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Limited Liability Company (LLC) is getting the attention of many small businesses that want to incorporate. The LLC is one of a few options available for individuals w

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

ishing to incorporate their business and is gaining ground as one of the most popular form of incorporating. So why are people flocking to the LLC as opposed to option

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

Examples of combination products may in

like C Corp?

Liability Advantages

In a LLC, you find the words “limited liability”. These words appeal to business owners because one’s personal assets are not at ri

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

k. In other words, debts against the business will not affect the owner for the debt collection. The owner’s home, financial and physical assets would not be subject

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

o the company’s liability. In fact, some companies separate their assets among different LLCs to protect their assets. For example, a company can hold equipment in on

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

Combination pro

LLC and financial assets in the other. By doing so, all the assets won’t be exposed to the same liability.

Another intriguing advantage is that the transfer of the d

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

bt to the limited liability company will not affect the owner, individually, for the debt itself.

Fewer restrictions

There are fewer restrictions for a LLC. For exam

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

ple, a LLC is not limited to a set amount of shareholders such as an S Corp. S Corps only allow up to 100 shareholders.

There’s even more flexibility of partnerships

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

ince members can create their own contract and allow the ease of management. Moreover, LLCs have fewer restrictions than an S Corp because it can issue varying classes

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

of ownership; S Corps can only issue one stock type.

Tax Advantages

Another advantage of the LLC is that the profits ignore the taxes associated with the business or

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

orporation. Rather, the tax is passed to the members of the LLC directly. Reporting the taxes is as simple as reporting it on your individual tax return. Additionall

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

Following aspects would a

, you will be able to apply costs or losses associated with the startup cost of the LLC to the individual tax return.

Conversely, a C Corp would be taxed by the govern

dd to the challenges in developing combination products:

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

ent. The remaining profits are then provided to the partners or owner and are subject to tax. As one can see, the profits are taxed twice - which would lower the gain

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

considerably.

Simplicity

Unlike C Corps or S Corps, it’s not necessary that a LLC hold annual meetings. Moreover, this entity is not required to even draft meeting

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

minutes.

Another advantage is that a member of a LLC can contribute appreciated property and it would tax free, regardless of how much interest the member has. Where

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

s in an S Corporation, the contribution of appreciated property would be available if the member has 80% or more controlling interest.

For Non-US citizens or permanent

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

Professional from academic institutions, pharmaceutical industries, health care indust

US residents, ownership in an S Corporation would not be an option. However, LLCs do not share in the same restrictions for these individuals.

Today, there are plenty

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

of websites that allows individuals to create a LLC through online vendors. The benefit of this easy access is that it’s quick and could save you a lot of money. Typi

.

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

ally, lawyers could charge you thousands of dollars to create a LLC. But with online sites, LLCs are easier than ever.

LLCs are not for everyone seeking to incorporat

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

Companies that provide selfless information through particip

. However, they do provide business owners with tremendous flexibility, simplicity and tax advantages. It’s no wonder LLCs are taking the incorporation world by storm

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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