RE:Another Seeking Alpha ArticleIn the SA article referenced, it becomes clear that the author (a recycler of stale news and superficial analyses) does not know what CRX's business model is. He/she describes half of it (off-patent drugs), and later -- in ignorance -- gives the reason why it can work (no R&D risk or delay on sales).
Here's the half that he/she missed. (1) The market-worthiness of the old drugs is already proven, whether sales are depleting or not. R&D is no promise; the end products are not guaranteed a market and their potential can be extinguished by another drugmaker's competing product reaching market first. (2) The business model EXPECTS depreciation, and the off-patent drugs that depreciate (some will, some won't) must eventually be replaced by new purchases. This is normal. Consider it a parallel to an oil producer, where depleting wells must be replaced by new wells on a continuing basis. For the business model to work and continue working, CRX must always be looking ahead at cash flow trends and replacing depleting flows with new flows.
This post should not be interpreted as either 'pro' or 'con' on CRX. The business model is clear, but it must be executed well and the company has some proving to do.
.
Craigbad wrote: Concordia Healthcare Is Worse Than Valeant
Summary
Concordia Healthcare has a severely flawed business model.
Concordia overpaid for "old drugs" which have no growth potential.
Concordia's old drug portfolio are depreciating assets.
Bankruptcy imminent unless Concordia changes its business model.