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Elan Corporation, plc Message Board

  • dar200 dar200 Feb 23, 2005 5:25 PM Flag

    Helping pedar on T revenue

    BIIB does not report 1/2 of ELN sales to the market as revenue.

    E pays B 1/2 of the overall gross profit on T plus B's manufacturing cost of T. B reports what E pays B as revenue, and remember, B's unit sales of T to E in any quarter may not equal E's unit sales to the market.

    E's wholesale list price for T is 23,504 per patient per year. Discounting that by 6% for discounts and returns results in 22,094 per patient per year of net revenue to E. E said its gross profit on T will be between 30% and 35% of sales. I'll use 32.5%, the midpoint. Thus, E's gross profit on T is 7,181 per patient per year. B's gross profit is the same.

    At the accounting CC on 11/03/04, E said royalties payable to third parties will range between the low to mid teens (meaning percentages of net sales). I'll use 13 %.

    So, if E's net sales price per patient per year is 22,094 and its gross profit is 7,181, that means total cost of sales is 14,913. If E pays royalties of 2,872 per patient per year to third parties (13% x 22,094), that means E pays B 12,041 per patient per year.

    Since the gross profit per vial is designed to be the same between E and B (7,181), that means B's cost of manufacturing T is 4,860 per patient per year (12,041-7,181=4,860).

    4,860/22,094 = 22% of end sales. This number will come down as volume increases, as will the royalty percentage.

    There you have it, pedar. Go to it using the correct numbers.

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    • Who's paying for the marketing and other expenses like MSActive? The Biogen salesforce has doubled and they are in the process of increasing this further. I'm getting visited twice a week by Biogen now. The other companies also seem to be targeting the MS docs as they are visiting at least once/week too. Additonally, Biogen is sponsoring many physician and patient events. This has got to be adding up and the marketing expenses may even surpass production costs.

      On another topic. I finally got my 1st tysabri infusion reimbursed and the reimbursement from this private insurer was excellent. One reimbursement down, twenty four to go..... We started 3 more patients this week and did several second infusions.

      • 3 Replies to neuro1111
      • <Who's paying for the marketing and other expenses like MSActive?>

        R&D, marketing, & g&a expenses attributable to Tysabri are split 50-50, and each company reports half of these expenses.

        I believe ELN talked some numbers in the earnings CC about these expenses, and, in response to a question, said these costs were relatively fixed.

      • N,
        Thanks for the report.

        "The Biogen salesforce has doubled and they are in the process of increasing this further. I'm getting visited twice a week by Biogen now. The other companies also seem to be targeting the MS docs as they are visiting at least once/week too. Additonally, Biogen is sponsoring many physician and patient events."

        Too late. [The BIIB marketing push is in sudden inverse ratio to BIIB's earlier, cavalier attitude (see BIIB CFO's statements of last year)toward TY's acceptance except as a second-tier MS drug.] Word of mouth among MS-ers has long ago out-stripped the effect of BIIB's well-dressed Sale Reps' office visits, desperate Reps distributing their cheap "Tysabri" embossed ball-point pens to the neuros' very bored office staff. Let BIIB absorb the cost of its incompetence.

        --- Persi

      • neuro,

        what was your drug of choice before T?
        what % of your new scripts are T now?

        thanks,
        ant

    • I think you fried his brain! You are talking way over his head. He prefers the simple rah rah given by the analysts.

 
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