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Gold/Mining/Energy : Nuvo Research Inc -- Ignore unavailable to you. Want to Upgrade?

To: john.d who wrote (7895)	10/25/2001 3:09:45 PM
From: Cal Gary	Read Replies (1) \| Respond to of 14101

Hi Joe and John I've been thinking this one over for a short 2 hours. At first I did have the C word in mind (cannibalism). Positive side 1: Diclomax is obviously a competitor product that have existing market share. 6.7mm pounds last year. Pennsaid will go head to head against it anyways for market share despite this transaction. The difference, when the rights change hands, Provalis will control marketing efforts for both products. Hopefully they'll segment and coordinate the two products and make this clear to the British physicians and help guide their buying decisions. Hopefully they'll remove previous marketing messages and competitive obstacles. Hopefully they'll make more money by orchestrating the two products. Negative Side 1 My other thoughts were, if I owned rights to a product generating 80% gross, why would I sell?? 1. I cannot consider the "Too small a revenue generator" arguement, especially at 80% gross unless all my other products in my portfolio is greater than 80%. Doubt that. 2. Could it be Pfizer is expecting or experiencing declining or eroding sales from Diclomax? Perhaps Cox2 are gobbling market share? Without knowing the price difference and how the British health plans pays for each, its hard to quantify. 3. Perhaps Diclomax has a limited lifecycle, how about 3 years? Negative Side 2 After the transaction closes, I see Diclomax not so much as an OA competitor, but a competitor in regard to margins. What is the marketing and sales to do when they have similar products but different margins? What is the management to do when they have similar products but different margins? These are the same questions I had in the past with regards to J&J being our US distributor. For example they have Tylenol, Tylenol Cold, Tylenol Strong, Tylenol RA, ... <g> Positive Side 2 "assuming sales are maintained" then this is certainly a good buy for Provalis shareholders. 1. NICE cashflow and margin. 2. NICE terms, cashflow pays for the rights. Less than one year payback on initial investment. Exp Rev per year inflow 6,700,000 per week inflow 128,846 80% gross mar 103,077 article reports 107,000 Total price 14,500,000 Down 1,900,000 Bal 12,600,000 per year out 4,200,000 per week out 80,769 net - yeare 2,500,000 net - week 22,308 In summary, I guess I'm net neutral on this NR.