Pink Sheet is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call +44 (0) 20 3377 3183

Printed By



Executive Summary

MEDI-MAIL MAIL-ORDER PHARMACY PURSUING NICHE: "affinity groups" and third-party payer clients with mail-order pharmacy contracts worth $ 1 mil.-$ 5 mil. annually is the focus of Medi- Mail's growth plan, founder and CEO Sol Lizerbram told the New York Society of Securities Analysts Dec. 10. Comparing the types of accounts Medi-Mail is seeking to those of mail-order pharmacy competitors Medco Containment Services and Diagnostek, Lizerbram said, "we're happy to sign" contracts for $ 1 mil.-$ 5 mil. per year. Lizerbram maintained that the small-client market is large, with "tens of thousands of payers" in that revenue range. Lizerbram cited Frost & Sullivan estimates that the mail-order pharmacy business will reach sales of $ 7.6 bil. by 1995 compared to $ 800 mil. "a few years ago." If Medi-Mail "only gets 5% of the market, that's $ 400 mil.," Lizerbram told the analysts. San Diego-based Medi-Mail, Inc.'s ultimate target is the third-party health care payer/administrator market such as health maintenance organizations, preferred provider organizations, unions, self-insured groups and municipalities. The company, which began operations in April 1987, built its business base on affinity groups. Lizerbram characterized affinity groups as "an expensive market to be in" for a mail-order pharmacy provider because of the time and money that must be invested to convert affinity group members to mail-order pharmacy voluntarily. Growing a mail-order business through affinity group accounts is "building brick by brick," Lizerbram acknowledged. Third-party payer contracts are now building the Medi-Mail business "floor by floor" in part due to the fact that third-parties enforce use of mail-order pharmacy. Medi-Mail's revenue record indicates a rapid growth during its short history. For the upcoming July 31 fiscal year, the company projects revenues of $ 12 mil. In FY 1991, Medi-Mail sales were a third of that ($ 4 mil.); in FY 1990, $ 2.5 mil; $ 1.2 mil. in FY 1989 and $ 215,000 in FY 1988. Lizerbram characterized the $ 12 mil. revised revenues forecast as "conservative" and based "only on the contracts at hand." While Medi-Mail's revenues have been growing, the company has reported losses for each year of its existence. In the most recent fiscal year, Medi-Mail took a loss of $ 934,653. However, Lizerbram told the analysts, the company plans to be profitable "toward the end of our fiscal year" 1992. He noted that Medi-Mail has sacrificed early profitability "for market share" and to build infrastructure. Asked to elaborate during Q&A, Lizerbram said the possibility exists that Medi-Mail will continue "to elect growth over profitability." Medi-Mail offers no-cost pharmacy benefit programs to affinity groups and recruits converts to mail-order via telemarketing. In FY 1989, the company signed exclusive mail-order agreements with 16 organizations and added nine more in FY 1990 for an aggregate total of over 6 mil. potential mail-order users. The company's affinity group accounts include: the San Diego County Medical Society (March 1991); ElderMed Ventures, a nonprofit hospital- based senior citizen's program with 300,000 members of whom only 2,000 used mail-order at the time of the contract (May 1990); the National Association of Retired Credit Union Members; the American Federation of Police, Hadassah, the 350,000-plus member Jewish women's service organization (July 1989); and the 36 PACE Membership Warehouses in 11 states (Oct. 1988). Medi-Mail began focusing on third-party payer contracts in April 1991. Some of Medi-Mail's contracts and signing dates include: Dallas-based Alliance Employee Leasing Group, with 6,000 employees, was signed on July 1. Medi-Mail estimated at the signing that it could convert 40% of Alliance's current $ 1.5 mil. annual spending on pharmacy to mail-order (about $ 600,000). Austin, Tex.-based Boon-Chapman & Affiliates, including MedCorp, S.W., was signed on Aug. 19. Medi-Mail says Boon-Chapman, a third-party administrator of 60 companies, and MedCorp, a PPO for 100 employers, represent a total of 45,000 employees and $ 1 mil. in additional mail-order pharmacy revenues. Hotel Employee and Restaurant Employee Local 30 Health and Welfare Fund of San Diego signed on Oct. 9. The fund covers 3,000 local union employees. Reston, Va.-based DynCorp signed a three-year on Oct. 22 that covers the company's 17,000 employees and their 23,000 dependents beginning in Janauary 1992. The DynCorp contract is estimated to provide Medi-Mail with annual revenues "in excess of $ 3 mil." Medi-Mail also has moved recently to broaden its services to customers who may also need prescriptions filled at retail pharmacies. On Aug. 12, 1991, Medi-Mail signed an agreement with Kmart under which the discount retailer giant's 1,300 U.S. outlets with pharmacies became part of the Medi-Mail provider network. Medi-Mail is in the process of acquiring the four-store Medco Drugs chain based in San Diego. Medi-Mail has been trading on the NASDAQ since September 1988 following an initial public offering that netted proceeds of $ 1.2 mil. The company is raising an additional $ 3.5 mil. through a recent private placement and the exercise of warrants for 753,077 shares of common stock, Lizerbram said. Medi-Mail's 4,250 sq. ft. mail-order pharmacy facility, customer service and marketing offices are located in Las Vegas. The pharmacy is "now geared to do $ 20 mil. or more" in revenues, Lizerbram said, and "we could double this with very little changes," such as upgrades in software.

You may also be interested in...

Part D Discount Liability Coming Into Focus: CMS Releases Drug Cost Data

Newly released Medicare Part D data sheds light on the sales hit that branded pharmaceutical manufacturers will face when the coverage gap discount program gets under way in 2011

FDA Skin Infections Guidance Spurs Debate On Endpoint Relevance

FDA appears headed for a showdown with clinicians and the pharmaceutical industry over the proposed new clinical trial endpoints for acute bacterial skin and skin structure infections, the guidance's approach for justifying a non-inferiority margin and proposed changes in the types of patients that should be enrolled in trials

Shire Hopes To Sow Future Deals With $50M Venture Fund

Specialty drug maker Shire has quietly begun scouting deals with a brand-new $50 million venture fund, the latest of several in-house investment arms to launch with their parent company's pipelines, not profits, as the measure of their worth




Ask The Analyst

Ask the Analyst is free for subscribers.  Submit your question and one of our analysts will be in touch.

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts