Profit caps

The most difficult step in price controls is arriving at a reasonable or fair price for a medicine. The literature on price controls and the tools employed are mostly from high-income countries. These include the cost-plus method, profit caps, comparative pricing, direct price negotiations and pharmaco-economic evaluations, or a combination of these tools. The cost-plus pricing model is difficult to employ in a coimtry where most suppliers are subsidiaries of international companies or importers of products from other markets. In this scenario, experience shows that it is very difficult to obtain accurate and reliable data to arrive at a determination of real costs and profits. 

The second method of price controls, using profit caps, is employed in, for example, the United Kingdom through the Pharmaceutical Price Regulation Scheme (PPRS), whereby the government negotiates a reasonable profit with companies for products sold to the National Health... 

The present Spanish system of price control is inefficient, as it provides notable negative incentives for pharmaceutical consumption and expenditure it would be desirable to replace it with a more flexible system such as an overall profit control system, or a combination of price-cap regulation and rate of return regulation. 

The central issue in any stock offering is price. In traditional, profitable companies price is usually measured as a price/earnings ratio. Since biotech companies rarely are profitable, price is evaluated using the capitalized value of the outstanding stock, i.e., price per share times the total number of shares, compared to other companies at similar stages of development with comparable upside potential. This "market cap" number (either private or public) is what sophisticated biotech investors look to in measuring whether an offering price is fair. Two measures used are postmoney and premoney values. 

An important question is how the pass-through of C02 opportunity costs affects the profitability of power stations. A main purpose of the free allocation of emissions allowances under the US cap-and-trade programmes for S02 and NOx, as well as under the EU ETS for C02, is to obtain the political support of large emitters. Thus, the free allocation aims to ensure that the introduction of the ETS does not reduce the profitability of the eligible companies. 

Option Cap Cost, M Proj. Time, Mos. Incremental profit. M/yr IRR % NPV M Payback, Yrs. 

Project y er Cap Ex Revenue CCOP Qt. Profit Depfcn Taxbl Inc Tax Paid Cash Plow PVofCF NPV ... 

With your permit you can buy dynamite for 20.00 for 100 sticks and resell it for 2.00 per stick. Less the small cost for blasting caps and a little fuse given with each sale, you will make 1,000% profit. If you steal it your margin of profit will be even greater. 

In the United Kingdom, the government controls the cost of pharmaceuticals not by limiting individual product prices, but by setting a cap on the profit that individual pharmaceutical companies can enjoy from their business with the National Health Service. Each company negotiates with the Secretariat of Pharmaceutical Price Regulation Scheme (PPRS) a total rate of return on the capital employed in generating its sales to the British National Health Service (NHS). 

Sales Increase Billion Biologies Sales Billion Profits Billion Market Cap billion 7 March 2007 R D Efficiency ... 

However, they might choose to bank any permits already acquired or given to them by government, and substitute these permits with extra purchases at the capped price. This would be a profit-maximizing strategy if future increases in permit prices were expected, and it would further loosen the effective scheme cap. It is likely that as soon as the price cap threshold was reached, all opportunities for banking would be used. "... 

Maximum losses are floored at around 700,000, similar to those with the ATM options, but the up-front premium cost is almost zero, comparing very favourably with the cost of the ATM options in excess of 600,000. If the investor is wrong, and bond prices continue to rise, the investor can still enjoy the benefit of a rise in bond prices of more than 1.50% before the calls sold cap the investor s profits at around 800,000. For many investors in this position, the price collar is an excellent strategy. 

The net cost of this strategy is 0.82 million, which is the maximum amount the investor can lose if he or she is wrong and bond prices fall. If bond prices stay the same, the net loss is only 0.34 million, as the option bought is in-the-money, and will expire with some intrinsic value that will be returned to the investor. If bond prices rise up to 1.50%, the investor can enjoy the benefit until the 118.00 strike is reached and profits are capped at around 1.2 million. 

Demand Prob Cumulative Revenue Cap Commit Exec Cost Credit Profit X Probability... 

Consumers Advancing Patient Safety (CAPS) - a consumer-led, non-profit organization formed to be a colledive voice for individuals, families and healers who wish to prevent harm in healthcare encounters through partnership and collaboration. Susan Sheridan, Co-founder and President, became involved in patient safety after her family experienced two serious medical system failures. 

Before the introduction of income cap regulation it was sufficient to analyse investments with respect to costs (because of cost coverage). In an income cap (or price cap) regulatory regime distribution companies also evaluate projects with respect to income effects, since the difference between the allowed income (stated by the regulatory authorities) and the total costs (opex + capex) constitute the company profit. 

Another important driver is the point about market cap. Capital markets value a stock more to the extent it earns profits beyond the certain return of a government bond. However, few companies have the means in place to ensure that threshold is reached. 

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