Lannett Co. Company Analysis
Autor: Minhao Fu • June 9, 2016 • Term Paper • 1,050 Words (5 Pages) • 684 Views
Lannett Company Stock Analysis s
Introduction
Lannett Co., Inc. develops, manufactures, markets and distributes generic versions of pharmaceutical products. The company sells its pharmaceutical products to generic pharmaceutical distributors, drug wholesalers, chain drug retailers, private label distributors, mail-order pharmacies, other pharmaceutical manufacturers, managed care organizations, hospital buying groups, governmental entities and health maintenance organizations. Lannett was founded in 1942 and is headquartered in Philadelphia, PA.
Fundamental Analysis
Lannett was one of the fastest growth company in USA 2015. T0here were three factors for Lannett’s outstanding growth: rising health care spending, an aging population and growing prices for generic drugs.
- Rising health care spending
In the next decade, health care spending is about to rise by 6% a year. The growth spending is caused by the Affordable Care Act, the economic recovery and a population steadily aging.
Before 2014, health care spending slow down. However, after that, health care spending in the U.S. is projected to have hit $3.1 trillion, or $9,695 per person. From 2014 to 2024, to the improving economy and the aging population, about 19.1 million people are expected to enroll in Medicare.
America is the wealthiest country in the world. The higher demand of rising health care will make drugs price go up. In a long term, this is beneficial for generic drugs company like Lannett Co.
- Baby boom and aging population
As the baby boomers continue to enter retirement, the whole world faces one of the most dramatic demographic shifts in the history. This shifts have a great influence on health care costs.
78 million people in US would begin turing 65 years old in 2011. From 2011 to 2028, around 3.5 million people will go to that age each year. As people age a lot, the demand for drugs will increase too. For a long term, Lannett Co. will benefit from
- Generic drugs
Lannett Co. is primarily providing products for generic drug industry. The future for this company is very bright and Lannett is expecting strong growth in the future. Generic pharmaceutical companies are able to produce drugs 80% less than the branded drugs. This is a great chance for companies like Lannett to make its products at a very low prices. Also, generic drugs are very comparable to brand listed drugs, quality, strength and performance as well as the usage of the drug. Generic drugs are available when the original patent of the brand drug expired. From 2013 to 2017, $86 billion of brand drug patent are expired. The demand for generic drugs will increase a lot since aging baby boomers continue to fill the market. Lannett has a strong customer base. The company’s generics products are sold through third party distribution channels rather than directly to physicians and hospitals. Third party channels include chain drug stores such as Walgreens, CVS and RiteAid. Wholesale distributors including McKesson, Cardinal or AmerisourceBergen and mail-order pharmacies including Express Scripts/Medco, OPTUMRx and Caremark.
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