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Starting a new business can be a daunting task. There are hundreds of decisions to be made. Who, what, where, and when are not just for English class anymore. Another question that must be ans

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

wered is “What form will my business be?” There are several factors to be considered and there are pros and cons for each type. In this article, I will try to briefly explain the differences bet

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

Examples of combination products may in

ween the business forms.

Sole Proprietorship: Most people are familiar with this type of business. This form is one person or married couple that usually operate the b

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

usiness by themselves. This is the “Mom and Pop” type of store. The owner receives all of the income from the business but is also responsible for all for the liabilities that the business incu

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

rs. The income or loss is also reported on the personal income tax of the owner. Most small businesses are started as this form of business. This is the easiest of all of the types of business

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

Combination pro

es to open.

General Partnership: In this type of business organization, there are two or more partners. The income is split between the partners, usually based on the a

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

mount of money or assets that each partner invests in the business and each must report his share of the income on his personal income tax form. Each of the partners have unlimited liability f

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

or the debts of the business partnership. Another drawback to this type is problems can arise between the partners. However, sometimes another opinion in a decision is just what a business needs

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

Limited Partnership: A limited partnership is similar to the general partnership. All of the general partners have an unlimited liability for the business debts. How

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

ever, a limited partners liability, as the name implies, is limited to the amount of the contribution that he has made to the business. Usually, a limited partner does not have as much input as

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

he other partners and like the other partnerships must report income on personal tax forms.

Corporations: A Corporation is usually viewed as a separate legal entity with

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

Following aspects would a

many of the rights and responsibilities of a person. The investors have limited liability; shareholders are not responsible for the corporation’s debts. The corporation files its taxes just li

dd to the challenges in developing combination products:

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

ke an individual. If the corporation makes a profit and distributes dividends, it cannot deduct the dividends from its taxes and the individual recipients must also pay taxes. Therefore, a corpo

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

ration is taxed twice on its earnings. A corporation has other tax benefits that an individual does not.

“S” Corporation: An “S” corporation provides the owners the ben

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

efit of being treated as a partnership on income tax, while also being treated as a corporation for other purposes.

Limited Liability (LLC): All of the members in a limi

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

ted liability company have limited liability for the debts of the business. This form of business is similar to an “S” corporation because it is usually treated as a partnership for income tax p

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

Professional from academic institutions, pharmaceutical industries, health care indust

urposes, but has the benefit of limiting the liabilities of the owners.

This is a brief description of the types of business that can be operated. Each of them has many more variation

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

s that are not present in this article and an attorney should be consulted to aid you in your decision. Each form has its benefits and drawbacks and the decision should be weighed carefully.

Al

.

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

though corporations allow limited liability to the principals, many creditors such as banks, other companies, and landlords may require a personal guarantee from the shareholders. A partnership

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

Companies that provide selfless information through particip

may be a good decision; although, one of the partners may be dealing with a “hard head.”

Take your time to weigh the pros and cons of each type of business and pick the one that is right for you

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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