have an underlying value of their own. For example, if cocoa beans are worth many hundreds or even thousands of dollars per tonne, then once a big pile of beans
Goods and commodities have an underlying value of their own. For example, if cocoa beans are worth many hundreds or even thousands of dollars per tonne, then once a big pile of beans
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
is accumulated in one place; in a warehouse or on a ship, it is worth a lot of money. A bank may lend money against the total value of the beans, minus some amount to take account of pri
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
ce and other risks
.
It is the same for every commodity or trade good which is resalable. A bank will make a loan as long as the collateral “adds up” and as long as the bank is comfor
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
able with the way the deal is structured between both the buyer and the seller. Of key importance is that if something goes wrong the bank is able to take possession of the commodities o
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
r goods and sell them to realise monies to repay any loan amounts outstanding.
Basically, when we talk of structured trade finance we are talking of deals whereby complex arrangements a
Basically, when we talk of structured trade finance we are talking of deals whereby complex arrangements a
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
e put in place to ensure a bank can take possession and sell the underlying capital used for the loan; in this example, the goods and commodities themselves.
Is trade finance complicate
Is trade finance complicate
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
d?
No. It is a simple business although the structures used in trade finance in more complex deals require a lot of work for all of the parties involved. This is why the total loan amou
No. It is a simple business although the structures used in trade finance in more complex deals require a lot of work for all of the parties involved. This is why the total loan amou
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
nt of a structured trade finance loans must be high enough to warrant the involvement of highly-paid bankers, lawyers and other advisers.
Where can I find out more about trade finance a
Where can I find out more about trade finance 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
d structured trade finance?
Day Robinson Group has offices in London and New Delhi and is one of the world’s foremost providers of training in the trade finance sector. For more informa
Day Robinson Group has offices in London and New Delhi and is one of the world’s foremost providers of training in the trade finance sector. For more informa
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
tion, you can visit our site at: http:///www.dayrobinson.com or you can contact the author of this article, Dan Day-Robinson at Day Robinson International in the UK (ddr@dayrobinson.com)
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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