Question-and-Answer Session
Operator
Your first question comes from Gregg Gilbert - Merrill Lynch
Gregg Gilbert – Merrill Lynch
First for Jeff, is there any significant lumpiness by quarter in SG&A or R&D that’s worth calling out or should those lines build pretty consistently over the course of the year?
Jeff Campbell
From an R&D perspective I would say no. From an SG&A perspective I wouldn’t say lumpy but certainly we are investing heavily in the first half of the year to get the FLECTOR Patch launch off very well so I would say the investment contemplated in this outlook is a bit heavier in the first half then the second half in SG&A. But all in all, the big variation in our outlook if you were to look at it throughout the year without giving quarterly specifics of course is we expect revenues to grow as the year progresses. That’s the big variable.
Gregg Gilbert – Merrill Lynch
And what are you contemplating in terms of inventory levels for the two pharma products in your revenue guidance?
Jeff Campbell
Think about the FLECTOR Patch as about a month in the channel Gregg. And we’ve been operating KADIA now a little less than a month-and-a-half for quite some time so expect it to be certainly below a month-and-a-half.
Gregg Gilbert - Merrill Lynch
Okay and then one more for Dean, how are you prioritizing pharma versus animal health from a business development standpoint and perhaps you could offer a little color on how a transaction in animal health would look different from the pharma side, if you can at least speak to that conceptually. Thanks.
Dean Mitchell
Clearly the greater opportunities that we see at the moment are on the pharmaceutical side and we’re still in the building phase of our portfolio. I think over the last 18 months have built a pretty solid and robust portfolio but as we think about our business being sustainable over multiple years we see the engine of building that portfolio being business developments. So clearly that’s our number one area of investment. On the animal health side, we have just shown tremendous ability to consistently grow that business over the last several years and we believe that with a little bit of targeted judicious business development activity we can drive that growth a little bit higher. Types of or the characterization of the types of deals typically the pharma deals you’re looking at late stage products which perhaps have a dilutive effect for a couple of years whereas animal health we tend to look at things which are faster payback, accretive more quickly than pharma deals and probably from a scale point of view much smaller than generally we think about the pharma deals. But generally speaking we are encouraged that we can find plenty of opportunities to really look at ways of building the business on both sides.
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