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When you option land in the path of growth, you make a relatively small investment for a large potential profit. What is the downside? You will lose most of your small investments.

When you buy in the path of

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

growth, you want to do three things:

1. Determine if the area is growing.

2. Determine the primary direction of the growth.

3. Buy property in the path of growth, wait for an increase in value, and sell.

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

Examples of combination products may in

However, what if you don't have the cash or ability to finance real estate that will sit there without producing income? That is when you may want to consider options. If you don't even have enough money to bu

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

y options you could find a partner who will put up the money if you do all the work.

Option Land In The Path Of Growth - An Example

You find a few properties that in the path of growth, and are either

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

for sale or look like they are not being used for anything. The latter are more likely to be optionable at a low cost, although to keep the option fee low you may have to offer a higher purchase price. At the

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

Combination pro

county building or wherever the property records are kept, you get the names and addresses of the owners.

You suspect that properties in this area will be worth 30% more within a year. One that is worth abou

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

t $300,000 has an owner who is open to the idea of an option. You meet with him and explain that you want to develop the land or team up with an investor who can help you, or alternately just find a bigger dev

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

eloper to turn the deal over to. However, you can't buy it outright at the moment, and you don't want to spend the time working on the deal if you won't be able to buy it later.

Thus, you need an option, so 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 will have the right to buy it when you are ready. You will need it to be for 18 months so you have enough time, and you will need it to be assignable, so you can bring in another investor if necessary. The

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

owner wasn't planning on selling just yet, so he is open to the idea of an option, but will only agree to 15 months.

You agree that you might be able to do something in 15 months, but you can only risk $3,000

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

for the option. The owner wants $8,000. You finally agree to pay $6,000 for the option, but if you buy the property it will be at $315,000 - 5% more than its current value. The option fee will apply towards t

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

Following aspects would a

he purchase. Reminding the seller that he gets to keep the $6,000 if you don't buy it is what finally convinces him to agree.

A year later the property has gone up in value by only 20%, not the 30% you were e

dd to the challenges in developing combination products:

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

xpecting. You find a buyer who will pay the market value of $360,000. Rather than go to the trouble and extra expense of a double closing, you decide to assign the option to the new buyer for $40,000. He must

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

pay $309,000 (the original $6,000 option fee is credited towards the $315,000 purchase price), at closing, making his total cost just $349,000.

Meanwhile, having invested $6,000, plus let's say $1,000 in adve

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

rtising, you have a profit of $33,000. If you lost $7,000 on half of these deals you would still be doing okay. This is why investors take the risk with options that most often expire worthless: The pay off ca

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

n be big enough when it works to more than cover the losses.

The other possibility when using options to profit from growth is to actually buy the property at the end of the option period. If it is an income

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

Professional from academic institutions, pharmaceutical industries, health care indust

producing property, the increase in value over the option period may make it possible to finance the purchase without additional cash. For example, in the above example, a bank may loan $315,000 on a property

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

worth $360,000, in which case you could even get your $6,000 investment back out of the deal (although you would have closing costs).

At this point, if the area is truly growing fast, and the income from the

.

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

property covers your expenses, you wait another year or so and make an additional $70,000 when you sell.

One last thought. Do your homework. It is common for prices to stop rising just when you think they are

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

Companies that provide selfless information through particip

most likely to jump up even faster. When you option like this, you are combining the risks of options with the risks of speculating on prices. Of course, you are also combining the advantages of both as well.

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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