Answers - Finance

Leasing Explained Leasing consists on hiring an asset which remains the property of the lender but can be used by the borrower. The

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

contract lasts for a certain time at the end of which the borrower has the option to buy the asset by paying a lump sum (usually a sm

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

Examples of combination products may in

all percentage of the asset’s value). If he chooses not to do so, the contract ends or it can be renewed by replacing the leased asse

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

t with a new one. It’s widely used for cars and business equipment.

Benefits of Leasing Equipment Leasing equipment has many benefi

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

ts; it combines the advantages of renting equipment with those of possession by means of loan financing. Furthermore, the main advant

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

Combination pro

age leasing provides is flexibility. Due to it’s mixed nature, most terms are subject to negotiation.

No Money Down When buying equ

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

ipment you need either to put money down or request a loan in order to purchase the equipment. When you lease, you pay monthly instal

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

lments and get immediate tenure. It’s just like if you were renting the equipment only you’ll be able to acquire it if you want to at

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

a later occasion.

Tax Benefits When you purchase equipment, it adds up to your taxable assets. If you requested a loan in order to

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

pay for it, you can deduct the costs, but the equipment remains your property. When Leasing, you only hold possession of the equipme

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

nt, it remains property of the lender and thus, you can deduct the monthly payments and it won’t add up to your taxable assets.

Flex

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

Following aspects would a

ibility If the equipment becomes obsolete, you can always request it to be replaced with a new one. Thus, you won’t suffer the conse

dd to the challenges in developing combination products:

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

quences of obsolescence. You can have up to date equipment just by paying a monthly fee for it. Once you have no more use of it, disp

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

osing of it becomes the lender’s problem and not yours. Given all the technological changes that occur everyday, chances are that y

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

ou will make an excellent use of this leasing characteristic. When it comes to starting businesses and businesses in the technologica

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

l field or technology dependent, leasing is definitely the best financial alternative.

Fast Approval Since the asset remains proper

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

Professional from academic institutions, pharmaceutical industries, health care indust

ty of the lender, leasing doesn’t have many requirements. The contract usually includes insurance policies attached to it so the lend

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

er get’s rid of certain risks related to the equipment and concentrates on its concern (financing).

Nevertheless a good credit histo

.

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

ry contributes a lot to getting a good deal on a leasing transaction. Bad Credit can increase the costs of leasing operations and sin

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

Companies that provide selfless information through particip

ce leasing is not the cheapest financial option, if you have really bad credit, it might be wise to consider other alternatives first

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 - Leasing Equipment: An Option for Small Business Financing

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