WCRX » Topics » Net Sales

These excerpts taken from the WCRX 10-K filed Feb 27, 2009.

Net Sales

We promote a portfolio of branded prescription pharmaceutical products currently focused on the women’s healthcare and dermatology segments of the U.S. pharmaceutical market. To generate demand for our products, our sales representatives make face-to-face promotional and educational presentations to physicians who are potential prescribers of our products to their patients. By informing these physicians of the attributes of our products, we generate demand for our products with physicians, who then write prescriptions for their patients, who in turn go to the pharmacy where the prescription is filled. Pharmacies buy our products either through wholesale pharmaceutical distributors or directly from us (for example, retail drug store chains). We recognize revenue when title passes to our customers, generally free on board (“FOB”), destination, net of sales-related deductions.

When our unit sales to customers in any period exceeds consumer demand (as measured by filled prescriptions in units), our sales in excess of demand must be absorbed before our customers begin to order again. We refer to the estimated amount of inventory held by our customers and pharmacies that purchase our product from our direct customers, generally measured in the number of days of demand on hand, as “pipeline inventory”. Pipeline inventories expand and contract in the normal course of business. When comparing reported product sales between periods, it is important to consider whether estimated pipeline inventories increased or decreased during each period.

 

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We generate our revenue primarily from the sale of branded pharmaceutical products in the United States (“U.S.”), including our oral contraceptives (LOESTRIN 24 FE, FEMCON FE, ESTROSTEP FE, and OVCON), our HT products (primarily ESTRACE Cream, FEMHRT, and FEMRING), our oral antibiotic for the adjunctive treatment of severe acne (DORYX), our psoriasis products (TACLONEX and DOVONEX) and our treatment for premenstrual dysphoric disorder (SARAFEM). Our revenue from sales of these products consists primarily of sales invoiced less returns and other sales-related deductions. In addition to the products listed above, the Company earns revenues from the sale of generic products, including TILIA™ FE (a generic version of ESTROSTEP FE) and ZENCHENT (a generic version of OVCON 35) under profit-sharing supply and distribution agreements with Watson. We also recognize revenue on a generic version of DOVONEX Solution under a profit-sharing supply and distribution agreement with Hi-Tech. The revenue we earn under these agreements is included with our related branded product revenue for financial reporting purposes.

Included in net sales are amounts earned under contract manufacturing agreements. These activities are by-products of our May 2004 acquisition of the Fajardo, Puerto Rico manufacturing facility from a subsidiary of Pfizer and the March 2004 sale of rights to two LOESTRIN products to a unit of Teva (then Barr). In connection with these transactions, we agreed to manufacture certain products for Pfizer and Teva (then Barr) for specified periods. Contract manufacturing is not an area of strategic focus for us as these contracts produce profit margins significantly below the margins realized on sales of our branded products. We have phased out the manufacturing of all but one of the Pfizer products (the supply agreement for the production of Dilantin® was extended for three years effective July 31, 2006, subject to two one-year renewals at Pfizer’s option). We continue to manufacture Dilantin® for Teva.

Changes in revenue from sales of our products from period to period are affected by factors that include the following:

 

   

changes in the level of competition faced by our products, including the launch of new products by competitors and the introduction of generic equivalent products;

 

   

changes in the level of promotional or marketing support for our products and the size of our sales forces;

 

   

expansion or contraction of the levels of pipeline inventories of our products held by our customers;

 

   

changes in the regulatory environment;

 

   

our ability to successfully develop or acquire and launch new proprietary products;

 

   

changes in the level of demand for our products, including changes based on general economic conditions in the U.S. economy;

 

   

long-term growth of our core therapeutic markets, currently women’s healthcare and dermatology;

 

   

price increases, which are common in the branded pharmaceutical industry and for the purposes of our period-over-period comparisons, reflect the average gross selling price billed to our customers before any sales-related deductions; and

 

   

changes in the levels of sales related deductions.

Net Sales

We
promote a portfolio of branded prescription pharmaceutical products currently focused on the women’s healthcare and dermatology segments of the U.S. pharmaceutical market. To generate demand for our products, our sales representatives make
face-to-face promotional and educational presentations to physicians who are potential prescribers of our products to their patients. By informing these physicians of the attributes of our products, we generate demand for our products with
physicians, who then write prescriptions for their patients, who in turn go to the pharmacy where the prescription is filled. Pharmacies buy our products either through wholesale pharmaceutical distributors or directly from us (for example, retail
drug store chains). We recognize revenue when title passes to our customers, generally free on board (“FOB”), destination, net of sales-related deductions.

FACE="Times New Roman" SIZE="2">When our unit sales to customers in any period exceeds consumer demand (as measured by filled prescriptions in units), our sales in excess of demand must be absorbed before our customers begin to order again. We refer
to the estimated amount of inventory held by our customers and pharmacies that purchase our product from our direct customers, generally measured in the number of days of demand on hand, as “pipeline inventory”. Pipeline inventories expand
and contract in the normal course of business. When comparing reported product sales between periods, it is important to consider whether estimated pipeline inventories increased or decreased during each period.

STYLE="margin-top:0px;margin-bottom:0px"> 


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We generate our revenue primarily from the sale of branded pharmaceutical products in the United States
(“U.S.”), including our oral contraceptives (LOESTRIN 24 FE, FEMCON FE, ESTROSTEP FE, and OVCON), our HT products (primarily ESTRACE Cream, FEMHRT, and FEMRING), our oral antibiotic for the adjunctive treatment of severe acne (DORYX), our
psoriasis products (TACLONEX and DOVONEX) and our treatment for premenstrual dysphoric disorder (SARAFEM). Our revenue from sales of these products consists primarily of sales invoiced less returns and other sales-related deductions. In addition to
the products listed above, the Company earns revenues from the sale of generic products, including TILIA™ FE (a generic version of ESTROSTEP FE) and ZENCHENT (a generic version of OVCON 35) under profit-sharing supply and distribution
agreements with Watson. We also recognize revenue on a generic version of DOVONEX Solution under a profit-sharing supply and distribution agreement with Hi-Tech. The revenue we earn under these agreements is included with our related branded product
revenue for financial reporting purposes.

Included in net sales are amounts earned
under contract manufacturing agreements. These activities are by-products of our May 2004 acquisition of the Fajardo, Puerto Rico manufacturing facility from a subsidiary of Pfizer and the March 2004 sale of rights to two LOESTRIN products to a unit
of Teva (then Barr). In connection with these transactions, we agreed to manufacture certain products for Pfizer and Teva (then Barr) for specified periods. Contract manufacturing is not an area of strategic focus for us as these contracts produce
profit margins significantly below the margins realized on sales of our branded products. We have phased out the manufacturing of all but one of the Pfizer products (the supply agreement for the production of DilantinSIZE="1">® was extended for three years effective July 31, 2006, subject to two one-year renewals at Pfizer’s option). We continue to manufacture Dilantin®
for Teva.

Changes in revenue from sales of our products from period to period are affected by factors that include the following:

 







  

changes in the level of competition faced by our products, including the launch of new products by competitors and the introduction of generic equivalent products;

 







  

changes in the level of promotional or marketing support for our products and the size of our sales forces;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

expansion or contraction of the levels of pipeline inventories of our products held by our customers;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

changes in the regulatory environment;

 







  

our ability to successfully develop or acquire and launch new proprietary products;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

changes in the level of demand for our products, including changes based on general economic conditions in the U.S. economy;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

long-term growth of our core therapeutic markets, currently women’s healthcare and dermatology;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

price increases, which are common in the branded pharmaceutical industry and for the purposes of our period-over-period comparisons, reflect the average gross
selling price billed to our customers before any sales-related deductions; and

 







  

changes in the levels of sales related deductions.

SIZE="2">Other Revenue

Beginning in the fourth quarter of 2006, the Company began to generate revenue related to licensing
rights to sell products using the Company’s patents to third parties as a component of other revenue.

 


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These excerpts taken from the WCRX 10-K filed Feb 29, 2008.

Net Sales

We promote a portfolio of branded prescription pharmaceutical products primarily in the women’s healthcare and dermatology segments of the U.S. pharmaceutical market. To generate demand for our products, our sales representatives make face-to-face promotional and educational presentations to physicians who are

 

38


Table of Contents

potential prescribers of our products to their patients. By informing these physicians of the attributes of our products, we generate demand for our products with physicians, who then write prescriptions for their patients, who in turn go to the pharmacy where the prescription is filled. Pharmacies buy our products either directly from us (for example, major retail drug store chains) or through wholesale pharmaceutical distributors. We recognize revenue when title passes to our customers, generally free on board (“FOB”), destination, net of related revenue deductions.

When our unit sales to customers in any period exceeds consumer demand (as measured by filled prescriptions in units), our sales in excess of demand must be absorbed before our customers begin to order again. We refer to the amount of inventory held by our customers, generally measured in the number of days of demand on hand, as “pipeline inventory”. Pipeline inventories expand and contract in the normal course of business. When comparing reported product sales between periods, it is important to consider whether estimated pipeline inventories increased or decreased during each period.

We generate our revenue primarily from the sale of branded pharmaceutical products in the United States (“U.S.”), including our oral contraceptives (LOESTRIN 24 FE, FEMCON FE, OVCON, and ESTROSTEP FE), our HT products (FEMHRT, ESTRACE Cream, FEMTRACE, ESTRACE Tablets and FEMRING), our oral antibiotic for the adjunctive treatment of severe acne (DORYX), our psoriasis products (DOVONEX and TACLONEX) and our treatment for premenstrual dysphoric disorder (SARAFEM). Our revenue from sales of these products consists primarily of sales invoiced less returns and other sales-related deductions. In addition to the products listed above, the Company earns revenues from the sale of generic products, including TILIA™ FE (a generic version of ESTROSTEP FE) and ZENCHENT (a generic version of OVCON 35) under profit-sharing supply and distribution agreements with Watson Pharma, Inc. The revenue we earn under these agreements is included with the revenue from our related branded product revenue for financial reporting purposes.

Included in net sales are amounts earned under contract manufacturing agreements. These activities are by-products of our May 2004 acquisition of the Fajardo, Puerto Rico manufacturing facility from a subsidiary of Pfizer and the March 2004 sale of rights to two LOESTRIN products to a unit of Barr. In connection with these transactions, we agreed to manufacture certain products for Pfizer and Barr for specified periods. Contract manufacturing is not an area of strategic focus for us as these contracts produce profit margins significantly below the margins realized on sales of our branded products. We have phased out the manufacturing of all but one of the Pfizer products (the supply agreement for the production of Dilantin® was extended for three years effective July 31, 2006, subject to two one-year renewals at Pfizer’s option). We continue to manufacture the old LOESTRIN products for Barr.

Changes in revenue from sales of our products from period to period are affected by factors that include the following:

 

   

changes in the level of competition faced by our products, including the launch of new products by competitors and the introduction of generic equivalent products;

 

   

changes in the level of promotional or marketing support for our products and the size of our sales forces;

 

   

expansion or contraction of the levels of pipeline inventories of our products held by our customers;

 

   

changes in the regulatory environment;

 

   

our ability to successfully develop or acquire and launch new proprietary products;

 

   

changes in the level of demand for our products;

 

   

long-term growth of our core therapeutic markets, currently women’s healthcare and dermatology; and

 

   

price increases, which are common in the branded pharmaceutical industry and for the purposes of our period-over-period comparisons, reflect the average gross selling price billed to our customers before any sales-related deductions.

 

39


Table of Contents

Net Sales

We promote
a portfolio of branded prescription pharmaceutical products primarily in the women’s healthcare and dermatology segments of the U.S. pharmaceutical market. To generate demand for our products, our sales representatives make face-to-face
promotional and educational presentations to physicians who are

 


38







Table of Contents



potential prescribers of our products to their patients. By informing these physicians of the attributes of our products, we generate demand for our products
with physicians, who then write prescriptions for their patients, who in turn go to the pharmacy where the prescription is filled. Pharmacies buy our products either directly from us (for example, major retail drug store chains) or through wholesale
pharmaceutical distributors. We recognize revenue when title passes to our customers, generally free on board (“FOB”), destination, net of related revenue deductions.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">When our unit sales to customers in any period exceeds consumer demand (as measured by filled prescriptions in units), our sales in excess of demand must
be absorbed before our customers begin to order again. We refer to the amount of inventory held by our customers, generally measured in the number of days of demand on hand, as “pipeline inventory”. Pipeline inventories expand and contract
in the normal course of business. When comparing reported product sales between periods, it is important to consider whether estimated pipeline inventories increased or decreased during each period.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">We generate our revenue primarily from the sale of branded pharmaceutical products in the United States (“U.S.”), including our oral
contraceptives (LOESTRIN 24 FE, FEMCON FE, OVCON, and ESTROSTEP FE), our HT products (FEMHRT, ESTRACE Cream, FEMTRACE, ESTRACE Tablets and FEMRING), our oral antibiotic for the adjunctive treatment of severe acne (DORYX), our psoriasis products
(DOVONEX and TACLONEX) and our treatment for premenstrual dysphoric disorder (SARAFEM). Our revenue from sales of these products consists primarily of sales invoiced less returns and other sales-related deductions. In addition to the products listed
above, the Company earns revenues from the sale of generic products, including TILIA™ FE (a generic version of ESTROSTEP FE) and ZENCHENT (a generic version of OVCON 35) under profit-sharing supply and distribution agreements with Watson
Pharma, Inc. The revenue we earn under these agreements is included with the revenue from our related branded product revenue for financial reporting purposes.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%;padding-bottom:3px;line-Height:95%; vertical-align:top">Included in net sales are amounts earned under contract manufacturing agreements. These activities
are by-products of our May 2004 acquisition of the Fajardo, Puerto Rico manufacturing facility from a subsidiary of Pfizer and the March 2004 sale of rights to two LOESTRIN products to a unit of Barr. In connection with these transactions, we agreed
to manufacture certain products for Pfizer and Barr for specified periods. Contract manufacturing is not an area of strategic focus for us as these contracts produce profit margins significantly below the margins realized on sales of our branded
products. We have phased out the manufacturing of all but one of the Pfizer products (the supply agreement for the production of Dilantin® was extended for three years effective
July 31, 2006, subject to two one-year renewals at Pfizer’s option). We continue to manufacture the old LOESTRIN products for Barr.

SIZE="2">Changes in revenue from sales of our products from period to period are affected by factors that include the following:

 







  

changes in the level of competition faced by our products, including the launch of new products by competitors and the introduction of generic equivalent products;

 







  

changes in the level of promotional or marketing support for our products and the size of our sales forces;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

expansion or contraction of the levels of pipeline inventories of our products held by our customers;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

changes in the regulatory environment;

 







  

our ability to successfully develop or acquire and launch new proprietary products;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

changes in the level of demand for our products;

 







  

long-term growth of our core therapeutic markets, currently women’s healthcare and dermatology; and

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

price increases, which are common in the branded pharmaceutical industry and for the purposes of our period-over-period comparisons, reflect the average gross
selling price billed to our customers before any sales-related deductions.

 


39







Table of Contents


This excerpt taken from the WCRX 10-K filed Mar 26, 2007.

Net Sales

We promote a portfolio of branded prescription pharmaceutical products primarily in the women’s health and dermatology segments of the U.S. pharmaceutical market. To generate demand for our products, our sales representatives make face-to-face promotional and educational presentations to physicians who are potential prescribers of our products to their patients. By informing these physicians of the attributes of our products, we generate demand for our products with physicians, who then write prescriptions for their patients, who in turn go to the pharmacy where the prescription is filled. Pharmacies buy our products either directly from us (for example, major retail drug store chains) or through wholesaler pharmaceutical distributors. We recognize revenue when title passes to our customers, generally free on board (“FOB”), destination.

When our unit sales to customers in any period exceed consumer demand (as measured by filled prescriptions in units), our sales in excess of demand must be absorbed before our customers begin to order again. We refer to the amount of inventory held by our customers, generally measured in the number of days demand on hand, as “pipeline inventory.” Pipeline inventories expand and contract in the normal course of business. When comparing reported product sales between periods, it is important to consider whether estimated pipeline inventories increased or decreased during each period.

We generate our revenue primarily from the sale of branded pharmaceutical products in the U.S., including our oral contraceptives (LOESTRIN 24 FE, FEMCON FE (formerly OVCON 35 FE), OVCON, and ESTROSTEP), our hormone therapy products (FEMHRT, ESTRACE Cream, FEMTRACE, ESTRACE Tablets and FEMRING), our oral antibiotic for the adjunctive treatment of severe acne (DORYX), our psoriasis products (DOVONEX and TACLONEX) and our treatment for premenstrual dysphoric disorder (SARAFEM). Our revenue from sales of these products consists primarily of sales invoiced less returns and other sales-related deductions.

Included in net sales are amounts earned under contract manufacturing agreements. These activities are by-products of our May 2004 acquisition of the Fajardo, Puerto Rico manufacturing facility from a subsidiary of Pfizer and the March 2004 sale of rights to two LOESTRIN products to a unit of Barr. Under these agreements, we agreed to manufacture certain products for Pfizer and Barr for specified periods. Contract manufacturing is not an area of strategic focus for us and these contracts produce profit margins significantly below the margins realized on sales of distributed products. We have phased out the manufacturing of all but one of the Pfizer products (the supply agreement for the production of Dilantin® was extended for three years effective July 31, 2006, subject to two one-year renewals at Pfizer’s option). We continue to manufacture the old LOESTRIN products for Barr.

Changes in revenue from sales of our products from period to period are affected by the following factors:

 

   

changes in the level of competition faced by our products, including the launch of new products by competitors and the introduction of generic equivalent products after the expiration of patents associated with our brands;

 

   

changes in the level of promotional or marketing support for our products and the size of our sales forces;

 

   

expansion or contraction of the levels of pipeline inventories of our products held by our customers;

 

   

our ability to successfully develop or acquire and launch new proprietary products;

 

   

changes in the level of demand for our products;

 

   

long-term growth of our core therapeutic categories of women’s healthcare and dermatology; and

 

   

price increases, which for the purposes of period-over-period comparisons, reflect the average gross selling price billed to our customers before any sales-related deductions.

 

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