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DIRECT PHARMACEUTICAL CORP. MARKETS 455 PREPACKAGED DRUGS TO MDs

Executive Summary

DIRECT PHARMACEUTICAL CORP. MARKETS 455 PREPACKAGED DRUGS TO MDs in over 30 states using independent marketing reps, the company said in a recent registration filing with the Securities & Exchange Commission. "The use of independent representatives will allow the company to significantly and rapidly expand into market areas with minimum investments in personnel," the filing explains. "In August, the company departed from its original plan of using salaried sales representatives and opted to use independent sales organizations," Direct explained. "At the point where a sales representative has established sufficient accounts, the company places a technical services representative in that market to properly service the accounts." Kansas City, Missouri-based Direct Pharmaceutical currently markets a formularly containing 455 drugs through 100 reps, of which 96 are independent, commissioned agents. The company purchases drug products from both manufacturers and wholesalers, however, the filing notes that "most all pharmaceutical manufacturers are now attempting to sell to the company." Drugs are then repackaged for physician dispensing, usually by a private contractor. The company said it installs in each account's office a copyrighted computer system, which generates customized labels, sales reports and restock orders for all medications dispensed. In addition, the company reports to Drug Distribution Data, which collects and reports all the sales of brand name pharmaceuticals to the manufacturing company for payment of commissions to the sales force. Direct Pharmaceuticals began operations in April 1986, at the time of a $2.1 mil., 700,000 share public offering. A subsequent private placement of 74,000 restricted common shares netted the company an additional $370,000. As of Dec. 22, approximately 2.3 mil. shares were outstanding. The Company's recent SEC filing, an 8-A, covers the registration of the remaining 2.7 mil. authorized shares. Revenues through Sept. 30 totaled $413,444; the firm booked a net loss of $774,677 for fiscal 1986. Founder Joe Musteen is chairman of Direct Pharmaceutical, and former National Association for Ambulatory Care Director James Roberts serves as CEO. The company is part of the movement to encourage MD dispensing. Physicians Pharmaceutical Service, based in Rockville, Md., also markets repackaged drugs through independent reps for dispensing by doctors ("The Pink Sheet" Sept. 15, p. 10).
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