Answers - Finance

Index Trackers

There is a category of unit trusts called index trackers, which are set up to match as far as possible a specific index, such a

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

s the FTSE 100, the FTSE all share, the US, Europe or Japan indices.

Perfect linking cannot normally be achieved because no fund can invest in every

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

Examples of combination products may in

share in the right proportions. Also indices take no account of the cost of buying and selling, which will depress the value of the tracker compared t

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

o the index.

Charges are lower than ordinary unit trusts because expert advisers are not needed. Initial charges are usually no more than 1%.

Some i

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

nvestment trusts offer index loan stocks, which are directly linked to the relevant index and so can achieve perfect linking. They usually have a set

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

Combination pro

repayment date and pay dividends. As they are unsecured, there is a slight risk of a failure to repay, but they take preference over shares in the inv

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

estment trust.

Index trackers are a relatively cheap and safe way of investing in the stock market.

Exchange traded funds

Recently introduce

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

d in the UK, these index trackers (also called extraMARK or iShares) are different from an investment trust in that they are open ended (like an OIEC)

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

and different from a unit trust in that the price varies during the day with the movement of the underlying assets whereas unit trust prices are revi

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

sed only once a day. There is not a great deal of choice so far, but if they catch on there will be many more. In addition to the FTSE 100 and FTSE e

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

UK, there are iShares for specific categories, such as TNIT (technology, media and telecom).

Dealing is through a stockbroker. There is no stamp dut

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

Following aspects would a

y to pay and annual charges are low (below 0.5%) They tend to be slightly cheaper than most index trackers.

From experience to date, exchange traded

dd to the challenges in developing combination products:

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

funds seem to track better than traditional index funds, possibly because of the lower charges and reduced internal tax liabilities arising from the w

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

ay they operate.

Friendly Society Savings Schemes

A friendly society is a mutual insurance and savings organisation operating for the benefit

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

of its members. Usually it has arrangements for sickness and death benefits as well as other forms of insurance and investment.

Friendly societies a

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

re authorised to offer a tax free investment linked to their life assurance funds. The maximum investment is ?25 a month or ?270 a year and schemes ru

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

Professional from academic institutions, pharmaceutical industries, health care indust

n for a minimum of ten years.

There has to be a life assurance element, the cost of which has a slight adverse impact on returns.

Income in the sche

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

me is subject to a favourable rate of tax and capital gains are tax free. After ten years no tax is payable on withdrawal. There are penalties for ear

.

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

ly withdrawal.

Watch out for proportionally high charges because the amounts invested are small.

These schemes are often promoted for children. They

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

Companies that provide selfless information through particip

are a way of involving children's savings in equities but most children are in a tax free position anyway, so other alternatives should be considered

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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Answers - Investing in Pooled Equity Funds - Index Trackers And Friendly Society Savings Schemes

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