I know what you mean, and to a point you're right. That young and growing companies need investment capital (contributed equity) to then grow and eventually return profit. That's a fair point.
My issue with MYX on this growth business are these: First, its asset turnover has been declining... i.e. its purchases hasn't been producing the gains it's supposed to, not gaining its shareholders any more efficiency or profit (see ROE chart above).
Second, MYX is pretty much a generic drug company. Its products and services are supposed to be tried and true; the market is supposed to have matured or established - that's why they pay for mainly the IP, a recipe to just mix, manufacture and delivered to market. That is, you'd expect a mostly generic drug company to be matured and established, all it need is pay the right price for the IP, be very effective and efficient in the manufacturing and distribution.
Third, MYX is a $1.5B company. At that size, the company ought to be making money instead of in the growing pain phase. I know, there are unicorns and those dot coms company priced in the billions and have yet to make a buck. But they tend to be companies that tries to change the world, go explore new planets or deliver packages using drones or something stupid like that.
So that's speculation. And it certain could make shareholders money, lots of it. Just when it come to generic drugmakers, they should be making money and grow slowly.
Come to think of it though, SRX is not really a matured company. I mean it has only serviced 3% of existing addressable market. Made good money at high margins, use the cash to pay dividends and fund further expansions.
Same with Hikma... making good money, high margin, always looking to expand into new geographies and markets. They even have a venture capital fund to really take risk on new drugs and ventures. Then with cash earned, some debt, some new equity... they made a major acquisition that results in them becoming the 6th largest generic drug maker in the US.
As Buffett said, growth is part of value.
But yea, I think it's safer for shareholders to buy into companies that makes money. Capitalists shouldn't be too entrepreneurial.
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