What not enough critics seem to appreciate is that there is a...

What not enough critics seem to appreciate is that there is a long history of companies that have claimed to developed the latest and greatest innovation in healthcare with ambitions to become the ‘standard of care’.

I don’t have the hard numbers but my experience tells me the odds of a new company (i.e. not a big pharma company) developing a new product and successfully commercialising it to the point it becomes the standard of are is very very small. Innovating is hard. Almost even harder is successfully commercialising it.

What this means for companies that are successful is that it gives them the opportunity go through a long runway of growth to become entrenched in the market, because the challenge is so difficult for new challengers to emerge. The main impediment to this being a big pharma coming along and taking it over.

The riskiest moments for this business is now far behind it. It has reached profitability without even trying due to the enormous margins on the product, even while increasing R&D and expanding manufacturing capacity to support future growth.

Sales are also reaching a point where the law of big numbers means that compounding on larger and larger numbers will result in big increases in free cashflow. Fortunately there is strong list of products in development that they can invest this increasing cash in, each with their own massive underserved markets to address.