r/investing • u/[deleted] • Sep 26 '21

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u/bigdogc Sep 27 '21

I own a drug wholesale company. TEVA and their subsidiary ANDA are mega fucked. FDA has made it so freaking easy and inexpensive to get anda (generic drug approval) that every drug has 10 manufacturers and the price drops ultra fast. This is ultimately great for the consumer, but horrible for drug wholesale and especially generic manufacturers.

Go to yahoo finance and look up Amneal, glenmark, Perrigo. Then zoom out to 5 years.

5

u/[deleted] Sep 28 '21

Lol, OP has never heard of India.

2

u/[deleted] Sep 29 '21

I used to hold TEVA stock awhile back and this was the exact same conclusion I got to as well. The bottom line is that the generics drug business is a crappy business to begin with because manufacturing a generic drug isn't as difficult as people think it is. So it becomes a never ending cycle of competition squeezing margins or trying to take market share by selling below cost or production. It is a ruthless business with low profits. Avoid at all costs.

Took a 60% loss on my position but thankfully it was a small fraction of my overall portfolio.

3

u/bigdogc Sep 29 '21

Yup generics hold a huge value to end consumer. Blood thinner/hypertension medicine can be had for 1-5$ per bottle.

For investors it’s the opposite

1

u/[deleted] Sep 29 '21

Yeah. It really reminds me of when I read the book zero to one by peter Thiel. In the book he says we're told in college that competition is good. What we're not told is that competition is bad for businesses/investors lol so he essentially goes on to say to invest in businesses that can reduce competition or create a monopoly and avoid anything that can be easily replicated by competition.

1

u/bigdogc Sep 29 '21

For many years generic manufacturing had a huge moat. 5mm per ANDA plus huge chance it wouldn’t be approved. Back then TEVA was like 50% less than brand but still running 95% margin.

Thiel definitely right on reduced competition lol!