Pharma Profits have kicked in!!!!!!!!!!!!! 3 P's, Pidduck, Profit margins, Product mix. From today's press release first:
MediPharm has made significant improvement in its adjusted gross margin. In the last reported quarter, Q2 2023, this was approximately 21% vs negative 1% in Q2 2022.
Now let me take the time and detail to explain to younger investors with a personal career real life example.
The profit margins in the recreatonal pot world are RAZOR thin to the point as Mr. Pidduck brought up at the last CC that some recreational cannabis companies have delayed paying their excise tax trying to stay afloat as a company. The profit margins in the world of cannabinoid pharmaceutical molecules are much healthier. Medipharm Labs does not have a magic wand and is able to generate profits margins of 21% strictly in the recreational segment when others, even the largest, are struggling to achieve profitability in the recreational segment. That statement in today's press release by Pidduck on Profit margins has to do with Product mix. Product mix being the difference in profit margins generated by the recreational segment vs the pharmaceutical segment.
Now for a real world example:
In the mid 1990's, say 1994, Chrylser was producing the Dodge Neon, capable of manufacturing around 200,000 of those vehicles per year. Let this represent the recreational pot segment. Profit margins on that vehicle were RAZOR thin, less than $1,500 USD per vehicle. We had to beat up our suppliers quite severely in order just to achieve that margin. In Detroit however at the Jefferson Assembly Plant, we were also building the new Jeep Grand Cherokee and between entry level and high optioned vehicles in that line, the average profit margin per vehicle was $15,000 per vehicle and on an an apples to apples volume basis, 200,000 Jeep G.C.'s yielded $3 billion in profits while the Neon generated only $300 million in profits.
So it's the product mix that shifted the profit margins for Chrysler and so too pharmacuetical API sales is what shifted the profited margins for LABS from -1% to +22%. That is a HUGE, MASSIVE shift in profit margins.
Oh, what did I do when I saw those profit margins on the new Jeep? Well Chrysler stock was sitting at around $5 or $6 bucks so I bought as much as possible and simply had to wait for the earnings numbers to come out because of those massive profit margins on the new Jeep. I sold at over $30.
When you see a massive shift in profit margins like Mr. Pidduck told us AGAIN today, you have to ask yourself as an investor, what has changed and sharing life experience I'm giving you the answer. Whether you buy more LABS or not, that's your business.