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I continually hear from economists, talking heads, other market letter writers, analysts and assorted “experts” that I need to

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

know all kinds of “stuff” about the stocks and mutual funds I am going to buy and I should keep up with them on a regular bas

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

Examples of combination products may in

s.

What is this important “stuff”?

Let’s see. Oh, I know. Price to Earning ratio, P/E. That’s always a big one on almost eve

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

ryone’s list. Simply put it is how many years it will take a company’s earning to pay back the price today. It can be from fiv

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

to infinity if it is not earning anything. Today there are many companies that have P/Es in excess of 50. That’s 50 years to

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

Combination pro

earn back your investment. Kinda steep, don’t you think? For years the average has been 14 or 15. Today it is about 28 to 30 d

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

pending on who is counting.

A stock selling at 14 P/E is fairly valued by “experts”, but if the stock is going down is that 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

till a “fair” value? Do you want to buy something that is a fair value, but looks like it will sell for less in a few months?

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

Then there are all kinds of things market analysts like to look for and talk about such a gross sales, net profit, management

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

experience, competition, industry sector, price/volume relationship, interest rates, rate of inflation and I could go on for a

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

couple of pages, but you get the idea. When, and if, you do this type of analysis you will find most of the numbers don’t agre

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

Following aspects would a

e with each other to give you a clear idea of whether to buy or sell. It is like trying to pick a button out of a washing mach

dd to the challenges in developing combination products:

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

ne during wash cycle. The more you look the more confused you become.

Brokerage companies want you to try to use all this “st

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

uff”. They encourage you to become confused. That way if you pick a stock that goes down they don’t take any blame. “The marke

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

is very complex” is their favorite phrase. Whether you win or lose they make money in commissions.

If this “stuff” is of no

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

value in stock selection (and it isn’t) then how are you to find stocks that go up? It is so simple that brokers don’t want yo

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

Professional from academic institutions, pharmaceutical industries, health care indust

to know. In fact, most of them don’t know. Here is the answer. Find a stock or better yet a mutual fund that is going up. Is

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

that too easy?

There is a basic law of physics that says a body in motion will remain in motion in the same direction until d

.

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

sturbed by another force. The Law of Inertia. This same principle can be applied to the stock market.

Find a stock or mutual

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

Companies that provide selfless information through particip

fund that is going up and buy it. When the direction changes to down (or even sideways) sell.

You don’t need all that “stuff”

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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