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Despite widespread agreement that effective expense management is critical to business success, there's still one aspect of expense management that tends to be handled badly. And it's costing many businesses millions each

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

year! Ironically, it's a cost that can be drastically reduced (all but eliminated) overnight.

I'm talking about the processing costs associated with purchases. They're called "transactional processing costs"; they're no

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

Examples of combination products may in

t the cost of the purchase itself, but the cost of the transaction.

The Dollar-Value of Transactional Processing Costs

The end-to-end cost of processing high volume, low value purchases (such as travel, entertain

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

ment, contract labor hire, training, employee claims, stationery, publications, books, kitchen supplies, etc.) can be exorbitant. In fact, in many cases, it's higher than the purchase cost itself (even with the efficienci

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

es delivered by an ERP application). The reason for this is that the total cost-to-transact includes many associated activities such as processing, administration, and bank fees, to name just three. In a typical business,

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

Combination pro

90% of purchases are low value; they represent less than 10% of total company purchase spend. But because the cost of each transaction is normally much the same regardless of the purchase price, in reality, these low val

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

ue purchases cost far more than the big purchases. Consequently, the majority of available company resources (e.g. employee time, effort, and money) may be dedicated to managing the low-value, high-volume transactions tha

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

t constitute a relatively small percentage of overall company expenditure.

How to Reduce Transactional Processing Costs

An increasing number of businesses have taken steps to address this issue, and have enjoyed

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

substantial operational savings and direct bottom-line improvements. They've significantly improved their operational efficiency and, in many cases, reduced their transactional processing costs by more than 90% per transa

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

ction. This represents substantial cost savings when considering the volume of transactions most companies process each year.

So how did they do it? What is the opportunity for those companies that still employ tradition

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

al methods?

Today, many businesses have found a straightforward, effective and efficient answer to this question. They employ a simple solution that combines the use of a traditional credit card with corporate expense ma

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

Following aspects would a

nagement software.

How does this work in practice?

The Process: Your employees use a corporate credit card to procure goods and services. The electronic transaction is sent to their individual PDA or PC (via any

dd to the challenges in developing combination products:

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

network or internet connection). The employee confirms the transaction and charge with the click of a button, and a fully coded transaction is then posted to your chart of accounts. You then make a single payment to the

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

credit card provider for all purchases made using the card during the month. Everything is managed automatically in real time, including all of the controls, business rules, and management notifications that ensure purcha

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

ses are approved and comply with corporate policy.

The Result: You're able to consolidate thousands of payments into a single transaction. With the supporting systems, you can analyze expenses and implement controls on 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

real-time basis.

Case Study

A company processes around 50,000 payment transactions per year, of which 80% (40,000) are low-value/high-volume non strategic expenses. By implementing a ProMaster corporate expense

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

Professional from academic institutions, pharmaceutical industries, health care indust

management software solution, they are able to save $56 per transaction, delivering a total cost saving of $2.24m per year (40,000 x $56.00 = $2.24m). Admittedly, this includes both 'hard' and ‘soft’ savings, but the busi

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

ness case is real, and is proven to deliver results in all industry sectors including R0I within six months.

Conclusion

For years now, companies have been using credit cards as a corporate payment tool for travel

.

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

and entertainment costs. The extension of the concept into general business procurement has been made possible more recently by the release of new products from card issuers and the development of sophisticated corporate

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

Companies that provide selfless information through particip

expense management software systems that provide immediacy of control. Today the concept is a key addition to corporate improvement project portfolios, covering all non-strategic low value spends and potentially far more

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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