Trxade Group, Inc.
CEO: Suren Ajjarapu
WSA: Good day from Wall Street. This is Juan Costello, Senior Analyst at the Wall Street Analyzer. Joining us today is Suren Ajjarapu, the CEO for Trxade Group Incorporated. The company now trades on the OTCQB, ticker symbol TRXD. Thanks for joining us today, Suren.
Suren Ajjarapu: Thanks for having me. I appreciate that.
WSA: Great anytime. Now starting off, please give us a history and overview of the company for some of our listeners that are new to the story.
Suren Ajjarapu: Sure. Trxade is a technology in – like a pharmaceutical supply chain oriented company. We have very advanced unique trading platforms that brings like pharmaceutical buyers and sellers together. So, we focus on like 24,000 independent pharmacies that are out there in the US that transact around $93 billion worth of pharmaceuticals per year, which is almost like a one-third of the total pharmaceutical market size. This is not a new concept. You have seen this in the equity trading and other trading platforms, but first in the pharmaceuticals, but good old concept of bringing buyers and sellers together is the same. If I need to explain in one sentence what Trxade does, they provide the distribution solutions within a cloud-based environment to these independent pharmacies and bring them purchasing efficiency and pricing transparency and means of product sourcing that meets their desired transaction terms. We have three distinct platforms, S2P supplier to pharmacy, P2P, pharmacy to pharmacy, and more recently we added S2S, supplier-to-supplier trading platforms. If you look at a typical independent pharmacy today, it’s an owner operated retail store that does not have the bandwidth or the resources to shop around for product availability or pricing. All the while that Affordable Care Act today has begun to lower reimbursement in an effort to save more money, the solution is Trxade.
Currently, these pharmacies do not have a well-defined means of product sourcing other than just to buy from their primary vendor. They have to log into several wholesaler sites and then try to negotiate to lower the prices for each product without having a firm base for their product where the cost should be. It is a tedious and non-centralized and inefficient way to procure pharmaceuticals whereas Trxade offers them value, product availability and streamlined and centralized means of purchasing so that they have time to attend their patient needs well.
WSA: Right certainly, and so yeah what are some of the recent serving offerings that you have now?
Suren Ajjarapu: First of all, a B2B is not a new concept and Trxade is enhancing the purchasing efforts for the pharma buyers by providing an easy to use trading platform along with the proprietary data analytics that can show them the information on pharmaceuticals that are in short supply, like it’s simple economics like supply and demand. If supply is low, demand goes up and price goes up, which is a crucial information that’s not currently available for these independent pharmacies that can keep extra stock for certain medications that can give them the customer service as well as give them the better margin and the end result is price is increasing. Of course, you may argue like FDA has that information or some other research universities and other public domains, but we are running our own algorithms that improve the validity and accuracy of these information. The future is that we recently released like RxGuru and Bulk Upload applications has – the future is in it. First of all, the RxGuru app is the first of its kind desktop interface to our servers while the Bulk Upload app is designed to bridge the gap between the pharmacy prescription management software system and our platform. These apps give them the flexibility and convenience to better informing the drug pricing, availability, and that is much needed efficiency that lacks in this industry.
WSA: Sure and what are some of the other current trends you have been seeing in the sector, and how do you position the company to capitalize?
Suren Ajjarapu: When Affordable Care Act was announced back in 2010, most of the companies focused either changes in the physician’s side or on the hospital side, but no one really focused on the pharmaceutical side at a pharmacy level, which actually completes the full circle of healthcare. Although part B is not included at this time in the Affordable Care Act, the drive towards healthcare efficiency and cost containment at all levels is here. We have seen already the mergers and acquisitions among pharmacy benefit managers like PBMs and the insurance industries strong drive to lower the cost of pharmacies is felt by nearly all the pharmacies in the nation. This is a – the pharmacies are looking now at alternatives when it comes to the procurement of these pharmaceuticals to safeguard their diminishing margins. We are in a unique position to offer them the savings and at the same time give them the knowledge that they need to possess or keep them afloat.
WSA: Certainly and so what are some of the factors that you feel make the company unique from some of the other players in the sector?
Suren Ajjarapu: So what sets us apart Juan is the data analytics, especially on the pharmaceuticals short supply database and a comparative pricing analytics for our generic products in relation to the proposed government benchmarks like NADAC, which is National Average Drug Acquisition Cost or NARP, National Average Retail Price. We maintain the most comprehensive near real-time generic pharmaceutical product [shortage] database in the industry. I have developed a proprietary algorithm to identify these pharmaceutical products that are prone to price increase in the near future. Like if you look at the pharmacies, currently they are accustomed to having a WAC plus or minus pricing, which is wholesale acquisition pricing for a branded product. When it comes to the generics, there is no industry-accepted benchmark. For instance, one pharmacy might have bought a particular drug for $10 the other one may have bought at the same strength and same drug for $15 by driving a few miles down the road. We believe the logical trend in this industry is towards commoditization as more generics enter into the market and even more manufacturers develop the same medication that is causing pricing competition. We are eliminating through our platform these inefficiencies and arbitrage by providing a transparent and easy to use system for these independent pharmacies.
WSA: Sure and what are some of the other goals and milestones that you and the team, Suren, are are hoping to accomplish over the course of the next year?
Suren Ajjarapu: I appreciate that Juan and certainly one of the key goals for us is to launch our new products for veterinarian facilities and hospital trading platforms. Another key goal for us is to carry the short supply inventory that I mentioned with our own brand name and getting into the contract manufacturing of these short supply drugs. The development of these products are in progress well and I anticipate to roll-in the services in early part of 2015. On the inventory side, we don’t see any major obstacles to grow rapidly and provide our member pharmacies the enhanced cost savings on the products we have acquired strategically, but in the long run, we are interested in bearing our own ANDA, which is Abbreviated New Drug Application that gives us the ability to vertically integrate within the industry and make us a stable provider of quality pharmaceuticals to our member pharmacies. However, I sincerely believe that the process of getting ANDA approved by FDA is cumbersome as you know and lengthy process, but definitely gives us a tremendous advantage in the long run.
WSA: Certainly and perhaps you can walk us through your background and experience Suren and talk about some of the key management team over at Trxade?
Suren Ajjarapu: Absolutely Juan. My background is even though it is a financial background, in my 20 years experience, I served as a CEO, founder, president, board member for several private and exchange listed companies. My partner COO, Shawn is a registered pharmacist and pharmaceutical consultant with over 10 years experience in retail pharmacy and pharmaceutical logistics and also a founder of pharmacies in the Tampa Bay area. Coming to my CFO, Mr. Doss who brings his 22 years of financial experience serving in a variety of capacities with accounting and investment firms. Other key members have overall 50 years of combined experience in the pharmaceutical space that are well suited to navigate today’s challenges while making most of the opportunities that our industry has to offer that benefits our shareholders and customers, but definitely our board is constituted with independent board members with a structured governance in place with a lot of public company experience. I think we are all set to take this company to the new heights Juan.
Suren Ajjarapu: Good, good, and – so as far as investors and the financial community are concerned as you’ve recently just upgraded your listing to the OTCQB, do you believe that your company story and message and upside are completely understood and appreciated by investors and if not what do you wish they better understood about the company?
Suren Ajjarapu: As you are aware, we have been under the radar for a while. We are working at gaining more awareness by the investment community as we execute our business plan. We are trying to improve our visibilities. I think we are in an exciting value proposition not only in terms of what we are doing to grow our revenues and earnings. Over the years, we have tried to maintain a favorable capital structure of the company. With our current Form-10 approval and post merger, we are looking at approximately $30.47 million or maybe some additional shares depending on the capitalization. But we have relatively small number issued in outstanding shares when compared to comparable public companies you may have seen hundreds of millions of shares outstanding. This capital structure enables reasonable earnings for shares fairly quickly and that is the key differentiator of us that I want to emphasize to the investment community, Juan.
WSA: Sure and so once again joining us today is Suren Ajjarapu, CEO for Trxade Group Incorporated, which trades on OTCQB, ticker symbol TRXD and is currently trading at $1.50 a share, market cap is around $45 million and before we conclude here Suren, to recap some of your key points, why do you believe investor should consider the company as a good investment opportunity today?
Suren Ajjarapu: Well I think we offer a significant potential for return on investment, Juan because of our capital structure and diversified sources of revenues, substantial growth for our revenue growth to the launch of new products without a significant regulatory burden for our market entry without like – look at our own branded inventory. Our trading platform is a very unique with minimum competition in terms of our service offerings and we intend to establish the first mover advantage in this space especially by providing a last-mile solution to the pharma manufactures. Like if you look at on the drug and biologics which requires an FDA approval prior to marketing, usually requires about 10 years of development, billions of dollars prior to commercialization, but in case of ours – like we do not require that level of FDA approval as we are taking it pre-approved and by other manufacturers. So I think those are the key points in terms of why this is an attractive investment and this is why an investor should consider our company a good investment opportunity, Juan.
WSA: Well, we certainly look forward to continuing to track the company’s growth and report on your upcoming progress and we would like to thank you for taking the time to join us today Suren and update our investor audience on TRXD.
Suren Ajjarapu: Thank you Juan. Thanks for the opportunity.