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Accounting, a.k.a. “The Language of Business”, is a large and diverse topic. Subtopics include financial accounting, cost accounting, management accountin

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

g, internal auditing external auditing, international accounting, governmental and not-for-profit accounting and taxes. The subtopic that comprises the la

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

Examples of combination products may in

gest portion of an accountants academic program of study is financial accounting.

The purpose of financial accounting is basically to provide useful infor

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

ation to users who will use that information to make a decision, most commonly either an investment or a credit decision. To be useful information needs t

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

be relevant and reliable. The most common means of conveying information to users is through the preparation of financial statements: 1. the income stat

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

Combination pro

ment, 2. the balance sheet, 3. the statement of cash flows, and 4. the statement of shareholders’ equity.

The income statement presents the profitability

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

f company over a period of time. The balance sheet presents the assets, liabilities, and owners’ equity at the end of the period of time used for the inco

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

e statement. The statement of cash flows classifies all cash inflows and outflows during the time period into one of three categories: operating, investi

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

g, and financing. The statement of shareholders’ equity shows how the shareholders’ equity changed over the period.

Generally accepted accounting princip

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

es (GAAP) are a set of standards, methods, procedures, and guidelines companies follow in measuring and reporting financial information in the financial st

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

tements. GAAP comes from written sources as well as practices that have been used for a ling time that have become generally accepted. Although the Secur

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

Following aspects would a

ties and Exchange Commission (SEC) has the legal authority to set accounting standards for companies, it has always delegated the majority of this responsi

dd to the challenges in developing combination products:

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

ility to the accounting profession itself. The current accounting professional body that sets standards is known as the Financial Accounting Standards Boa

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

d (FASB). The FASB issues standards called Statements of Financial Accounting Standards (SFAS). They can be found on the FASB web-site, www.fasb.org. As

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

of May 2007 the FASB has issued 159 such statements.

All publicly traded companies listing their stocks on U.S. stock exchanges must have their financial

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

tatement audited by an external CPA firm that expresses an opinion as to whether the financial statements have been prepared in conformity with GAAP. The

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

Professional from academic institutions, pharmaceutical industries, health care indust

dea is to lend credibility to the financial statements by providing a third-party’s verification that the statements are presented fairly in conformity wit

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

high quality standards, GAAP!

Recent accounting scandals (WorldCom, Enron, etc), however, have given the accounting profession somewhat of a black eye an

.

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

have rekindled the debate over whether principles-based, or more recently termed, objectives-oriented, standards should be set forth as opposed to rules-b

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

Companies that provide selfless information through particip

sed accounting standards. A principles-based approach to standard setting stresses professional judgment, as opposed to following a specific list of rules

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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