Peter:
Prompted by your quandary over QDEL, I've done a little investigating.
I am no expert in their business and maybe I should start following their
thread, but their problem appears to be controlling expenses. As you said,
they have many tests approved, about $38 million in trailing revenues and
their gross profit margin isn't bad - over 50 percent. But they only
have $1 million in trailing net profit. This doesn't exactly translate
into shareholder value as they seem to be spinning their wheels - they
generate more revenues, but it's constantly offset by VERY high sales
and marketing expenses and high admin. expenses. For example, their top
five executives earned $850,000 in compensation and bonuses last year,
which is about half of TRIBY's $1.5 million in annual admin. expenses.
Someone's getting rich off QDEL, and its not the shareholders.
Part of their sales and marketing expense problem appears to be attempting
to produce and market "Quidel" name-brand products. Maybe this will
pay off in the long-run if they can carve out a name-brand niche. This
appears to be highly risky, however, especially in the medical field where
low costs will become increasingly important and the ability of low cost
"generics" to steal market share is well documented. Unlike Nike and
Intel, I doubt there will be much prestige in whether a doctor prescribes
or uses Quidel's or Triby's Hep B or H. Pylori test. If so, maybe this
isn't a road TRIBY should venture down. Either way, QDEL does appear to
represent a good case study for TRIBY to learn from.
I've also run some comparative valuations for several rapid diagnostics
cos, namely QDEL, EPT, and SALV. I may have numbers to post soon,
but overall TRIBY still looks good on paper. At $13, EPT appears to
be defying gravity. I think Triby has a real credibility problem in
the market right now - EPT/pregnancy test sales, TRIBY's largest source
of revenues, appear to be stagnant with no clear plan in place to
jump-start them, especially outside the US; very large question
marks on the Uni-Gold platform due to constant FDA submission delays;
and downward revisions on projected HIV revenues - for example, SALV
has announced they are selling their tests in Russia for $2 - 3/test,
which is probably lower than earlier estimates. |
