"Infrastructure, supply chain systems and purchasing strategy implemented during 2016 continue to drive gross profit sharply upward. Alexium’s top-line growth from 2015 to 2016 (from $1.0M to $13.3M AUD) was largely due to the success of winning new business not only due to the performance of Alexium’s chemistries, but by offering those chemistries at competitive price points to much larger competitors. As the scale of Alexium’s sales have increased, the company is now able to buy raw materials in bulk, a larger global footprint has dramatically reduced the shipping component of our COGS and air freight during scale-up is being replaced by far less expensive conventional ocean freight. The effect of these strategic efforts has resulted in a 14 percentage point increase in gross profit from the first half to the second half of 2016 and gross profit on new specialty chemistry sales since the beginning of 2017 have exceeded 30%. Over the course of 2017, as more product lines achieve the same economies of scale, Alexium is forecasting average gross profits across all product lines to exceed 40%."
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