Weighing Biovail's Claims

Because the weight of packaging would be less of a factor for the bulk product, let's assume each pill weighed 1 gram, and that the larger of the two loads -- 8,360 pounds -- was in bulk pills. The lighter-weight pill and the larger weight of this load both favor Biovail in terms of calculating the value of the load.

With this information, it is possible to determine the value of the Wellbutrin XL on Biovail's truck. First convert pounds to kilograms:

Finished or retail containers: Total weight of 3,330 pounds divided by 2.205 kilograms per pound equals 1,510 kilograms of Wellbutrin XL.

The per-pill weight of 1 gram is equal to 0.001 kilogram.

1,510 kg divided by 0.001 kg/pill equals 1,510,00 pills.

Bulk containers: Total weight of 8,360 pounds divided by 2.205 kg/lb equals 3,791 kg of Wellbutrin XL.

3,791 kg divided by 0.001 kg/pill equals 3,791,383 pills.

Total Wellbutrin XL on the truck: 5,301,383 pills.

The wholesale acquisition cost for Wellbutrin XL is about $2.83 per pill, according to company guidance as widely used by sell-side analysts, which means gross end-user sales (i.e., money collected from wholesalers) from this shipment equals $15,002,913.

But GlaxoSmithKline offers discounts, coupons and free samples to wholesalers to encourage stocking of Wellbutrin XL. This "gross to net discount" ranges from 30% to 35%, according to Biovail. Assuming a "gross to net discount" of 32.5%, the net end-user sales base for Biovail's royalty revenue is $10,126,966.

Biovail also has stated that its royalty rate on net end-user sales ranges in the low- to mid-20% range. For this analysis, we assumed the royalty rate is 22.5%, which equates to Biovail revenue on the truck of $2,278,567.

An alternative analysis, making assumptions even more favorable to Biovail, reached similar conclusions -- that the company overstated the value of the shipment involved in the accident.

The alternative calculation assumes the entire cargo was in bulk form and that each pill weighed only 0.6 grams; the wholesale acquisition cost was raised to $2.85 per pill; the gross to net discount was lowered to 30% and Biovail's royalty rate was raised to 24%.