Next couple of days, page-14

@long_haul and @CaptainBarnacles

On the face of it, if annual revenues to end customer of Jublia amount to US$280m , and Valeant are only earning circa US$50m (before costs!) - then that implies a gross margin to the retailer (Walgreens in this case) of over 80%!!!

Of course, the US pharma supply chain is complex, and includes middle-men such as insurers. As such, the retailers gross margin can be expected to be substantially less than this 80% figure. Nevertheless, this is clearly a nonsense, and one would have to assume that there is more to this story.

Here are some links that provide some food for thought. My preliminary conclusions are that Valeant, in a myopic attempt to secure top line revenues, has set up a complex web of rebates (inducements?), first to insurers and then to Walgreens - and in the end, has left itself very little at the bottom line.

https://www.drugchannels.net/2016/06/valeant-reveals-bad-news-about-its.html
https://www.*.com.au/valeant-pays-high-rebates-to-sell-drugs-2016-11?r=US&IR=T
https://www.**promotion blocked**/investing/2016/07/09/the-most-important-thing-walgreens-said-about-vale.aspx
https://www.nytimes.com/2015/12/16/business/valeant-makes-distribution-deal-with-walgreens.html

In short, Valeant has made a real meal of it. To be fare to Acrux, it is industry practice to quote figures from an independent third party (IQVIA). Acrux cannot be expected to be adjusting numbers to account for the incompetence of Valeant.

What does all this mean in terms of Walgreens selling generics in the future? I have no idea. However, if regulators are making big efforts to lubricate the approval process of generics - I'm guessing they're going to be taking a keen interest in those generics getting to market.
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