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The New Slant

Really understanding compounding will make all the difference in investing. I believe that Warren Buffett, the world's greatest investor, is hardwired to think geometrically. He is rich beyond dreams because he tota

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

lly gets the magic of compounding, and he executes on the concept. I am going to get these numbers wrong because I'm doing them from memory but it doesn't matter. You'll get the concept. Buffett started a partnership way back when

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

Examples of combination products may in

. He had a number of limited partners invest with him, and he took 20% of the gains. In the late 1960s he terminated the partnership with his famous letter, "When you no longer understand the way the game is played, it's time to l

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

ave the game." I'm paraphrasing, even though it's in quotes.

Buffet took about $100 million out of that first partnership for himself, so he was working with $100 million, keep that in mind. In 1974 when the bear market bottomed,

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

it might have been early 1975, he started another rise...he took over Berkshire Hathaway. Buffet, since the 1970's, has been getting a compounded (remember that means exponential) growth rate of about 22 to 24%.

This is where I

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

Combination pro

ntroduce you to the cousin of the Magic of Compounding, which is called the Rule of 72. With the Rule of 72 you can calculate how long it will take you to double your money at any given rate of return. OK? Let’s take an example. I

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

f you're earning 12% on your money and you want to know how long it will take to double it (we're compounding, remember?) divide 72 by 12, and your answer is 6. It will take 6 years to double your money. Let’s do another one. If y

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

ou're getting 6% on your money, divide 72 by 6 and you'll see that it will take 12 years to double. If you're getting 9%, it's 72 divided by 9, or 8 years to double up.

As for Warren Buffett, he's getting 22% on his money. This m

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

ans you divide 72 by 22 and gee, in only 3.27 years, or every 3 years and 4 months, he doubles his money. Since he's been at it about 35 years with that $100 million he had to play with, he's doubled his original $100 million almo

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

st nine times. You get that by taking 35 years and dividing by a double every 3 years and 4 months. It equals 10.70, or let's go with nine doubles to adjust for a rate of compounding that is varying. The key point is he's not maki

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

g 9 times his money with the $100 million, that would be an arithmetic progression that would give him $900 million. He's making nine doubles, a geometric or compounded progression.

Let's see how that works.

Warren Buffet's Geom

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

Following aspects would a

etric Progression Starting Dollar Amount: $100 million Time Periods Involved: Nine 3 year and 4 month periods

Period Time Taken Compounded Gain
0 Starting Po

dd to the challenges in developing combination products:

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

int $100,000,000
1 3 years, 4 months later $200,000,000
2 6 years, 8 months later $400,000,000
3 10 years

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

later $800,000,000
4 13 years, 4 months later $1,600,000,000
5 16 years, 8 months later $3,200,000,000
6 20 ye

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

ars later $6,400,000,000
7 23 years, 4 months later $12,800,000,000
8 26 years, 8 months later $25,600,000,000
9

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

30 years later $51,200,000,000

I believe Buffet is worth about $47 billion. It doesn't matter, he is somewhere in his ninth double. This is the magic of compounding! Also, he never sells. This means

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

Professional from academic institutions, pharmaceutical industries, health care indust

his money is doubling every three years and four months with no tax consequences. He gets taxed only when he sells. Under normal conditions, the money compounds until he dies, then it's taxed at a capital gains rate in the far di

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

stant future. In Buffett’s case, he’s giving most of his wealth to the Gates’ foundation to benefit society.

Teach your children to live a balanced life, and also help them master this concept and you will have very happy and ver

.

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

rich children. In stocks I show you how to make money at the bottom by buying depressed securities that are going to come right back, making you a fortune as they rocket off the bottom. In the future I will also show you how to m

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

Companies that provide selfless information through particip

ake money with the Warren Buffet concept, or classical Graham and Dodd analysis. In the mean time, good luck with understanding the magic of compounding.

Start thinking exponentially, Make Money Now

Copyright 2006 Richard Stoyec

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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Find out how trade show exhibitors sell their exhibit by using themes. The added value of themes increases traffic and profit.

I have to admit I was a bit skeptical upon reading the sales page for Get Google Pay-Per-Click Ads Free. I'd never heard of this alleged secret guru, Dr. Jon As a matter of fact I tried to find other marketers who might have heard of him to no avail.

The Federal Trade Commission has failed to curb SPAM in the last two-years since the CAN-SPAM Act was introduced. There is slightly less SPAM then before but this is hardly due to any efforts by the FTC.

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