Biovail case study
Table of Contents
1.0 INTRODUCTION
Biovail Corporation was one of the Canada’s largest pharmaceutical publicly traded companies which expert in the development and large scale of manufacturing of pharmaceutical products. Biovail Company engaged activities on enhance formulate of the existing drugs, clinical testing, manufacture and commercial pharmaceutical products and utilized advanced drug delivery technologies.
In the case, on September 30, 2003 there was a truck carrying a shipment of Wellbutrin® XL from Biovail’s manufacturing facility in Manitabo to Biovail’s Distributor, North Carolina was involved in a multi-vehicle traffic accident near Chicago. From these case, we see that many issues come out when truck accident happen. The outcome was not favourable, as Biovail 's acquisition methods were labelled as unethical and their accounting practices were questioned.
The company announced that the loss of the quarterly earnings which target in the range of $215 million to $235 million is because of the truck accident happened that contributed a significant unfavourable variance where the company estimated that revenue of the truck that involved in accident was in the range of $10 million to $20 million.
There are several issues that addressed in this case when truck accident was happen which included accounting policy of the revenue recognition that “Freight On Board” (FOB) point which are FOB Shipping point and FOB Destination point, and ethic of earning management where Biovail is suspected might significantly overestimate the value of the product that involved in the truck accident due to Biovail fail to meet its third quarter 2003 earnings guidance.
On October 9, 2003, analysts state there ‘overweight’ rating on Biovail on estimate revenue lost in the accident and have poor earning quality in accounting. Previously year, Trappel mentioned that company’s revenue and earnings performance had not been of high quality. There is having some
1.0 INTRODUCTION
Biovail Corporation was one of the Canada’s largest pharmaceutical publicly traded companies which expert in the development and large scale of manufacturing of pharmaceutical products. Biovail Company engaged activities on enhance formulate of the existing drugs, clinical testing, manufacture and commercial pharmaceutical products and utilized advanced drug delivery technologies.
In the case, on September 30, 2003 there was a truck carrying a shipment of Wellbutrin® XL from Biovail’s manufacturing facility in Manitabo to Biovail’s Distributor, North Carolina was involved in a multi-vehicle traffic accident near Chicago. From these case, we see that many issues come out when truck accident happen. The outcome was not favourable, as Biovail 's acquisition methods were labelled as unethical and their accounting practices were questioned.
The company announced that the loss of the quarterly earnings which target in the range of $215 million to $235 million is because of the truck accident happened that contributed a significant unfavourable variance where the company estimated that revenue of the truck that involved in accident was in the range of $10 million to $20 million.
There are several issues that addressed in this case when truck accident was happen which included accounting policy of the revenue recognition that “Freight On Board” (FOB) point which are FOB Shipping point and FOB Destination point, and ethic of earning management where Biovail is suspected might significantly overestimate the value of the product that involved in the truck accident due to Biovail fail to meet its third quarter 2003 earnings guidance.
On October 9, 2003, analysts state there ‘overweight’ rating on Biovail on estimate revenue lost in the accident and have poor earning quality in accounting. Previously year, Trappel mentioned that company’s revenue and earnings performance had not been of high quality. There is having some
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