China Opportunity

Below is an interesting read from Deloitte on the Chinese pharmaceutical industry. On p. 15, section 2.3 on the Chinese OTC market, Deloitte states that the cold, fever, and flu medications comprised about 30% of that overall market. (On the prior page, Deloitte confirmed the high demand for U.S. branded products, corroborating the similar statement in SCRC's PR on China last week.) I wonder what percentage of that 30% is in the RapiMed(R) pediatric market; my SWAG is 20%. Assuming 30% of the $32B OTC market report from last Monday's PR, and then accounting for my 20% SWAG results in an addressable market of about $1.9B for RapiMed(R). For each half percent of this market with RapiMed(R), ScripsAmerica would generate about $9.6M in revenues. As Scrips said in its press release, there is nothing like the RapiMed(R) product in China. And the demand for drug products manufactured in the U.S. is very high due to the thousands of deaths caused annually in China by counterfeit OTC products. I believe Scrips could ultimately penetrate more than a half percent of this market.

In addition, per the "China Package" PDF on the Scrips website, There are 17 OTC products it could combine and market with its ODT technology. Moreover, Scrips could also launch adult versions of its pediatric, Tylenol-based easy melt tablets. According to the Deloitte research, similar to the U.S., the aging population in China is becoming quite large. And considering the difficulties that many senior adults have with swallowing pills, it would make sense to quickly follow up the pediatric version with a launch of an adult version. I have no idea how quickly Scrips can ramp up the adult version and ultimately follow up with launches for each of the 17 OTC products. (Clearly, a successful RapiMed(R) launch will provide the needed revenues to facilitate the accelerated development, marketing, and launch cycles for the additional products.). Assuming Scrips can hit half of the OTC products by 2016, it would not be unreasonable to base our financial modeling on the entire $32B OTC market in China. Each quarter percent of that much larger market (which will exceed the current $32B by 2016), is $80M. Not bad!

Remember also that ScripsAmerica has identified 7 generic Rx drugs and 7 vitamin products that it can match with its ODT technology. To that end, considering only China, there is significant potential here.

https://www.deloitte.com/assets/Dcom-Germany/...190112.pdf

By the way, I invested in SCRC for the wholesale drug distribution business and Bob's vision to target the independents in the U.S. But this China opportunity is pretty exciting.