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When the typical new business operator starts a business, they concentrate on making the business succeed. That is necessary but not the only thing that a business operator should concentrate on. A business depends on cash flow to exist and grow

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

, so business operators would do their business a good turn by looking at sources of cash flow provided by the Government.

We are talking about the taxation authorities such as Inland Revenue Department in New Zealand (IRD), the Australian Taxati

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

Examples of combination products may in

on Office in Australia (ATO) and Inland Revenue in the United Kingdom and the Inland Revenue Service in the USA (IRS). All of these taxation administrations, along with those in Canada and South Africa for example, have both income tax and goods

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

and services tax (GST) or value added tax (VAT) that present opportunities for refunds when a business’ expenses exceed its income in the early stages of its life.

Initially, the start-up capital may come from savings, family and friends and sal

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

ried employment. The last source of finance – salaried income – means that the business operator still works full-time for a salary and part-time on their business. This presents particular opportunities to receive extra cash flow to fund the gr

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

Combination pro

owth of the business – from value-added taxes and income tax refunds.

It should be noted that even where the business owner does not have other salaried (tax paid) income, they might have a husband or wife who does have salaried income. If they

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

become a partner in a partnership conducting the business, or a shareholder in a Loss Attributing Qualifying Company (LAQC) in New Zealand only, then they can share in the business losses and receive income tax refunds.

In Australia, there was an

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

ATO income tax ruling (IT 2218) that allowed a partner to receive a salary – as long as the partnership agreement recorded it in writing – and this presented an opportunity to maximize the loss for one partner (the salaried partner), thereby maxim

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

izing the income tax refund. That income tax ruling was withdrawn on 22nd May 2002. Australia has no LAQC equivalent entity. However, there is nothing preventing a partnership agreement specifying a partnership split other than 50/50, so that o

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

ne partner can receive more of the loss than the other. It would be prudent for the partnership agreement to record the reasons for the ratio used.

So, how does it work? Most businesses start off making losses, and small businesses and home-bas

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

d businesses are not exempt from this. The total revenue or income is usually low. It is often below the thresholds where the business has to register for GST or VAT, so that the business owner may be tempted to not register for GST or VAT, ther

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

Following aspects would a

eby saving on administration (in filing the returns) or accounting costs.

If the business owner contacts their local taxation authority, they will be correctly advised of the income thresholds for registration and the decision will be left to the

dd to the challenges in developing combination products:

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

m to make. It would not be appropriate for a taxation officer to advise the business owner on how to manage their taxation affairs, and there is a case of the Privy Council (UK) that confirms the Inland Revenue cannot tell a business owner how to

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

run their business. It is certainly not obligatory on the taxation authority to advise a business owner on a course of action that would contravene their charter of “protecting the revenue” of the State.

This is why a business owner should seek

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

the advice of a suitably qualified accountant who is experienced in taxation and business advice. A proactive accountant is more likely to provide this advice than a compliance accountant. The compliance accountant’s role is more likely to invol

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

ve complying with tax laws, rather than optimising tax situations. The compliance accountant’s mind is so attuned to complying with tax laws that they often do not see the opportunities for optimising a client’s tax position.

Once the business o

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

Professional from academic institutions, pharmaceutical industries, health care indust

wner has been convinced that it is in their interests to register for GST or VAT, the next question is for what filing period to opt? The more regular a filing period, the sooner the GST or VAT refunds will improve the business cash flow. So the

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

may decide to opt for monthly or two-monthly GST or VAT returns. There will be an administration or accounting cost that needs to be weighed against the benefit of a quicker cash flow.

The income tax refund is an annual event that cannot be cha

.

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

nged, except for where the business owner is leaving the country before the end of the tax year and applies to have a tax return processed sooner. There will be extra forms to complete and information to provide, and it usually means that the bus

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

Companies that provide selfless information through particip

iness is closing down. Even that income tax return should be lodged as early as possible after the tax year ends, rather than being left to be filed with other taxpaying business owners, so the income tax refund is received soon rather than later

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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Effective public relations is essential for building a powerful personal brand according to personal branding expert and author Thomas Murrell from 8M Media and Communications.

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