Not so good deal, page-23

I have to question your logic here. A royalty can be calculated on either the net revenue or the gross. While it does not say which base is used, the term double digit suggests that the royalty is on the gross price, To use an example if the price established is $200 then the royalty would be at least $20.

Initially ITF will be buying the product from us, and while the mechanism for this is not stated but the contract would also have a buy price in it, possibly with volume discounts. The royalty would be on top of this.

As part of this deal ITF has to establish a manufacturing capability, which it would probably do with a suitable contractor, one known and approved by the FDA, I would imagine. When this happen the royalty will be our revenue stream and if you think that we would be content with 4% then I think you are mistaken. The company has never been one which undervalues its products and this is its largest market.

I think the choice of ITF (small, but competent and hungry) was influenced by its deals with Aspen and Ansell. Mundipharma is also quite small on the world pharmaceutical stage and they seem to be getting their act together in a big way. Both are focused on the health of women of childbearing age with all the safety concerns that brings. 

Whatever the royalty is we will be getting that on the price ITF sells it for. This may not be the pharmacy price, which no distributor is able to control because this is subject to deals with insurers. It is also not the price which the consumer pays so retail has little meaning in this market.

DYOR