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A lot of investors dislike volatility. They reason that the up and down movement of the stock price makes it harder to pred

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

ict. Higher uncertainty means higher risk, they say. Therefore, for the same reward, they prefer stocksthat has a lower vol

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

Examples of combination products may in

atility.

On the contrary, smart investors like Warren Buffett embraces volatility. He reasoned that if a stock A is tradin

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

at $ 50 and has a fair value of $ 60. Shouldn't A be less risky if it plunges to say $ 20 or $ 15? That is a valid point.

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

This of course assume that the fundamental that caused the drop has not changed.

I like volatility for several reasons. Fo

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

Combination pro

entry and exit points, volatility increases our potential return. No, I do not advocate day trading. No, I do not recommen

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

d buying stock A at $ 30 and selling it at $ 31 just because it has risen in value. We should try to be investors with long

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

term horizon of at least one year.

Another reason to like volatility is that it reduces uncertainty. Some of you might ro

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

l your eyes and think that this is nonsense. Let us explore this. What causes a stock to move? The stock price might move d

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

ue to market sentiment. It also move when it release earnings or new products or news about incoming threat from competitor

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

. In other word, the stock price moves due to the news concerning the company.

News are fact. Fact are certainty. Therefor

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

Following aspects would a

e, when the news is out, you get less uncertainty because the unknown has already been discovered. Be it bad or good, news

dd to the challenges in developing combination products:

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

always reduce uncertainty.

For example, when Merck & Co Inc. (MRK) announced the withdrawal of its painkiller drug, Vioxx,

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

that reduces uncertainty. Sure, shareholders lost money as the stock price plunged and volatility increased. But, sooner or

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

later, Vioxx will be pulled anyway. Not pulling Vioxx only make the liabilities worse. Now, potential investors can estima

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

e Merck's fair value based on the 'bad' news. While the news is bad, it reduces uncertainty which reduces risk. This is in

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

Professional from academic institutions, pharmaceutical industries, health care indust

a sense good news for investors.

It is hard to fathom. But we need to embrace volatility. Sooner or later, a company will

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

announce news, which can be good or bad. Either way, the stock price will be volatile when the news is announced. Volatilit

.

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

is bound to happen. Otherwise, how can we investors profit from it? When a company's stock price does not move much, you c

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

Companies that provide selfless information through particip

an't profit much and vice versa. The trick is knowing when to buy and when to sell. That will determine your rate of return

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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