Aloha, When I first saw the deal, it reminded me of the old movie "Percentage of Net Profits" deals. Those are the ones where they tell a struggling screenwriter he will only receive $10,000 for his script, but get 2% of the net profits. Only later does the naive writer discover that "Jaws" has yet to make a profit, according to its studio accountants. <g>
But when you see the details, it doesn't look quite as bad. Assuming they can find honest accountants. However, if there are no oxymorons available, having good checks and balances could make it a good deal.
First, Duramed does not have to spend a ton of money hiring salemen or advertising. Secondly, Solvay is big in Europe where Duramed has no presence at all. But the main thing I like is that both firms assume sales will be so great that profits will overwhelm both sales and R&D costs. I am hoping for that to come true, which is the sine qua non of the investment.
So, I do think they might have negotiated a tighter deal, but they are a lot closer to the situation than I am. I don't think, "Hey, who wants to help me whup J&J" is the most attractive come on in the world. J&J is tough and vicious. The trick is how soon the profits start rolling in for both companies. I think that will be real soon. |
