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Biotech / Medical : Sepracor-Looks very promising -- Ignore unavailable to you. Want to Upgrade?

To: CrazyPete who wrote (8846)	9/15/2005 2:00:19 PM
From: kenhott	Read Replies (1) \| Respond to of 10280

The reasonable thing to do would be to estimate your inventory in terms of expected sales. In a launch of a fast growing product, it doesn't make sense to look into the just launched past for ratios as it would give you strange answers. And in terms of inventory management, the focus should be on having enough inventory in place to easily absorb advancing sales. Reasonably the weeks of inventory outstanding should be based on some targeted sales number. So if this is what SEPR did/is doing, it could look something like the following: Est next 12 month sales: $200m 10 weeks of reported inventory: $40m If Lunesta does not grow beyond $200m, eventually SEPR will destock $20m to get down to 5 weeks (long term goal) of inventory or $20m. On the other hand, if Est 12 month sales goes to $300m, inventory weeks would move down to 7 weeks with the same $40m inventory. Flip it around, if we kept inventory at $40m, and if est 12 month sales moves up to $400m, inventory weeks would be down to 5 weeks (the long term goal) w/o any destocking. I personally would not expect much destocking.