Replies to post #130181 on Biotech Values

[DewDiligence]

A key element of MNTA's [Lovenox] take is the gross margin. How will all of this affect that? Does more competition per se mean more expense;...is the institutional market more or less expensive to compete in?

NVS’ actual marketing expenses will increase marginally if at all on account of the AG, even if NVS becomes somewhat more aggressive in the hospital segment. However, the contractual SG&A in the NVS-MNTA Lovenox agreement that is an input in the calculation of NVS’ operating profit becomes proportionally higher if sales are lower. Thus, the key determinants of NVS’ profit margin on Lovenox will be market share and ASP; everything else is essentially round-off error.

[zipjet]

A key element of MNTA's take is the gross margin. How will all of this affect that? Does more competition per se mean more expense; is the institutional market more or less expensive to compete in? What is the extent and effect of price cuts?

GM is bound to take a hit increasing over time, say 10% points at one year out. (Just a guess)

I do think there will be increased marketing expense for Sandoz to penetrate the institutional market. But SANDOZ has to do it or SNY could really take undue advantage. But it likely pales to insignificance for Sandoz compared to the GM hit, and as DD points out is likely not part of the calculation for MNTA.

ij