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Why a Cash Flow Statement?

Many business owners believe their financial statements will give them all the information they need. Financial statements are an historical tool that shows you where yo

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

ur business has been. A Cash Flow is the fancy name for a working budget that tells you how much cash your business actually has. Working in sync with your balance sheet your cash flow should be an

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

Examples of combination products may in

easy-to-read tool that allows you to monitor sales, costs, profitability, collections and cash. It allows you to plan for future cash needs for growth, while identifying operational issues requirin

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

immediate action.

Successful cash flow planning does not require a degree in accounting. What you need is real-time understanding of where the cash is originating, where it is going, and how much

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

is left over (just like you do at home). Businesses need to operate with a cash flow model that looks ahead one year, month by month, and is updated with actual results every week.

Create a Works

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

Combination pro

eet

The formula for successful cash flow management is deceptively simple. Money in. Money out. Money left over. If there isn’t any money left over, then you need to do something differently.

Sta

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

t with Sales. Sales is work performed that is documented by cash register receipts, guest checks or invoices. Project the amount of sales you anticipate month-by-month starting with the current mon

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

th. Sales should fluctuate when you consider the seasonality of your business. Break the sales into categories and be conservative.

Project your collections month by month. Collections are the mon

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

y you put into the bank in the form of cash, checks or charge card vouchers. If Sales do not equal Collections, you either have accounts receivable or a cash control problem.

Review your expenses.

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

Define your expenses into two major areas: Cost of Sales (expenses that fluctuate with sales such as product costs) and Overhead Expenses (expenses that do not fluctuate with sales). Define the c

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

st percentages for your major sales categories. Forecast all other Overhead Expenses (rent, utilities, insurance, licenses, etc.). Project all expenses out in the month they will be paid.

Forecast

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

Following aspects would a

your payroll. List your current and anticipated employees and categorize them as Cost of Sales labor or Overhead labor. Cost of Sales labor may be projected in part by a target labor cost percenta

dd to the challenges in developing combination products:

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

e. Estimate payroll expense per employee (average hours worked, rate of pay) over the next twelve months.

Evaluate Your Profitability

With monthly sales and expenses projected, business profitabi

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

ity, feasibility and value can be determined. Total Sales minus Total Cost of Sales Expenses (including Cost of Sales payroll) minus Total Overhead Expenses (including Overhead payroll) equals Mont

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

hly Cash Reserve. This is also your profitability. Is there any money left?

What debt are you servicing? Evaluate this debt separately from your profitability. Debt takes many forms including note

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

, loans, credit cards, leases, and lines of credit. When businesses must restructure their debt in order to improve cash flow, lenders expect the business’s Balance Sheet to look a certain way in o

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

Professional from academic institutions, pharmaceutical industries, health care indust

der to qualify for financing.

So, What’s Next?

Once this working budget is assembled, a break-even sales volume can be determined that generates enough profit to cover debt load and have no cash

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

loss. Your cash flow objectives are now clarified and strategies can be implemented. Any issues that caused a cash flow problem will now be corrected. With your Cash Flow mapped out, you have the

.

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

eginning of control.

Cash Flow Planning brings financial stability to a business through pro-active budgeting, monitoring and adjustments. You will understand where you are today and what your opt

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

Companies that provide selfless information through particip

ons and priorities are. You will be able to forecast your cash needs and gain control of your business. With the use of a Cash Flow, your business will have more money and a road map for the future

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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