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Biotech / Medical : Agouron Pharmaceuticals (AGPH)
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To: ALL who wrote (4260)5/7/1998 3:02:00 PM
From: Peter Singleton  Read Replies (1) of 6136
 
Just to add a point to the discussion on Viracept gross margins, US gross margin was 66% Q3, up from 63% Q2, and expectations are it will continue to trend upward, as one would expect from any manufactured product, especially one early in its life cycle. AGPH and its contract manufacturers have some pretty smart folks on this ... I think there was a discussion to that effect on this thread a number of months ago.

However, Viracept will not end up being a typical 90%+ gross margin pharmaceutical product, due to the points already noted:

- as a small molecule, all PIs are difficult and expensive to manufacture, some more than others. Viracept is apparently good in this respect. Vertex's Amprenavir is supposed to the easiest to manufacture, albeit reported by VRTX

- AGPH doesn't manufacture in house

There's an additional c. 20% of revenues that goes to JT for their support in funding development of the product, which reduces the value of the gross margin revenue stream to AGPH.

Peter
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