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Ronald Coase, the Nobel Prize winner of economics in 1992, brought the transaction cost theory to the world (or

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

at least this transaction cost theory has been assigned to him). This theory postulates (amongst other things)

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

Examples of combination products may in

that organizations exist because of market inefficiencies.

Coase dedicated much of his studies to the differen

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

ces between the economic systems and firms. Transaction costs link both of these:

Transaction costs, in my

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

iew, become the factor upon which the productivity of the economic system depends. (http://coase.org/coase

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

Combination pro

emarks2002.htm)

Because of inefficiencies in economic markets, it is more efficient to organize activities in

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

organizations. The normal coordination role of the price mechanism is missing when the market is inefficient or

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

non-existing.

So, if there is no (external) market you can organize that specific market activity within the o

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

ganization and save transaction costs. The transaction is the object of study. This is interesting of you think

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

about outsourcing and the transactions that are involved when dealing with outsourcing. The cost elements of

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

he transaction involve information costs, the costs of the setting up the agreement as well as the costs as mai

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

Following aspects would a

taining the contract.

Now, picture the following situation.

Your company is located on the third floor of a b

dd to the challenges in developing combination products:

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

uilding with two wings. There was no wall between the wings and people could walk and communicate over and thro

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

gh. Easily. If there was a problem you ran across to the other side and with the output where the problem as pr

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

nted, you discussed the issue and tried to solve it at the moment. “This is urgent.”

After the outsourcing dea

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

l, there is this wall and if you want to go from one wing (building) to another you need a security key in orde

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

Professional from academic institutions, pharmaceutical industries, health care indust

to access. Each communication involves time. One of the advantages of outsourcing is just that, different loc

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

tions. Indeed for large corporations the spreading the activities over more locations spreads the business risk

.

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

. But the additional problem is the management of the various activities over the different locations.

Yet the

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

Companies that provide selfless information through particip

e is this wall and you cannot longer step over it at the moment you wish to.

So what to do... (to be continued

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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You know that your business is basically sound and that it has the potential to be a success in the long run.

Have you ever wondered how multi-national companies like McDonalds, Coca-cola, Microsoft, Apple, Intel, Motorola, Sony and UPS came up with their names? Just think, if these companies have some lame or forgettable brand name, would they be as big as they are now? Every company starts out by thinking of a name...

Don't you think that good work should speak for itself...that if you're good enough at what you do, you shouldn't have to hustle up business?

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Digg It - Outsourcing And (Reducing) Transaction Costs

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