\f\fBurroughs Wellcome revenue projection worksheet % increase in capsule sales % price reduction Reduced Dosage (mg) 1989 cost per capsule 1990 cost per capsule Dosage Reduction Input Proportion of Patients 96 Values Dosage (mg) Receiving 53% Normal Dosage (mg) 1200 80.0% 20% Reduced Dosage (mg 500 20.0% 500 Weighted AVG 1060 88.3% 30.30 30.30 This spreadsheet allows you to project revenues and prots into 1990 at alternative prices and altern. rates. Explore the cells on the spreadsheet to convince yourself of the validity of the computations l'v making these projections is to base projections on capsule sold in 1985 and 1990. Capsules sold in 19: dlvldll'lg 1989 revenue by the price per capsule which is 51.50 per capsule for most of the fiscal year (1 states that sales are expected to lncrease by a certain percent in 1990. Find that figure and plug it inti Once you have projected 1590 sales in capsules it is easy to determine 1930 sales revenue. cost of gel contribution. No dosage reduction [1] [2] l3] 199i]I [current 1990 [projected 1989 price] price reduction] Capsule sales 156,666,667 226,662,666 226,662,666 Price per capsule $1.50 $1.20 $0.96 Cost per capsule $0.30 $0.30 $0.30 Contribution per capsule $1.20 $0.90 $0.66 Contribution margin 80.0% 75.0% 68.8% R05 80. 0% 75.0% 68.8% Revenue $225,166,666 $275,522,466 $226,417,626 COGS $45,626,666 $66,666,666 $66,666,666 Contribution $166,666,666 $266,641,666 $151,537,326 Contribution margin 80.0% 75.0% 68.8% Revenue Change from 1989 $50,422,400 $4,682,080 Contribution Change from 1989 $26,561,800 $28,542,680 1990 Alternative Prices 1With Dosage Reduction 1939 1990 1990 Capsule sales 150,066,667 202,315,100 202,315,100 Price per capsule $1.50 $1.20 $0.96 Cost per capsule $0.30 $0.30 $0.30 Contribution per capsule $1.20 $0.90 $0.66 Contribution margin 80.0% )'5.0% 68.8% ROS 80.0% 75.0% 68.8% Revenue $225,100,000 $ 243,373,120 $ 134,702,436 COGS $45,020,000 $60,344,530 $60,344,530 Contribution $130,030,000 $132,533,530 $133,357,366 Contribution margin 80.0% 75.0% 68.8% Revenue Change from 1989 $18,278,120 $30,397,504 Contribution Change from 1989 $2,453,590 $46,222,034 C \fBurroughs Wellcome Financial Analysis Table 1 Retrovir Financials 1987 Additional _% Price Reduction 1990 1\" _% Price + _% Dose Reduction 199i] '5 Unit Cost1 Unit Price 2 Unit Contribution 3 Contribution Margin 4 Pills (Units) Sold 5 Sales 5 Variable Cost? Contribution Dollars 3 Cumulative Contribution 9 Return on Sales '0 0.50 1.88 1.38 7 3 40% 10,101,409 $24,000,000 $10,204,255 0.40 1.50 1.10 ?3. 33% 105,000,000 $150,400,000 $110,100,000 0.30 1.50 1.20 00.0% 150,000,007 $225,100,000 $100,000,000 Table 2 Retrovir R&D Sunk Investment Costs Sunk Costs Minimum Maximum Research and Development Free Distribution of Retrovir Free Supply (one metric ton] to National Institute of Health 1 Total 1 The one metric ton donation to the National Institute of Health was calculated using a cost of $0.50 per 100mg pill. [1 [19 X $0.50i1mg = 55,000,000]. \f\f