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Imagine an investment strategy that allows investors to take advantage of the difference in the price of a certain market or

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

asset. In other words, the investor would profit from the discounted purchase and immediately resell of the product or sha

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

Examples of combination products may in

e in a different market at a higher price. This investment strategy has been in practice since the concept of competing mar

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

kets was first recognized. In today’s marketplace, this practice is known as arbitrage.

An arbitrageur seeks out assets th

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

t exhibit certain characteristics that indicate that the market (or markets) is compatible with sustaining a reasonable prof

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

Combination pro

t during the exchange. In order for this to happen, one of the following three circumstances must exist:

1. An asset with

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

a reliable future-estimated price is currently trading at a lower price than its monetary value in a market with little or n

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

risk.

2. An asset trades in one market considerably lower than it trades in another.

3. Two different assets are traded a

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

varying prices although the cash flow for both assets is the same.

These conditions might seem a bit confusing to the ever

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

yday investor, however, arbitrage takes place daily in a number of circumstances that are fairly commonplace. For example,

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

oreign money exchangers take advantage of the arbitrage between two currencies when they exchange one currency for another w

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

Following aspects would a

th international tourists.

Another common example of arbitrage is when an individual purchases a stock in a market where th

dd to the challenges in developing combination products:

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

e stock is undervalued and turns around and sells the stock in a foreign market where the stock is priced higher. By doing

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

his, the trader has generated a profit through the difference in the price of the two stocks.

Arbitrage occurs frequently i

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

a variety of environments. Many businesses operate each day based solely upon its principle. Investors from both domestic

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

markets as well as foreign markets have been taking advantage of arbitrage as an investment strategy since its popularity g

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

Professional from academic institutions, pharmaceutical industries, health care indust

eatly increased during the 1980’s.

Private investors who are interested in becoming arbitrageurs must keep in mind that whi

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

e this technique can be a very lucrative investment option, one of the key elements to turning a profit using this approach

.

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

is the ability to make a decision quickly to purchase the stock or asset in question and then turn around and resell before

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

Companies that provide selfless information through particip

he market has the opportunity to equalize (therefore reducing or even eliminating the profit margin between the two markets)

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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