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Drugmakers make bank by charging 100x prices for generic 2-in-1 pills. The Hustle Sponsored by Drugmakers increase prices 100x simply by combining generic drugs A new exposé from Axios brought to light many drug manufacturers’ practice of combining multiple generic...
By: Wes Schlagenhauf
August 14, 2018
Drugmakers make bank by charging 100x prices for generic 2-in-1 pills.
Drugmakers increase prices 100x simply by combining generic drugs
A new exposé from Axios brought to light many drug manufacturers’ practice of combining multiple generic over-the-counter medications and selling them as ‘convenience drugs’ for up to 100x more than their generic counterparts.
Although these combo meds provide no additional medicinal benefits to patients than their separate OTC counterparts, they bring in billions for the companies that manufacture them by exploiting the power of prescription.
Markups that would make Martin Shkreli proud
‘Pharma bro’ Martin Shkreli made headlines for increasing the cost of lifesaving Daraprim 5,000% overnight. But, while Shkreli later landed in jail (securities fraud), this pharma price-gouging is totally legal.
In fact, price hikes are common practice at pharma companies. Horizon Pharma sells a drug called Vimovo (which is just Nexium and Aleve combined into 1 pill for convenience) for $2,482 per bottle.
Nexium and Aleve, however, are just as effective when taken separately -- and cost less than $20 when purchased over-the-counter.
How is this possible?
Companies like Horizon combine common meds into unnecessarily expensive convenience drugs to increase margins. By striking deals with pharmacy benefit managers, they get their drug on insurance lists.
Then they hire huge sales and marketing teams to convince doctors (who don’t know the drug’s price) that convenience drugs encourage patients to use drugs ‘as directed.’
Then, the nail in the coffin: Pharma companies like Horizon subsidize copays, making the drug seem cheaper and more accessible to doctors and patients -- and then bill health insurers for thousands.
Medical misinformation makes money
The reason drugmakers go to such creative lengths to sell meds is simple -- it makes money.
In less than 5 years, Horizon made $540m by selling Vimovo, and $670m over the same time period selling another convenience drug called Duexis (the company stands by the benefits of both drugs, despite criticism).
Other drugmakers such as Pfizer and GlaxoSmithKline have also sold billions of dollars worth of convenience drugs over the past decade.
Business idea: designer cough drops
Dwarf among giants: Samsung has lost $39B in market value so far this year
Samsung Electronics is now one of the world’s worst-performing major tech stocks of 2018, dropping over 11% with $39.4B wiped off of its value, according to CNBC.
So what gives?
We got ourselves a full market
Samsung’s Q2 earnings showed the slowest quarterly growth in more than a year, with mobile revenue down 22% year-over-year.
The firm is reportedly betting on the recently released $1k Note 9 to revive sales, but global smartphone shipments declined 1.8% in Q2, and, unfortunately, as the handset market decreases, the competition continues to increase...
For the first time, Huawei surpassed Apple as the 2nd-largest smartphone pusher as it sets its sights on Samsung, who is currently at the top with 71.5m devices shipped this quarter (still a 10.4% annual decline).
In other saturation news...
Memory chips are becoming a dime a dozen.
Samsung’s semiconductors have been the tech giant’s white knight, accounting for 37% of sales and 78% of profits in Q2.
But, as other semiconductor makers enter the market, analysts fear it will be harder for Samsung to charge the same premium for their products.
For now, the company will keep riding on a chip and a prayer, assuring investors that market conditions for its memory chips will remain “solid” for at least the rest of the year.
Wonderschool raised $20m to disrupt preschool with its start-your-own school app
Wonderschool, a startup that helps educators set up for-profit preschools in their homes, raised $20m to expand its software platform.
Designed to give educators all the tools necessary to get a school off the ground -- helping with everything from licensing, to curricular development, to marketing, to payment processing -- Wonderschool takes a 10% share of tuition once school’s in session.
Funding’s cool at Wonderschool
This Series A (headlined by Andreessen Horowitz) brings the company’s total funding to $24.1m. The company, launched 2 years ago, has already launched 140 schools in New York, Los Angeles, and San Francisco.
With its new round of funding, Wonderschool wants to match underpaid educators with entrepreneurial directors (or ‘principals,’ as they were known in the Dark Ages).
Good for business, good for teachers
But it’s not just Wonderschool that’s feeling cool. Teachers on the platform have also reported earning 3x as much as they previously earned.
Teachers are underpaid across the school board, but preschool educators are still worst-off -- making 48% less than other teachers.
By making it easier for educators to tap into the $25B annual daycare industry, Wonderschool hopes to expand economic opportunities for educators while expanding educational opportunities for students -- at least in communities willing to pay extra for cool preschool.
The owner of iconic denim brands Wrangler and Lee is getting out of the pants biz
VF Corp., which wields a long list of apparel brands including the Lee and Wrangler denim labels, has announced it will turn its denim division into a separate, publicly traded company.
Its new plan as a corporation is to focus on its roster of “activity-based lifestyle brands,” like Vans, The North Face, Timberland, and Reef.
It’s called athleisure, and it means yoga pants
While VF maintains that its denim business is actually succeeding, it’s currently the lowest performer among the company’s wide range of clothing segments.
The denim market has faded significantly as shoppers inch closer to actual physical activity (or at least looking the part) -- and VF is giving the people what they want.
In the company’s sales forecast for the year, it said it expected its outdoor wear, active wear, and workwear to increase more than 76% combined.
But, let’s be honest, it’s not aaall the market’s fault
In that same forecast, the company estimated that its denim business showed a whopping 0% growth for the year -- and you know everybody loves to blame the market.
TheWall Street Journal notes that jeans sales in the US fell from $18.8B in 2013 to $16.2B in 2017.
That said, Levi’s has found a way to adapt while still mainlining the sturdy blue, so maybe it’s less about denim, and more about the fact that Wrangler and Lee aren’t as popular these days as they were with bull riders and teens in the ’90s.
1. The forefront of innovation. Where no startup or product has gone before. 2. Basically, your competitor’s product, with a subscription app. 3. Second only to the screaming, bleeding edge. If you’re not pooping your pants in sheer terror of the unknown, you’re not there yet.
CEO: Alright Johnson, this quarter we need a blender unlike anything that’s ever blended before.
Product Manager: Ok. You know last season’s best-selling blender, the BladeRunner9000? Imagine that -- but with an app that we charge $4.99 a month for.
CEO: Bu-but, they said it couldn’t be done!
Product Manager: I know, I’m scared too. This is truly *thunder clap sounds in the distance; crows screech* THE BLEEDING EDGE.