That’s the wrong question—the question you want to be asking is what proportion of Erbitux’s US profits belong to LLY.
The answer: approximately 60%; this number is sky-high because LLY earns a very large royalty on US Erbitux sales and BMY does almost all of the marketing.
The US economics of Erbitux for LLY are so favorable from a margin standpoint that Erbitux is worth as much to LLY’s bottom line as a hypothetical wholly-owned drug with the same US sales as Erbitux and a typical profit margin for a biopharmaceutical. Thus, from a valuation standpoint, Erbitux can be treated as though it were wholly owned by LLY.
Annualized US sales of Erbitux are currently about $650M.
“The efficient-market hypothesis may be the foremost piece of B.S. ever promulgated in any area of human knowledge!”
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