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Once a decision had been made to incorporate, the next question will inevitably be where to incorporate. One of the more attractive options available is to set up a Nevada corp

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

oration.

There are many advantages to forming a Nevada corporation, but before exploring these, it may be advisable to understand from the outset what incorporating in Nevada

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

Examples of combination products may in

ill not do for you.

Incorporating in Nevada will not lower costs

You must have heard the statement quite often that organizing a Nevada corporation will result in lower costs

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

The truth of the matter is that it won’t and that incorporating in your home state may well end up being cheaper. The primary reason is that Nevada imposes a number of fees on

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

corporations domiciled in that state. Fees that many home states do not charge.

Incorporating in Nevada will not lower taxes

There is also a misperception that if you registe

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

Combination pro

as a Nevada corporation, you will lower your taxes. Whilst Nevada has no corporate income tax, you still need to file corporate tax returns in those states where you operate 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

a non-resident. Things sort of cancel out, and in the end you don’t really save. This myth of lower taxes is widespread, probably encouraged by incorporation service providers

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

These providers play on the extreme privacy that Nevada provides, thus implying that no one will ever find out. Privacy does not exactly equate to exemption from taxes, and it

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

is not legally correct to believe that this will be the case.

Why then would you incorporate in Nevada?

Without question the most compelling reason to establish your business

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

as a Nevada corporation is that the state offers the greatest protection from liability.

There is a well-established concept in corporation law called “piercing the corporate

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

eil.” This is the legal process where a court removes the protection provided to the individual members of a corporation and holds those individuals personally responsible for

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

Following aspects would a

the acts of the corporation. In other words, if the corporate veil is pierced in your corporation, you will personally become liable for its debts and obligations. Each state h

dd to the challenges in developing combination products:

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

s different tests for evaluating the legal propriety of piercing the corporate veil.

Many states, such as California, Florida, Georgia, Louisiana, Texas, New York, and Pennsyl

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

ania, allow this process to be initiated quite easily. Other states may require a certain level (usually substantial) of capitalization or net assets for a corporation to be re

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

pected and not pierced. Sometimes failure to comply with annual formalities (like stockholder meetings, corporate minutes, and Board of Directors’ meetings) may be viewed as su

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

ficient reason for piercing the veil.

Nevada takes a much more liberal approach. In fact, its supporters enjoy highlighting the fact Nevada has only allowed the corporate veil

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

Professional from academic institutions, pharmaceutical industries, health care indust

to be pierced twice in the past 26 years. There have been many Nevada corporations that neglected documenting resolutions and minutes, failed conduct meetings, had little capit

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

lization, or commingled funds, amongst others without having the veil pierced. In most other states, these corporations would have been held culpable.

The bottom line remains

.

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

hat a Nevada corporation offers more privacy and confidentiality than any other state. Perhaps even of greater importance is the fact that stockholders, officers and directors

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

Companies that provide selfless information through particip

f a Nevada corporation are safeguarded in most instances against being held personally liable. Next to these, the other advantages of incorporation in Nevada pale by comparison

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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