struggling to make the numbers work

I've spent a considerable amount of time researching the US generic pharmaceutical industry (something I should have done a long time ago), and my conclusion is that a lot needs to go right for Acrux to cover its expenses. IQVIA sales are one thing, but they tell us little about what's left for the actual upstream pharmaceutical company (pharma co). The downstream retailer and wholesaler gross profit margins are fairly modest, perhaps amounting to a combined 20% deduction from the top. The killer is the rebates and deductions demanded by the giant PBMs ang GPOs. These have risen dramatically for all pharma co's in the last several years, but in the generics space, they have trully become eye popping. I'd be suprised if they're less than 60% (of the actual retail price!), and they come off the pharma co's gross revenues. They may be as high as 75%(!) (as far as I can tell).

If Jublia does eventually gain traction, it may well turn things around. But anyone thinking that >$400m USD in (downstream) sales is on the cards, needs to think about the price erosion that might occur after the release of generics (look at the IQVIA sales trajectory for Dapsone 7.5%, for instance). Then think about what might be left after gross-to-net deductions, and then think about sales costs to the pharma co. I suspect a gross-profit margin of 50% (off net revenues, not gross-revenues) is a tad optimistic.

We can optimistically hope for pehaps another 5 revenue generating commericalised products each averaging maybe $30m USD in upstream retail sale. These will all be suffering the same deductions.

Acrux will get a share of what's left after deducting sales costs, and if it's lucky will get a 50% (optimistically?) share, with all other competitors.

With a little luck, Acrux can get a fair share of this (but then, when one considers the giants that are being competed with, to what degree can we expect a "fair" share?).

It's very clear that the impetus, by governments & regulators, to reduce the costs of meds by unleashing generics has very effectively eroded the market power of the pharma co's. But as tends to happen when supply (of fairly commodised products?) increases darmatically, the one's that win are not only the consumer, but also the middle-men & gate-keepers (PBMs, GPOs and to a lesser extent, wholesalers). Wholesaler gross profits have gone up substantially, even as their gross-margin % has declined. It is no wonder the US pharma co landscape is a sea of red.

It's quite possible that the US landscape will change for the better (it couldn't get much worse), as regulators and govt's start realising that the pendulum has swung too far, and relaible supply of generics is now at risk. And also that the middle men arte abusin gtheir power. But I have no idea how likley or how soon this might occur. If I'm going to benefit from reforms in an industry in turmoil (which I do see as a prospective theme), then I want to be getting paid while I wait.

So I am out.

It's equally possible that I am making a poor assessment of the facts. I hope so, for the sake of long sufferinf shareholders, and I look forward to being corrected and enlightened by those that know the industry better.