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what am i missing, page-27

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cadrifter

1,247 Posts.

01/03/16

15:18

Post #: 17156258
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Originally posted by IndiJo ↑

As usual I cant give a yes/no answer. But things to consider when thinking about inventory:

- what are the storage requirements for the inventory? Best case they sit in the approved goods part of the warehouse.

- devices and components have expiry periods even when not packaged up with drugs. So you don't want the stuff hanging around doing nothing

- there is a cost to holding inventory so why hold more than you need

- balanced with what are the lead times in case you need more? 4 weeks, 6 months? If materials have a long lead time you tend to hold inventory

- supply risk, if the supplier is a single source of supply you will try to contractually obligate them to hold inventory or potentially you hold it. Either way if there is a fire, flood, earthquake or for more likely a machine/line fault or regulator finding that puts them out of operation for 3-6 months then that will be factored into what level of inventory is held.

At the end of the day, in the vast majority of examples pharma will only build inventory for devices based around what their actual production and filling capabilities are. If they can produce 2 million doses per month they are not going stockpile devices. They will simply make sure the supplier has minimum of say 3 months inventory on hand at all times and they will get the device manufacturer to ship 6 million per qtr offset by a calendar month or two. (for example)

Holding large amount of inventory for a launch? ONLY if they are holding large amounts of drug product in bulk in preparation for launch/approval in which case they will start filling of devices in line with launch plans.

All IMHO

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Just to add one note --

Accounts Receivable more than doubled from 1.4MM to 2.9MM from end of the 1Q to the 2Q. Could have been for PFS, RU AI's for AbbVie, WI's for Medimmune, Customization work etc ... As long as it is not delinquent it is all good.

Inventory shrunk from 151K to 122K.

UNS Price at posting: 18.5¢ Sentiment: Buy Disclosure: Held
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