Just Answers - Finance

The biggest gripe that I have with a few famous financial planners is their myth and awe of compound interest. They say, “compound interest is the 8th Wonder of the World accordi

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

ng to Einstein, and will make you a million for your retirement if you’d only skip a few trips to your local coffee shop!!” In my opinion, compounding your return on investment i

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

Examples of combination products may in

a tiny factor in wealth building compared to how much and how often you save money.

Growth charts used by the people struck by compounding ignore all forms of taxation, fees, c

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

mmissions, inflation, and then misleadingly uses an average return of 10-12%. Let’s start with the average stock market return of 10.7% This return rate is the most frequently pu

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

lished number to reflect a stock market average. There are many problems with market averages, but the 10.7% is not any kind of accurate annual compounded growth rate. As an exam

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

Combination pro

ple, if the stock market has a loss of 10% one year, and a 20% gain the next year, these zealots say that the average return for these two years is +5% (+.2-.1)/2).

This is a ma

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

hematical failure to add. The correct return is only 3.9%, and again, this doesn’t include fees, commissions, taxes and inflation. How are you going to compound your money when t

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 stock market starts one of its frequent 5 year droughts of moving down and sideways (’73, ’81, ’87, ’00). The after-inflation Dow Jones Industrial Average annual return for th

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

last 55 years is only 4.8%; plug that little number into your calculator for 10 years and see how many Rolls-Royces you can buy.

Your growing portfolio will either be in a taxa

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

ble account (knock another 25% off of your annual compounded growth rate for taxes) or in a qualified retirement account. The zealots talk about qualified accounts like everyone

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

an have them, but there are mazes of rules for who can qualify for certain programs, how much they can invest, and even a ceiling to how much can be put in them. Sooner or later

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

Following aspects would a

very dime of these accounts will be taxed as well. And when the baby-boomers start emptying the government’s social security account in 2014, tax rates on these retirement accoun

dd to the challenges in developing combination products:

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

s are not going to remain low. Politicians will take the easy way out and simply tax these retirement accounts to make up any deficit. The point is this: when money is in a retir

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

ement account, it isn’t yours until the government taxes it and releases it to you. More reference material for this article is available at http://investing.real-solution-center

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

com.

If you start playing around with realistic compound rates, the serious increase in earnings doesn’t start until after 50 years. So unless you are a 4 year-old with $50,000

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

n the bank and have the discipline to never spend it, even the concept of compounding is fairly irrelevant for your financial future. Today, half of the 50 year-olds in the U.S.

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

Professional from academic institutions, pharmaceutical industries, health care indust

o not have $50,000 in retirement assets. Even skilled investors are unlikely to build that into a tidy $2,000,000 by the time they turn 65.

The compounding that pays the most is

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

the addition to your savings over time and investing skill. If you don’t continually add to your accounts, they can not add up to much; “No big money in = No big money out.” And

.

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

if you don’t continually accumulate investing skill and knowledge, you won’t be able to keep your money growing faster than inflation is destroying it. Please note that there are

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

Companies that provide selfless information through particip

no books titled “How To Get Wealthy By Putting Some Money Under A Mattress.” Your money has to be invested and earning interest above the inflation rate or you are getting poorer

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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