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E-Folder - Top 10 Reasons to Set Up a Corporation
The corporation has been described as one of the great inventions of mankind. An entity on its own, the corporation exists separate from the personal fortunes of its founder
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
s, can pass from their hands intact, and may even outlive them. It pays its own taxes, can be sued in its own name and may have many owners in the form of shareholders over
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
time.
There are many advantages of doing business in this structure. So, let’s look at the top 10 reasons to set up a corporation.
1. Protection from liability
This proba
There are many advantages of doing business in this structure. So, let’s look at the top 10 reasons to set up a corporation.
1. Protection from liability
This proba
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
bly ranks number one among the top 10 reasons to set up a corporation because of the limited liability that the corporate structure affords its owners. Theoretically, the co
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
rporation is responsible for its debts and obligations. This benefit is not absolute though and has boundaries. The corporate veil may be pierced under certain circumstances
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
and shareholders of a new or small corporation may be asked to give personal guarantees when trying to obtain financing.
2. Ability to Raise Capital
One of the top 10 rea
2. Ability to Raise Capital
One of the top 10 rea
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
sons to set up a corporation is the increased ability to raise capital, when compared to a sole proprietorship or partnerships. Outside investors may be enticed by the tax b
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
enefits and limited liability offered by corporations. The flexible nature of the capital structure in corporations allows them to address a wide variety of investors with v
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
arying needs.
3. Choice of Tax Year
Tax law allows corporations (except S corporations) to freely choose their fiscal tax year, which may be different from the calendar ye
3. Choice of Tax Year
Tax law allows corporations (except S corporations) to freely choose their fiscal tax year, which may be different from the calendar ye
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
ar. The corporation can select the tax year most advantageous to the business and most appropriate a fit to its natural business cycle.
4. Business Continuity
This is not
4. Business Continuity
This is not
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
too obvious a benefit but certainly important enough to be one of the top 10 reasons to set up a corporation. The corporation can survive its founders provided that it compl
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
ies with state and federal regulations.
5. Centralized Management
Shareholders in the corporation possess the right to vote for and determine the board of directors of the
5. Centralized Management
Shareholders in the corporation possess the right to vote for and determine the board of directors of the
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
corporation, who in turn elect the officers of the corporation. This affords control.
6. Transferability of Ownership
In contrast to the other forms of business entity, t
6. Transferability of Ownership
In contrast to the other forms of business entity, t
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
he ownership interest of a corporation is easily transferred. Barring any prohibitive agreement among shareholders, or restrictions in the articles of incorporation or bylaw
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
s, shares of stock may be bought and sold freely.
7. Corporate Identity
Shareholders benefit from the sense of image and stability of a corporation.
8. Tax Savings
Corpo
7. Corporate Identity
Shareholders benefit from the sense of image and stability of a corporation.
8. Tax Savings
Corpo
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
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
rations are taxed at a lower rate than individuals. They can own shares in other corporations and receive corporate dividends 80% tax free. This is certainly one of the top
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
10 reasons to set up a corporation.
9. Less Risk of IRS Audit
The probabilities of IRS audits on corporations are lower than on individuals, and disallowances are likely t
9. Less Risk of IRS Audit
The probabilities of IRS audits on corporations are lower than on individuals, and disallowances are likely t
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
o be less.
10. Employee Benefit Plans
The last, but not the least of the top 10 reasons to set up a corporation, can be found in employee benefit plans. The owners of a co
10. Employee Benefit Plans
The last, but not the least of the top 10 reasons to set up a corporation, can be found in employee benefit plans. The owners of a co
.
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
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
rporation may be in a position to take advantage of several IRS-qualified employee benefit plans that can be used both to compensate employees and to reduce the corporate in
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
come tax liability. Payment to these benefits gives the corporation a tax deduction and the shareholders may receive favorable tax treatment on the dividends arising from it
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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