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As turnaround investors, I prefer to invest in companies that are down but not out. This is important because a lot of times, investors misunderstood the two. Of

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

ten times, these two types of companies are trading near or at their 52 week low. But the similarity ends there.

Company that is Down. This is the compan

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

Examples of combination products may in

that experiences problem and it seems like it can weather the problem. It just needs time to right the ship and get back on track. How can we be certain that th

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

e company can weather the storm? The ultimate guideline is to look at the company's balance sheet and income statement. Does the company have a positive net cash

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

Is the company expected to post a profit? If the answer is yes to both questions, then the company in question is most likely is just down, but not out.

Com

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

Combination pro

any that is Out. This is the company that experiences problem but its future existence might be in doubt. It might right the ship but by then it might be too

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

late. As a result, shareholders will be wiped out and lose 100% of their investment. How can we be certain for the company that is out? Again, we have to check

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

he ultimate guideline, which is the balance sheet and income statement of the company. Does the company have a negative net cash? Is the company expected to post

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

a loss for the foreseeable future? If the answer is yes to both questions, then the company in question has the high probability of being out of business.

Using

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

analogy without illustrations are confusing, in my opinion. Therefore, I will choose one company for each situation. Please do not treat this as a buy or sell r

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

commendation. This is merely my observation as someone who had watched these companies for a while.

Pfizer Inc. (PFE) might be categorized as the company that i

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

Following aspects would a

down. Stock price slumped to 8 year low this week due to weak sales of its drug franchises and tepid guidance. Management has refused to update guidance for 200

dd to the challenges in developing combination products:

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

6 and beyond due to uncertainty. So, let's look at Pfizer's balance sheet, shall we? The latest information on Pfizer shows that the company has $ 15 Billion of

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

ash and equivalent and $ 5.517 Billion in long term debt. In other words, Pfizer has $9.5 Billion of positive net cash. How about earnings? Is Pfizer expected to

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

post a loss? Nope, it is expected to post earnings of $ 1.95 per share for year 2005 or $ 14 Billion of net profit. Profit is plenty while balance sheet is solid

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

. Pfizer clearly is a company that simply has a small bump in the road.

How about AMR Corp (AMR)? This is an excellent example of a company that is out. Looking

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

Professional from academic institutions, pharmaceutical industries, health care indust

at the balance sheet, AMR has a negative net cash of $ 9.5 Billion. What this means is that it has $ 9.5 Billion more long term debt than it has cash. Is AMR pro

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

itable? Not a chance. It is expected to post a loss of $ 4.36 per share for 2005 or $ 714 Million. It doesn't look pretty. High amount of debt and big loss is th

.

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

e recipe for a company that is down. If AMR doesn't turn its ship anytime soon, it might be forced to file bankruptcy.

To consistently make money, investors nee

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

Companies that provide selfless information through particip

to be able to differentiate the company that is down and company that is out. Weed out the company that is out and your investment return will be so much better

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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