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Biotech / Medical : Agouron Pharmaceuticals (AGPH)
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To: Steve Fancy who wrote (4251)5/6/1998 10:00:00 PM
From: Spekulatius  Read Replies (3) of 6136
 
Agouron valuation

with a price to sales ratio (PSR) of about 3.0, AGPH seems to one of the cheapest drug companies available, except for Chiron and Genzyme.
I think one reason for this is the hole in the product pipeline and fears about increased competition for VIRACEPT. This may mean, that profits or even revenues may shrink before a new product runs down the pipeline and gets ready to market.
Another reason may be the compartively small gross margins of about 55% on VIRACEPT sales.Usually, drug companies have much better gross margins. I'm not sure what the reason for these low gross margins is, they don't seem to improve as the VIRACEPT revenue increases. Is Agouron extremely weak on the manufacturing side or is VIRACEPT just difficult to manufacture or are there some other specific reasons for the low gross margins?
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