Skyepharma – Paxil manufacturing problems
Skyepharma bounced a little today but it is still well down on two days ago and is at low levels against historical prices – it has rarely gone below 50p since mid-2003 and has gone above 70p several times since then, most recently late last year. Of course it has always been fairly volatile but I was a little surprised at how sharp a reaction there was to the news of Glaxo’s manufacturing problems with Paxil CR.
Firstly, Skyepharma does not manufacture Paxil CR, it helped develop it and receives a (small percentage) royalty which does bring substantial income because Paxil brings Glaxo such huge revenues. On the face of it the effects of the problems should be that Skyepharma loses a fair amount of revenues (all the royalties from Paxil CR’s US sales, i.e. most of it) for about six months and then things slowly go back to normal, by next year everything should be back to normal. This does not look like something that should have much impact on how much Skyepharma is worth. (more…)
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