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Top Articles - Pre-Construction Investing
With pre-construction investing, you can make a large profit, and there are even ways to limit your risk. This strategy generally won't work well in slow markets, but then markets go up and down. If the time isn't right now, try it when pri
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
ces are rising.
The first time I remember hearing about this was in the late seventies. As condominiums became more popular, the prices rose consistently (remember that this was a time of high inflation too). Smart investors took advantage
The first time I remember hearing about this was in the late seventies. As condominiums became more popular, the prices rose consistently (remember that this was a time of high inflation too). Smart investors took advantage
; 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
of this before the condos were even built.
First you need to understand how these projects were financed. A developer would determine that there was enough demand for a condo complex, get an option on some land, and have a plan drawn up. T
First you need to understand how these projects were financed. A developer would determine that there was enough demand for a condo complex, get an option on some land, and have a plan drawn up. T
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
e banks didn't want to loan money on an unproven plan, however. How did the developer prove that the units could be sold?
By selling them! If you want to be the proud owner of one of the beautiful new units in the Blue Spruce Condominiums,
By selling them! If you want to be the proud owner of one of the beautiful new units in the Blue Spruce Condominiums,
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
you had better buy now! That was essentially the pitch, but of course people wouldn't (and couldn't) pay for something not yet built. They could sign the contract to close on the unit once they were done, however, and put down a $500 deposi
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
.
If the units were expected to sell for $55,000 when done, the developer might sell the first dozen for $50,000, just to get things moving. Once he had enough contracts in hand, the bank would put up the money so construction could begin.
If the units were expected to sell for $55,000 when done, the developer might sell the first dozen for $50,000, just to get things moving. Once he had enough contracts in hand, the bank would put up the money so construction could begin.
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
Six months later, as the condos neared completion, the last ones might be selling for $65,000. Things already there to look at tend to sell for more. (And inflation was at double digits during some of these years.)
Investors who bought a u
Investors who bought a u
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
it at first had a contract to buy at $50,000. If it was assignable, they could just sell it to a buyer for say $13,000, which with the $50,000 price added up to $63,000, still a discount from the going rate of $65,000. If the contracts were
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
not assignable, he could sell the unit and do a simultaneous close. This latter way had more costs, but he still made over $10,000 on an investment of $500.
By the way, as long as the language of the contract limited damages to the deposit
By the way, as long as the language of the contract limited damages to the deposit
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
amount, (ask an attorney), the buyer could walk away if necessary. The most he would lose is $500.
Pre-Construction Investing - A More Recent Example
Around the time we moved to Tucson, Arizona (2004) there were new subdivisions go
Pre-Construction Investing - A More Recent Example
Around the time we moved to Tucson, Arizona (2004) there were new subdivisions go
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
ng up all over. One developer had a subdivision where he was building homes to sell for $150,000 and by the time they were half sold, he was starting to sell them for $200,000. Lucky homeowners who put their deposit down early got to move i
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
nto a home with $50,000 of instant equity.
This did not go unnoticed by investors. Soon many of the sales were to investors who intended to immediately resell the homes for a profit once they were complete and they closed the purchase. Som
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
did very well in this way.
Eventually, the developers stopped selling to the investors. So many investors were in on the game that when the subdivision was done, the developers had to compete to sell their own remaining homes while all th
Eventually, the developers stopped selling to the investors. So many investors were in on the game that when the subdivision was done, the developers had to compete to sell their own remaining homes while all th
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
investors were trying to unload theirs. Prices could be pushed down or houses could sit on the market longer, creating more expense for the developer. They preferred to sell to people that were actually going to live in them.
There are ot
There are ot
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
er ways to invest in pre-construction deals. Some builders need your help to get financing, for example. If you agree to buy their new house, you can use your credit standing to get a construction loan. They might line up a dozen investors
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
o get a subdivision built in this way. The sales price is set at a level that hopefully assures both you and the builder a profit.
You sell as soon as the home is complete. The builder may sell to you for $160,000, knowing the home will be
You sell as soon as the home is complete. The builder may sell to you for $160,000, knowing the home will be
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
worth $190,000 when done. If his cost is $130,000, and you are his way to get the money to build it, he is happy. Often the bank may not know that it is an investor and not a resident buying the home (you changed your mind?), but you can le
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
your conscience be your guide when it comes to the financing paperwork.
You can do something similar with condo conversions. When an apartment building is converted into condominiums, the developer may need to pre-sell enough units to get
You can do something similar with condo conversions. When an apartment building is converted into condominiums, the developer may need to pre-sell enough units to get
.
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
the cash and/or financing necessary for the deal. These early sales are often at prices far below what the finished condos sell for. You might put a $2,000 deposit down on a $85,000 condo that is worth $95,000 or more when it is done.
You'
You'
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
l notice one thing in common about all of these examples. They assume a hot real estate market where things are selling relatively fast and prices are rising. That is what you need to really make money safely with pre-construction investing
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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