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Financial statements both report on a firm's position at a point in time and on its operations over some past period. However, their real usefulness lies in the fact th

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 they can be used to help predict the firm's future earnings and dividends as well as the risk factor of these cash flows. From equity investor's viewpoint, predictin

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

Examples of combination products may in

g the future is what financial statement analysis is all about. From management's viewpoint, financial statement analysis is useful both as a way to anticipate future c

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

nditions and, more important, as a starting point for planning actions that will influence the future course of events for the firm.

Financial ratios are designed to s

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

how relationships among financial statement accounts. Ratios put numbers into perspective. They provide the necessary comparisons in order to comprehend the firm's curr

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

Combination pro

nt situation along with it's past performance and its future potentials and threats. Such comparisons are made by ratio analysis. It must be pointed out that according

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

to financial analysts, a single ratio is relatively useless in making relevant evaluations of a firm's health. Thus, if it is to be effectively interpreted a ratio must

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

be systematically compared with other ratios of the examined company, or even the industry competitors during a specific period of time.

Analysts who use financial ra

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

ios extensively may be characterized as belonging to three main groups. Managers, who use ratios to help analyze, control, and improve the firm's operations, credit ana

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

lysts, who analyze ratios to help ascertain a company's ability to pay its debts, and securities analysts, who are concerned with a company's efficiency and growth pros

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

ects. As it is expected, each group of analysts has specific areas of interest, which it wishes to investigate. Therefore, ratios may be characterized into specific tas

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

Following aspects would a

k groupings. The five group categories are liquidity ratios, asset management ratios, debt management ratios, profitability ratios and market value ratios.

One of the

dd to the challenges in developing combination products:

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

first concerns of most financial analysts is liquidity. It is actually the ability of the firm to measure its maturing obligations. By relating the amount of cash and o

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

her current assets to the current obligations, ratio analysis provides a quick and easy-to-use measure of liquidity. The second groups of ratios, the working capital ra

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

tios, measure how effectively the firm is managing its assets. If it has too many assets, its interest expenses will be too high, and hence their profits will be depres

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

ed. On the other hand, if assets are too low, profitable sales may be lost. Thus, having the proper level of each type of asset is considered important. The stock turno

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

Professional from academic institutions, pharmaceutical industries, health care indust

ver ratio is defined as cost of sales divided by inventories. These ratios suggest that the company hold extensive stocks of inventory; excess stocks are, of course, un

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

productive and represent an investment with a low or zero rate of return.

Profitability is the net result of a large number of policies and decisions. Although the rat

.

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

os examined thus far provide some information about the way the firm is operating, the profitability ratios show the combined effects of liquidity, asset management, an

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

Companies that provide selfless information through particip

d debt management on operating income and net income. Return on capital employed is calculated by dividing the net profit before tax with the share capital and reserves

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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