Bioval
To: David Maris
From: Rafael Brisco
Date: 01/24/2014
Subject: Biovails case analysis
This memo is in response to your request to analyze the effect of recent events on Biovail Corporation’s revenue. I went through the details from the very beginning of this case. The truck accident might had little incidence on Biovail’s revenue since products were fully insured. It seems that Biovail did poorly in the first quarter of 2003 but it started recovered on the second quarter. Besides, the amount of money that the truck accident lost would affect the 4th quarter.
According to your findings regarding the quantity of Wellbutrin® lost, the amount of money that Biovail would miss in this 3rd quarter is around $ 13 million. Although the products were still Bioval’s property (referencing the communication between Kenneth Howling and Distributor), the products were fully insured and some pills may still be usable, so the lost impact in the mid-term would not be highly significant for the company.
According to the SAB 10, it is clearly stated that the revenue lost at the truck accident should correspond to the 4th quarter of 2003. So, the reduced amount of revenue cannot be blame on this truck accident. It can be seem at the income statement that the company’s sale has been down in the first two quarters of 2003, even below 2002. Amortization and Acquired research and development are tearing Earnings down in 2003.
Even without the accident, Bioval would not achieve the expected revenues. They cannot blame only on that.
I am concern about two other issues, the high difference in expenses on Amortization and Acquired research and development from first half of 2002 compared to the first half of 2003
From: Rafael Brisco
Date: 01/24/2014
Subject: Biovails case analysis
This memo is in response to your request to analyze the effect of recent events on Biovail Corporation’s revenue. I went through the details from the very beginning of this case. The truck accident might had little incidence on Biovail’s revenue since products were fully insured. It seems that Biovail did poorly in the first quarter of 2003 but it started recovered on the second quarter. Besides, the amount of money that the truck accident lost would affect the 4th quarter.
According to your findings regarding the quantity of Wellbutrin® lost, the amount of money that Biovail would miss in this 3rd quarter is around $ 13 million. Although the products were still Bioval’s property (referencing the communication between Kenneth Howling and Distributor), the products were fully insured and some pills may still be usable, so the lost impact in the mid-term would not be highly significant for the company.
According to the SAB 10, it is clearly stated that the revenue lost at the truck accident should correspond to the 4th quarter of 2003. So, the reduced amount of revenue cannot be blame on this truck accident. It can be seem at the income statement that the company’s sale has been down in the first two quarters of 2003, even below 2002. Amortization and Acquired research and development are tearing Earnings down in 2003.
Even without the accident, Bioval would not achieve the expected revenues. They cannot blame only on that.
I am concern about two other issues, the high difference in expenses on Amortization and Acquired research and development from first half of 2002 compared to the first half of 2003