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Accountants are the keepers of the standards. They are the ones who make sure that when we look at a financial statement, we can be reasonably that it was built using sound accounting practices and that it is comparable to other audited financial st

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

atements for other companies.

That sounds like a daunting task, but never fear. The accounting professional is in business to help you through all this.

The accounting profession is self-regulated. They decide the most appropriate way to record c

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

Examples of combination products may in

ompany activity on the financial books of record. They do this through an august board of seasoned professionals, the Accounting Practices Board of the American Institute of Certified Public Accountants (AICPA). This group defines what is known as

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

“Generally Accepted Accounting Principals” or GAAP, which all public accountants must adhere to on behalf of all their clients.

The process used to introduce new GAAP or change old GAAP is beyond the scope of this paper, but it is a lengthy process

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

ith plenty of review opportunities for all CPAs and business people.

THE PURPOSE OF GAAP

The main purpose of having GAAP is to assure consistency in accounting practices, not only within a company, but across all regulated companies. The SEC requi

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

Combination pro

res all publicly held companies to be audited at least annually by a Certified Public Accountant (CPA). The CPA assures the stockholders that they can count on the financial information from the company, because it is in compliance with GAAP.

By pr

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

eparing all financial information according to GAAP,

• Management can depend on the records and make course corrections for their individual departments or the company as a whole for the betterment of the company.

• Investors and lenders can make s

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

und decisions based on the financial records of the company.

• Stockholders and prospective stockholders get an accurate picture of the company’s financial health.

• Stock can be valued fairly on the market

• Deceptive, unfair and even criminal pr

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

actices are minimized.

PRIMARY PRINCIPLES

The following are some of the primary principles upon which GAAP is built. This is, by no means, a complete description of GAAP, which is very detailed and takes much study to become expert at, but it show

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

s the abiding purpose behind all that detail.

1. Historical Cost Principle: In general, the value of a company’s assets is the original cost of those assets less suitable depreciation or amortization. This keeps companies from stating their assets

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

at market value, which is not only difficult to ascertain, but very subjective in nature. Historical cost provides the actual cost which is very objective.

2. Revenue Recognition Principal: This simply states that revenue is recognized when it is

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

Following aspects would a

earned, which may be a different time than it is received. For example, if your company provides a service at the end of December, but you customer doesn’t pay you until January of the following year, your December revenue total will include that am

dd to the challenges in developing combination products:

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

ount. January will not, even though that is the month in which you deposited the payment.

3. Full Disclosure Principle: Any information, whether or not strictly financial, that is relevant to the business and may have a future impact, must be disc

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

losed. All transactions must be posted, of course. But even further, this principle provides for disclosure of contingencies. For example, if your company is being sued, the lawsuit must be analyzed for expected chance of loss. This contingency m

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

st be disclosed in a footnote of the financial statements. This is to prevent a loan officer or investor from not knowing this possibly impacting information when making decisions regarding investments in or loans to the company.

4. Matching Princ

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

iple: Put simply, revenue must be matched to the expenses that helped to create it. This is why you have accruals and deferrals. The expenses associated with earning revenue for this period must also appear in this period.

GAAP ASSUMPTIONS

GAAP a

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

Professional from academic institutions, pharmaceutical industries, health care indust

ssumes the following:

1. Going Concern Assumption: The company or entity is a “going concern” and is not likely to end operations in the current year. It is expected to remain in business for the foreseeable future. Any exceptions to this assumpt

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

on must be disclosed.

2. Economic Entity Assumption: The company is an independent entity and is separate from it’s owners.

3. Monetary Unit Assumption: The currency used to measure the entity’s financial performance is stable.

4. Periodic Repo

.

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

rting Assumption: Business operations are reported on a regular basis, usually annually. The fiscal year doesn’t have to be the same as the calendar year. This is usually set according to the business cycle for the particular company.

Using Genera

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

Companies that provide selfless information through particip

lly Accepted Accounting Principles is necessary for all business entities. But you needn’t become a GAAP expert yourself. Hire a good accountant. A CPA may be necessary if your company is publicly held, or for loan or business venture requirements

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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Incorporating online is probably one of the easiest ways to incorporate your business. Incorporating online generally only requires standard information such as the names and addresses of the initial officers, and sometimes their titles. Using a third party will ensure that you take care of all the steps required for the initial filing with the Secretary of State.

Payroll management is an issue you need to think about before you have employees. Even if the payroll roster is just you, it is never too early to start thinking strategically about your payroll management.

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