Addendum to “Moberg Pharma, Part 1”

There have been some questions as to how I arrived at the gross profit percentages in my model of Europe.

Here is a brief explainer:

The annual report lists the ex-factory price for Europe as €15, which is 166 SEK. This is effectively what Moberg and its partners (combined) will sell to wholesalers for. This number strips out VAT and wholesale + pharmacy markup.

So we have 166 SEK to split three ways, between COGS, Moberg income, and Bayer income (Allderma in Sweden but we care more about Bayer for modeling Europe broadly).

In Sweden, Moberg achieved a 60% gross margin in Q1. We know margins will be a little better in Sweden than RoE because Moberg is helping with marketing spend there. Let us assume a 50% gross margin for Moberg on sales through Bayer.

If we assume they split the profit evenly, and a 50% gross margin for MOB, that allows us to break 166 SEK into thirds:

55.3 SEK to COGS

55.3 SEK to Bayer

55.3 SEK to Moberg

55.3/399 = 13.9%

That’s the 14% central case in the model.

That is functionally equivalent to a 14% royalty on full-price product sales, which is reasonable in my view.

Hope that helps to clarify my logic.

Thanks for reading.