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It is important for MoGen to get $5 billion of external funding in 2006. There are four areas that need a total funding of $10 billion, MoGen expected internally generated sources of funds of $5 billion, and thus, it needs further $5 billion of external funding.The four areas that need funding are:$1 billion for expanding manufacturing and formulation, and fill and finish capacity in order to meet the increase in demand and remove supply risk;$3.5 billion for expanding investment in R&D and late-stage trials in order to maintain momentum behind its new drug development pipeline and diversify its product line;$2 billion for acquisition and licensing in order to achieve a strong growth in revenues and earnings per share;$3.5 billion for the stock repurchase programme in order to return cash to shareholders, as the company has never issued dividends to shareholders. MoGen preferred the flexibility of repurchasing shares to paying dividends. Because due to the highly uncertain nature of its operations, if MoGen goes for paying dividends instead repurchasing shares, there is always the risk of decreasing the dividend during hard time which, when announced, will likely result in a significant drop of the stock price. In addition repurchasing shares has a favourable impact upon EPS by reducing the shares outstanding.Pros and cons of convertible bonds:From the issuer point of view: