Answers - Finance

When people ask for investing advice, ETFs usually come up pretty quickly, because they are so heavily marketed and trumped by the industry. Exchange-traded funds, or ETF

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, are an easy way to diversify a small investment, but to get the most out of your investment, it is important to understand how they operate.

ETFs are like mutual fund

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

Examples of combination products may in

, in that they are a collection of investments, but they are traded on an exchange, such as the NYSE, instead of purchased directly from the issuing company. They also di

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

fer in their redemption structure and tax efficiency from traditional mutual funds.

Here are five benefits of ETFs over mutual funds:

Tax Efficiency: U

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

pon redemption, mutual funds must sell its underlying securities, and the capital gains are then distributed to the owners of the funds. Since ETFs trade on an exchange a

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

Combination pro

d investors are selling to other investors, no underlying securities are sold, and no capital gains are distributed. If the makeup of the ETF changes it will, occasionall

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

have to distribute gains, but it should be less frequent than with traditional mutual funds.

Lower Fees: ETFs are no-load funds, and you won't be slapped wit

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

h a redemption fee when it's time to liquidate your position. Further, ETFs typically have lower annual fees than traditional Mutual Funds, making them an attractive alte

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

native. (NOTE: In rare cases where a very small amount is being traded, broker's fees may be a higher percentage of the investment than a mutual fund's expenses wo

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

ld be, but in most of these cases the invested amount would not meet the minimum investment required by most mutual funds).

Liquidity: The exchange-traded

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

structure of ETFs generally allow for liquidation of a position faster than a mutual fund, which must be liquidated at end of day. Further, the ability to set a limit ord

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

Following aspects would a

er allows flexible trading that no investor could get from a mutual fund. Not all ETFs have the same liquidity, however, and it is important to review trading volumes

dd to the challenges in developing combination products:

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

nd the ETF prospectus to determine whether you are comfortable with the frequency of trades.

Intraday Pricing: Because ETFs are traded on active stock exc

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

anges, purchases and sales happen at market prices, rather than end-of-day Net Asset Value, which mutual funds use. As a result, one may purchase ETFs at a premium or a d

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

iscount to the value of the underlying assets, and arbitrage is frequent.

No Minimum Investment: When starting investing, diversification can be cost prohibit

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

ve if you're using traditional mutual funds, which frequently have a minimum investment of $2500 or more. Because ETFs have no minimum investment (other than the market p

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

Professional from academic institutions, pharmaceutical industries, health care indust

ice of one share), they are a good vehicle for diversified investing.

Of course, many of these benefits could be liabilities if not used properly. For instance, t

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

he intraday pricing feature of ETFs could lead an investor to buy an ETF at a premium or sell it at a discount to the value of the underlying securities. Also, brokerage

.

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

ees may have a greater impact on some investors than traditional mutual funds' management fees and loads would have.

Used wisely, ETFs can be a good vehicle for widely d

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

Companies that provide selfless information through particip

versifying a small or initial investment, but it is always best to seek professional investing advice.

In the future I will cover the five negatives of investing in ETFs

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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