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All bonds are not created equal. Savvy investors recognize that asset allocation can help manage investment risk. Although there is no guarantee that a specific asset allocation will meet your investment objectives

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

or generate a certain amount of income, diversifying your fixed-income portfolio may help you more effectively balance risk and return potential.

Vary Maturities

Longer-term bonds usually offer higher yields, but

; 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 more sensitive to interest-rate fluctuations than similar coupon shorter-term issues. Some risk-averse investors purchase only short-term issues, settling for lower yield. Other investors choose longer-term bond

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

s for higher return potential, taking on more market risk. Choosing a range of issues with staggered maturities, perhaps through a laddered portfolio, may help improve return potential and minimize interest rate ris

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

k.

Consider Quality

With some types of bonds such as U.S. Treasury securities, which are backed by the full faith and credit of the U.S government, the risk that the issuer may default on a payment of interest or

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

Combination pro

principal is extremely low. However, modest yields often accompany this high degree of credit quality. If you seek higher yields by taking on a higher degree of risk through investing in issues of lesser credit qual

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

ity, diversifying among different issuers may help reduce your total exposure in the event of any single issuer’s default.

What is your Tax Bracket?

Many investors who are in the higher (28- 35%) tax brackets grav

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

tate towards municipal bonds primarily for one reason: tax-exempt income. Municipal bonds are considered second to Treasuries in terms of credit quality, which adds to their appeal. Income from municipal bonds may b

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

e subject to state and local taxes as well as the Alternative Minimum Tax (AMT). Call features may exist that may impact yield. If sold prior to maturity, investments in municipal securities are subject to gains/l

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

osses based on the level of interest rates, market conditions and credit quality of the issuer. Morgan Stanley does not provide tax advice. Talk to your financial advisor to see if municipal bonds may benefit you.

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

Explore the Diverse Market

The large domestic market for individual bonds offers many choices, such as U.S. Treasury, inflation-protected, tax-advantaged municipal, mortgage-backed, preferred and corporate securit

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

Following aspects would a

ies, but there is also an entire world of bonds beyond our borders. Foreign* countries and corporations may also issue bonds, many of which are denominated in foreign currencies, while others are denominated in U.S.

dd to the challenges in developing combination products:

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

Dollars.

For More Information

Which bonds make sense for you? Contact us, and we can help you develop a well-diversified bond portfolio based on your needs, risk tolerance and objectives. Please call (866) 651-86

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

25.

*Investments in foreign securities involve risks associated with interest-rate and currency-exchange-rate changes as well as by market, economic, and political conditions of the countries where investments are

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

ade. There may be greater returns but also greater risks than with U.S. investments.

This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offe

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

r to buy or sell any security or other financial instrument, or to participate in any trading strategy. The securities/instruments discussed in this material may not be suitable for all investors. Any particular i

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

Professional from academic institutions, pharmaceutical industries, health care indust

nvestment should be analyzed based on its terms and risks as they relate to your specific circumstances and objectives. This is not a research report and was not prepared by the Morgan Stanley research department.

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

It was prepared by Morgan Stanley sales, trading or other non-research personnel. Morgan Stanley makes no representation or warranty with respect to the accuracy or completeness of this material. Morgan Stanley 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

oes not render advice on tax or tax-accounting matters. This material was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the

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

Companies that provide selfless information through particip

taxpayer under U.S. federal tax laws. Clients should consult with their tax advisors before making any tax-related investment decisions.

Investments and services are provided by Morgan Stanley DW Inc., member SIPC

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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Have you been focused on the tangibles of strategic planning and possibility forgetting the intangibles?

Unlike resale rights where you can only sell the product itself and keep all profits, with master resale rights, you are also able to sell the product and the rights for other people to sell it.

In some states consumers can expect to pay property taxes on their homes as well as on their personal vehicles.

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