RxLogic Pitch Deck 112216
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Transcript of RxLogic Pitch Deck 112216
Confidential property of Rx Logic, LLC
October 2016
Service • Execution • Compliance
Strong revenue opportunities at higher
margins…pharmaceutical logistics…a
better 3PL model
2Confidential property of Rx Logic, LLC
Small & mid-market pharmaceutical clients lack logistics solutions
1. Pharmaceutical companies have begun to
accept and adopt the 3PL concept.
2. Clients are driven by process, performance and
compliance, not cost.
3. Barriers to entry and existing provider
thresholds have created a capacity problem for
the small to mid market clients.
4. Gross margins exceeding 40% are not
uncommon.
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3PLs Lower Cost & Improve Performance Leveraging a Reduced Risk Model
Provide resources, scalability and flexibility
Offer their expertise and shared services to lower the total
logistics cost for the client
Margin up costs, bill clients for services provided and avoid
inventory ownership risks
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Pharma 3PL Capacity is Lacking
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1 Illinois Department of Financial & Professional Regulation website (https://www.idfpr.com/LicenseLookUp/LegacyLookup.asp),
February 2016
Active Wholesale Drug Distributor License…1
Chicago
MetroIllinois US
Companies 145 195 942
Locations 213 316 1,403
Distributor Locations ~195 ~298
3PL Locations ~18 ~18
Note:
IL makes up 22.5% of all national wholesale drug distributor licensing.
The top 5 states of IL, CA, PA, NJ & IN comprise 43.4% of all licensing.
Chicago Metro is a Growing Pharmaceutical Hub
“By 2014, it’s estimated that 7 out of 10 of the leading
pharmaceutical products will require temperature-controlled
transportation”.2
“The total size of the healthcare cold chain logistic services market is
expected to expand from its current figures of US$ 8.5 billion to
nearly US$ 13.4 billion by 2020”.3
With the addition of incubators and small to mid-market players,
more than 600 pharma related companies have a Chicago Metro
presence.
2 Merrill Douglas, Navigating Pharma Logistics, August 20123 Global Healthcare Cold Chain Logistics Market Report & Forecast (2016-2020), IMARC Group, DUBLIN, April 15, 2015
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Illinois Pharma 3PL Competition…
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Large (> $1B revenue)
AmerisourceBergen Drug Corporation
Cardinal Health (2)
Catalent Pharma Solutions
Kuehne + Nagel, Inc. (2)
McKesson Corporation (2)
Medline Industries, Inc.
Owens and Minor Distribution, Inc.
Ozburn-Hessey Logistics LLC
Smith Medical Partners, LLC
Mid-Market (>$50MM X < $1B revenue)
Packaging Coordinators LLC (Frazier Healthcare)
Diamond Marketing Solutions Group, Inc.
Small (<$50MM revenue)
Lion Logistics, Inc.
Pharma Logistics Ltd
Qualanex LLC
Time Definite Services, Inc.
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Profile:
• Newer entrant
• Limited resources
• Customized needs
• Illinois based
Client Sales: $5MM - $200MM
Business potential:
• “Hot” industry (ie. biosimilar products)
Client Targets like…
Manufacturers:
• Thera Proteins Intl. (TPI)
(biosimilars)
• Akorn (niche pharmaceuticals)
• Tagi (specialty pharmaceuticals)
Distributors:
• Hauser Pharmaceuticals
Other:
• Pharma / healthcare Incubators
like MATTER & Healthbox
• Government
Target Small to Mid-sized Companies (clients)…
The Proposal (phase I)
Rx Logic partners with a company to implement and operate a
pharmaceutical third party logistics (3PL) business.
Rx Logic will:
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Secure, manage & maintain
wholesale drug distributor
licenses
Manage operations and
logistics
Source and sign-on pharma
clients.
Source the facility
Layout and design
operation
Project manage
Source & procure
equipment and systems
Rx Logic has the Skill and Experience
Specific industry expertise and regulatory compliance
knowledge
15 years pharmaceutical industry experience
Pharma industry sales relationships and contacts
Deep operations and 3PL experience with many
successful start-ups
4 years experience operating an extremely profitable
pharmaceutical 3PL
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Client Sales Channels and Connections Already Exist
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Existing client relationships
Leverage relationships with pharma sales contacts
– Identify opportunities and drive business
– Incented via a commission structure
Cultivate relationships with pharma consultants
– Influencers that steer pharma manufacturers to service
providers
– No cost
Expand relationships with entities like MATTER4 and Healthbox5
– Chicago based incubator for healthcare, biopharma, medical
devices, etc. start-up companies
Fuel growth by performance and reputation
4 http://www.matterchicago.com/5 https://www.healthbox.com/
Pharma Logistics 2-year Time Line
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Task
Partner / Rx Logic agreement negotiated & signed
Client #1 conditional SLA signed
Design, Layout, SOPs
Comm. Pharma Sales Rep contract drafted, submitted & signed
Procure & install HVAC and thermal wall for 25K SF
Wholesale drug distributor Illinois license
Wholesale drug distributor license (all states) and VAWD cert.
Market pharma operation and services to Pharma Consultants
Actively pursue additional clients through all sales channels
Engage Biopharma and healthcare incubators / participants
Client #1 final SLA and SOW signed
Client #1, Prog. #1 set-up, implementation & program training
Client #1, Prog. #1 project start (limited to licensed states)
Fiscal Year 1
May
'17
June
'17
July
'17
Aug.
'17
Sept.
'17
Oct.
'16
Nov.
'16
Dec.
'16
Jan.
'17
Feb
'17
March
'17
April
'17
Fiscal
Year 2
Concept and Model Expansion (phase II)…
Expand the existing footprint
Research / consider developing and operating new
locations
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Future Service Offering Opportunities (phase III)…
Logistics
Transportation Solutions
Controlled Substance Cage and Vault
Medical Device Distribution
Literature Distribution
System Solutions
Online Web Portal / Customized reporting
Inventory and Data Management
Manufacturer Prescription Drug Supply Chain Track and Trace
Miscellaneous Services
Client A/R Collection
Client Contract Management
Client Chargeback Management
Packaging Programs
Finished Goods Testing Programs
Reverse Logistics
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The concept is sound. The need is there. The sales
will come.
…we just need to decide how best to engage.
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Appendix
*Financial Performance over time…
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* Assumptions:
1. Based on 25,000 SF (receipt, storage, shipping & office) years 1 -3. Grown to 50K SF year 4.
2. Costs and rates used to generate the projected performance summary reflect in use, currently active operating numbers.
3. 5% sales commission paid quarterly in arrears.
4. 33% gross profit split after sales commissions paid to Rx Logic.
5. No transportation revenue included
Year 1 Year 2 Year 3 Year 4 Year 5
Projected Annual Gross Revenue 162,500$ 1,709,282$ 2,876,198$ 3,479,834$ 3,989,127$
Total CapEx (5 yr. amortization where applicable) 165,100$ 261,600$ 261,600$ 315,850$ 315,850$
Total Operating Expense 715,616$ 877,739$ 984,594$ 1,123,962$ 1,152,676$
Total Expenses 880,716$ 1,139,339$ 1,246,194$ 1,439,812$ 1,468,526$
Projected Annual Gross Profit (Loss) (718,216)$ 569,943$ 1,630,004$ 2,040,022$ 2,520,601$
Projected Annual Gross Margin -442.0% 33.3% 56.7% 58.6% 63.2%
Projected Annual Sales Commissions -$ 72,223$ 129,223$ 166,446$ 193,090$
Proj. Ann. Gross Profit (Loss) less Sales Commissions (718,216)$ 497,720$ 1,500,781$ 1,873,576$ 2,327,510$
Rx Logic share of gross profit -$ 164,248$ 495,258$ 618,280$ 768,078$
Projected "Partner" Net Profit (718,216)$ 333,472$ 1,005,523$ 1,255,296$ 1,559,432$
Projected "Partner" Net Profit Margin - 19.5% 35.0% 36.1% 39.1%
Rx Logic FTEs 2.83 4.00 6.00 7.00 7.00
In the Pipe line…
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Client #1, 2 programs (prior client):
Program #1
– Estimated revenue $1.3MM
– CA, FL, IL, & NJ comprise 54% of the shipping volume.
– Can obtain 50% of the total program volume year 1 and
all volume inside of year 3.
Program #2
– Estimated revenue $1.0MM
– Require licensing in all 50 states prior to start-up
– Once licensed, can obtain 30% of the total program
volume year 1, all volume inside of year 3
Transaction / Cash Flow
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Partner /
One possible layout…
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Rx Logic Principal Biographies
Scott Hopper
(https://www.linkedin.com/in/scottjhopper)
Principal and founding member with over 25 years of experience in the logistics
arena, he has held various supply chain, operations and engineering roles. He
is a degreed Industrial Engineer with an M.B.A. in Operations Management and
holds certifications in Supply Chain Management, Lean and Six Sigma.
He has designed, operated and improved facilities and functional departments
and has substantial experience sourcing, procuring, improving processes and
reducing cost.
He has worked for and in various industries including CPG, wholesale
hardware, automotive, telecommunications and consulting. He has almost 10
years 3PL specific experience.
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Rx Logic Principal Biographies cont’d
The other Principal and founding member provides Rx Logic with more than 25
years of experience in pharmaceutical distribution, logistics and transportation. He
served in a senior operations role for a large pharmaceutical company. In this role,
he was heavily involved in the selection, design, start-up and day-to-day operation
of a state of the art, 300K SF distribution center.
He has spent several years in the 3PL industry in business development,
procurement and operations functions.
22Confidential property of Rx Logic, LLC