Abraxis BioScience (ABII)

Contractual allowances, returns and credits, cash discounts and bad debts

Contractual allowances, generally rebates or administrative fees, are offered to certain wholesale customers, GPOs and end-user customers, consistent with pharmaceutical industry practices. Settlement of rebates and fees may generally occur from one to 15 months from date of sale. We provide a general provision for contractual allowances at the time of sale based on the historical relationship between sales and such allowances. Upon receipt of chargeback, due to the availability of product and customer specific information on these programs, we establish a specific provision for fees or rebates based on the specific terms of each agreement. A one percent increase in the estimated rate of contractual allowances to revenue for the year ended December 31, 2007 would reduce net revenue by $0.1 million. Contractual allowances are reflected in the financial statements as a reduction of revenue and as a current accrued liability. The accrual for customer credits and product returns is presented in the financial statements as a reduction of revenue and accounts receivable. Our provision for contractual allowances during each of the three years ended was as follows:

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Consistent with industry practice, our return policy permits our customers to return product within a window of time before and after the expiration of product dating. We provide for product returns and other customer credits at the time of sale by applying historical experience factors, generally based on our historic data on credits issued by credit category or product, relative to related sales and we provide specifically for known outstanding returns and credits. At December 31, 2007, a one percent increase in the estimated reserve requirements for customer credits and product returns would have decreased 2007 net revenue by $0.3 million. Our provision for customer credits and product returns during each of the three years ended was as follows:

We establish a reserve for bad debts based on general and identified customer credit exposure. Our actual loss due to bad debts in each of the three years ended December 31, 2007 was less than $0.1 million.

Contractual allowances, returns and credits, cash discounts and bad debts

Contractual allowances, generally rebates or administrative fees, are offered to certain wholesale customers, GPOs and end-user
customers, consistent with pharmaceutical industry practices. Settlement of rebates and fees may generally occur from one to 15 months from date of sale. We provide a general provision for contractual allowances at the time of sale based on the
historical relationship between sales and such allowances. Upon receipt of chargeback, due to the availability of product and customer specific information on these programs, we establish a specific provision for fees or rebates based on the
specific terms of each agreement. A one percent increase in the estimated rate of contractual allowances to revenue for the year ended December 31, 2007 would reduce net revenue by $0.1 million. Contractual allowances are reflected in the
financial statements as a reduction of revenue and as a current accrued liability. The accrual for customer credits and product returns is presented in the financial statements as a reduction of revenue and accounts receivable. Our provision for
contractual allowances during each of the three years ended was as follows:

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Consistent with industry practice, our return policy permits our customers to return product within a
window of time before and after the expiration of product dating. We provide for product returns and other customer credits at the time of sale by applying historical experience factors, generally based on our historic data on credits issued by
credit category or product, relative to related sales and we provide specifically for known outstanding returns and credits. At December 31, 2007, a one percent increase in the estimated reserve requirements for customer credits and product
returns would have decreased 2007 net revenue by $0.3 million. Our provision for customer credits and product returns during each of the three years ended was as follows: