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.
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.
"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.