"To counter pricing pressure from the AG, DRL and Alchemia have jointly invested in further process and production improvement, with the aim of reducing the cost of the active pharmaceutical ingredient (API) to increase the profitability of fondaparinux over its life. Alchemia and DRL have agreed that these costs will be born equally by both companies. In total, the two companies have agreed to split additional costs of $10m equally, in order to compete most effectively in the current market. Alchemia's share of these costs will not be paid up front, but will be deducted from Alchemia’s net quarterly profit receipts over the next 10 quarters at a rate of $500,000 per quarter. The benefits of this investment are expected to flow through into increased profits from the December quarter 2012 onwards as the benefit of the API cost reduction is realised. This reduction in manufacturing cost is also expected to play an important role in maximising profits in non-US markets where the selling price of fondaparinux is significantly lower."
I remember discussing awhile back what the cost will be in refining the manufacturing process, looks like bottle neck strikes again with a 500k per quarter!
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