Answers - Finance

ISAs replaced PEPs and TESSAs for new investments after April 1999 and are guaranteed to run for ten years. The annual limit for investment is ?7,000 (?5,000 from April 2006). Income and capital gains in an ISA are tax free and

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

dividends receive a 10% tax credit until 2004.

Investments can be in three components:

up to ?3,000 (?1,000 from April 2006) in a cash component in banks, building societies, National Savings products (the taxable

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

Examples of combination products may in

nes of course);

up to ?1,000 in an insurance component single premium life assurance policies such as with profits bonds;

up to the full ?7,000 (?5,000) in stocks and shares investment or unit trusts, prefere

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

nce shares, bonds and gilts or directly in equities (a self select ISA). There are no geographical limits as there were for PEPs.

There is a question mark over the value of the insurance component because insurance

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

inked products pay income tax (albeit at a favourable rate), which cannot be recovered and no more tax is payable on investments outside an ISA except for higher rate taxpayers.

Shares arising from employee share option schemes

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

Combination pro

can be transferred to a stocks and shares ISA without counting against the annual limit.

Although 18 is the starting age for ISAs, 16 and 17 year olds can invest up to ?3,000 (?1,000 from 2006) in a cash ISA.

There are three k

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

inds of ISA:

Maxi ISAs - up to the full ?7,000 (?5,000) is invested with one provider, although it can still be broken down into two or three components.
Mini ISAs - you can have one, two or three 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

one for cash, one for insurance and one for stocks and shares (but you cannot forgo either the cash or insurance mini ISA to put ?4,000 in stocks and shares).

TESSA only ISAs when a TESSA expires, the capital element

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

(but not the interest) can be re invested in a cash or TESSA only ISA without counting towards the annual ISA limit.

You cannot invest in both a maxi ISA and a mini ISA in the same year.

Income can be left in or w

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

thdrawn but once taken out neither income or capital can be put back into that year's ISA.

CAT standards exist for ISAs (charges, access, terms) to protect inexperienced investors but providers do not have to follow them.

A

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

e they good value?

There has been some debate about the value of PEPs, particularly for standard rate taxpayers, since not many People pay capital gains tax and the extra charges could be greater than the income tax savings

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

Following aspects would a

. However, this dates back to the time when PEPs could only be invested in equities. The same questions arise in connection with ISAs.

Statistics of returns over a period are only available for the time when PEPs were limited t

dd to the challenges in developing combination products:

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

equities. They show that equity investment through a PEP achieved a higher return although it took a lengthy period for the difference to be significant.

Corporate bond ISAs and PEPs

Now that ISAs and PEPs can be inves

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

ted in company fixed interest stocks and shares, producing more income than equities at least to start with (as well as incurring less risk), there will be a tendency, particularly in the case of higher rate taxpayers, to use IS

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

s and PEPs in this way.

Another reason is that the full amount of tax deducted at source from company fixed interest stocks can be recovered by the ISA manager instead of the limited recovery of tax deducted from dividends.

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

Choosing an ISA

Even when you have decided on the type of ISA you wish to invest in, there is still a wide choice. Here are some questions to ask the ISA provider:

What are the initial/exit and annual charges and

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

Professional from academic institutions, pharmaceutical industries, health care indust

are they charged to income or capital?

What are the dealing costs (if applicable)?

What is the charge for transfer to another provider?

Is there any charge for switching between the provider's own

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

unds?

Are there charges for collecting dividends, getting company reports and attending AGMs?

It is possible to have a self select share ISA in which you choose which shares or units to invest in and you c

.

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

an trade in the usual way (this also applies to PEPs). There is no specified limit as to how long you can hold cash - the criterion is an intention to invest.

Putting all your annual share ISA money into one unit or investment

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

Companies that provide selfless information through particip

rust, while economical, can be somewhat risky, especially in the case of an ISA mortgage, but you can spread the risk by choosing a different investment sector for each ISA year.

Fund supermarkets are worth considering for ISAs

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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