Advice You - Business

S corporations and C corporations each have advantages and disadvantages. Their suitability depends on

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

your individual needs. Choosing the right one for you depends on what type of business you own, and how

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

Examples of combination products may in

much profit the business produces.

If your corporation turns out more money that can be considered hi

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

her than the reasonable salary for you as a president or CEO of the company, then obtaining an S corpor

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

ation tax status might be the right choice. This is because an S corporation passes profits directly to

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

Combination pro

the owner, which means corporate tax is not assessed on the business. The profits can be filed in the

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

wner’s personal income tax. In a C corporation, your profits will be doubly taxed. As the owner of the

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

company, you will have to pay corporate tax, as well as an individual income tax on your profits.

If y

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

ou plan on opening a small business with investors, and anticipate losing money for the first few years

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

an S corporation status would be more beneficial for you. Business losses can be filed in the investor

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

s’ personal income tax to offset any other potential income they may have.

If you plan to expand your

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

Following aspects would a

business and give your employees stock options, obtaining a C corporation status would be more advantag

dd to the challenges in developing combination products:

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

ous. S corporations are limited to having less than 100 shareholders. So, if you plan to have more than

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

that, achieving a C corporation status is the right move.

Another reason why you may want to choose a

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

C corporation tax status over an S corporation status is that there are rules the IRS impose that forc

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

you to become a regular corporation. For example, if you plan on using small corporate offering regist

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

Professional from academic institutions, pharmaceutical industries, health care indust

ration to raise funds for your corporation, then you will need to apply for a C corporation status. If

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

you plan to make your corporation public, you will need to become a C corporation.

If you are plannin

.

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

to start a business, make sure you consult with a business lawyer, and check federal and state laws go

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

Companies that provide selfless information through particip

verning corporation status. They will be able to advise you as to what would be more beneficial for you

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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Advice You - S Corporations versus C Corporations

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