Many investors in the pharmaceuticals marketplace look for companies that are about to release a new drug product. What they sometimes miss, however, is the earnings potential of drugs that have long since been forgotten about. Many companies have not missed this point, however, and are quietly going about marketing them as valuable inexpensive alternatives. Consolidating companies do not get mentioned all that often but their margins can lead to nice profits.
Pernix Therapeutics Holdings Inc. is an acquirer, marketer and distributor of branded pharmaceuticals. The company currently has an extensive product catalogue oriented toward allergies and the affects of the common cold.
Past the company having an extensive product catalogue, its distribution program offers insight into just how profitable the company is and could be. Currently, it offers its lines of branded products to drug wholesales who in turn sell to drug stores, supermarkets and mass merchants. This particular method of distribution requires a certain level of product base to make it profitable for the wholesaler but is a method that maximizes efficiencies for all involved once that certain critical product offering point is reached. Pernix has reached that point and is reaping rewards as paediatric patients continue to become infected by everyday childhood maladies.
Perhaps the company’s largest internal strength is its ability to regenerate interest in products that have “peaked” in their prescription abilities. Generally, this means that prescribers were more likely to prescribe a product more often when it was first offered and promoted by larger pharmaceutical companies. Once that promotional activity ended, prescribers were less likely to offer the product to patients. Pernix has seized on this aspect of the branded market and reinvigorates products with its own marketing efforts. Recently, the company has purchased CEDAX, a bronchitis medication, for $6.1 million and intends to put it through its marketing arm after having peaked some 10 years ago. Costs associated with the company’s marketing and sales efforts are relatively small, leaving a margin most would be very comfortable with.
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