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Section 1031 of the Internal Revenue Code (IRC) defines the 1031 exchange. 1031 exchange also known as Like kind exchange specifies that if an asset that is most ofte

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

n a land or a building, is sold and the proceeds of the sale are then reinvested in a similar type of asset then there is no gain or loss and the capital gains taxes

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

Examples of combination products may in

are deferred.

A 1031 exchange is an ideal way to suspend the taxes that are immediately due after the first sale. For instance if an investor purchases a residential

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

property for say $250,000 and sells it for $30,000 after 5 years, the profit of $50,000 which he incurs will be subject to capital tax. But if the profit so accrued

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 invested in another similar kind of commercial real estate, there will be no taxation on it. So his taxes will be deferred to some date in future.

1031 exchange i

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

Combination pro

s a source to save your money being spent in capital taxes, but on the same hand an individual should be careful and keep few points in mind before entering this exch

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

ange.

· Before entering the 1031 exchange, whether as an investor or a seller it is better to do a little research and consult your tax advisor to get an estimate on

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

your tax exposure.

· Several assets such as boats, horses or cattle etc. qualify for the 1031 exchange but on the same hand only real estate can be exchanged for a

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

real estate. So the real estate should be an investment property. A building purchased for renovations and selling and land purchased for construction of houses etc.

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

cannot qualify for 1031 exchange because in such instances the owner does not intend to hold on to them for a period of time for investment reasons.

· Further in ord

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

er to have a cent percent tax deferment on the disposition of property, there are three basic steps to be followed. Firstly right after the sale of the original or re

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

Following aspects would a

linquished property, it is necessary to acquire a replacement property as early as possible. The replacement property must be equal to or greater than the value of 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 relinquished property. Secondly those who wish to have 100% capital tax deferment must reinvest all of their net equity from the surrendered property in the replace

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

ment property. Finally one must assume debt on their replacement property that is equal to or greater than the debt on the original property. In case the debt on your

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

replacement property is less than the debt on your original property then people seeking complete capital tax suspension should put in additional cash to balance the

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

exchange transaction.

· There are certain rules to identify an adequate replacement property. For instance according to the three-property rule you may identify up

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

Professional from academic institutions, pharmaceutical industries, health care indust

to three replacement properties overlooking their fair market value. You may not purchase all the identified properties but it is best to have alternatives in hand. W

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

hile under the 200 percent rule you are allowed to identify more than three replacement properties only on the condition that the fair market value of these propertie

.

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

s does not cross 200 percent of the contract price of the property sold. In the 95 percent rule if the fair market value of more than three identified properties exce

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

Companies that provide selfless information through particip

eds 200 percent of the value of the original property, the exchange can still hold id the 95 percent of the total cost of all the properties on the list are purchased

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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As an unsecured loan, tenant loan is available without any property. All sorts of tenants can apply for these loans to fulfill their various personal purposes.

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