Hello there!

I need some advice on how to present a "royalty" percentage, for a product I am selling to another company. I am in a critical phase of negotiations on selling a pharmaceutical product (in its entirety) that my small company has developed to a large pharmaceutical company.

My question is: During negotiations, as I present this royalty to the pharmaceutical company, do I show the proposed royalty as part of the distributor-cost breakdown, or as a part of the end user-cost breakdown? Also, is it better to show the royalty as a percentage, or as a monetary value?

I am told a range of 4% to 10% is normal, and have decided to negotiate for 7%, this represents approximately $0.75 of the distributor-priced product. However, do companies typically negotiate based on supposed end-user priced product (which would be nearly impossible for me to determine at this point).

Let me know if you need other information. I hope this is clear enough.
Thank you for any assistance you can provide.
JK1151

ScottGem

I would suggest contacting someone are score.org. Your question is really highly specialized and I would think you would have a staff of attys or CPAs to help with it. If not, they may be better able to help.

jk1151

I posted my question (following Scott's reply) on score.org and was happily surprised to have a reply within 24 hours that was helpful, thorough and encouraging. I have already come a long way in my project, but the contact at score.org gave me some interesting ideas and was a good sounding board to my questions. This is helpful in my critical phase of negotiations.

Thank you!

ScottGem

Thanks for letting us know. SCORE has a very good rep, but this is the first time, I've gotten first hand feedback about their services.

Stringer

Good response...
Stringer