Biotech Values

[iwfal]

If they have satisfied themselves with Amphastar's ability to make good, Watson is taking little risk in moving full steam ahead IMO.

Based upon an earlier board assessment of A* there is no chance that Amphastar can make good on >$4B ($1.3B x 3).

Calculation of damages is pretty straight forward:

Was about 1/2 of 500M/Q market - i.e. about $250 million per Q of M/N revenue and at 68% GM about $170M GP.

After launch of A* and AG the total $ value of Lovenox market shrinks due to price cuts - say to $400M/Q. M/N gets 1/4 of that - so $100M/Q. And due to price cuts of 30% the GM drops to 55% so GP is 55M per Q for M/N. I.e. M/N lose about $115M/Q which, over three years (minimum durability of the patents IMO), is >$1.3B.

Note that although I assume price drops 30% the market for Lovenox drops only 20% due to price cut inducing more scripts.