RxLogic Pitch Deck 112216

Confidential property of Rx Logic, LLC

October 2016

Service • Execution • Compliance

Strong revenue opportunities at higher

margins…pharmaceutical logistics…a

better 3PL model

2Confidential property of Rx Logic, LLC

Small & mid-market pharmaceutical clients lack logistics solutions

1. Pharmaceutical companies have begun to

accept and adopt the 3PL concept.

2. Clients are driven by process, performance and

compliance, not cost.

3. Barriers to entry and existing provider

thresholds have created a capacity problem for

the small to mid market clients.

4. Gross margins exceeding 40% are not

uncommon.


3PLs Lower Cost & Improve Performance Leveraging a Reduced Risk Model

Provide resources, scalability and flexibility

Offer their expertise and shared services to lower the total

logistics cost for the client

Margin up costs, bill clients for services provided and avoid

inventory ownership risks


Pharma 3PL Capacity is Lacking


1 Illinois Department of Financial & Professional Regulation website (https://www.idfpr.com/LicenseLookUp/LegacyLookup.asp),

February 2016

Active Wholesale Drug Distributor License…1

Chicago

MetroIllinois US

Companies 145 195 942

Locations 213 316 1,403

Distributor Locations ~195 ~298

3PL Locations ~18 ~18

Note:

IL makes up 22.5% of all national wholesale drug distributor licensing.

The top 5 states of IL, CA, PA, NJ & IN comprise 43.4% of all licensing.

Chicago Metro is a Growing Pharmaceutical Hub

“By 2014, it’s estimated that 7 out of 10 of the leading

pharmaceutical products will require temperature-controlled

transportation”.2

“The total size of the healthcare cold chain logistic services market is

expected to expand from its current figures of US$ 8.5 billion to

nearly US$ 13.4 billion by 2020”.3

With the addition of incubators and small to mid-market players,

more than 600 pharma related companies have a Chicago Metro

presence.

2 Merrill Douglas, Navigating Pharma Logistics, August 20123 Global Healthcare Cold Chain Logistics Market Report & Forecast (2016-2020), IMARC Group, DUBLIN, April 15, 2015


Illinois Pharma 3PL Competition…


Large (> $1B revenue)

AmerisourceBergen Drug Corporation

Cardinal Health (2)

Catalent Pharma Solutions

Kuehne + Nagel, Inc. (2)

McKesson Corporation (2)

Medline Industries, Inc.

Owens and Minor Distribution, Inc.

Ozburn-Hessey Logistics LLC

Smith Medical Partners, LLC

Mid-Market (>$50MM X < $1B revenue)

Packaging Coordinators LLC (Frazier Healthcare)

Diamond Marketing Solutions Group, Inc.

Small (<$50MM revenue)

Lion Logistics, Inc.

Pharma Logistics Ltd

Qualanex LLC

Time Definite Services, Inc.


Profile:

• Newer entrant

• Limited resources

• Customized needs

• Illinois based

Client Sales: $5MM - $200MM

Business potential:

• “Hot” industry (ie. biosimilar products)

Client Targets like…

Manufacturers:

• Thera Proteins Intl. (TPI)

(biosimilars)

• Akorn (niche pharmaceuticals)

• Tagi (specialty pharmaceuticals)

Distributors:

• Hauser Pharmaceuticals

Other:

• Pharma / healthcare Incubators

like MATTER & Healthbox

• Government

Target Small to Mid-sized Companies (clients)…

The Proposal (phase I)

Rx Logic partners with a company to implement and operate a

pharmaceutical third party logistics (3PL) business.

Rx Logic will:


Secure, manage & maintain

wholesale drug distributor

licenses

Manage operations and

logistics

Source and sign-on pharma

clients.

Source the facility

Layout and design

operation

Project manage

Source & procure

equipment and systems

Rx Logic has the Skill and Experience

Specific industry expertise and regulatory compliance

knowledge

15 years pharmaceutical industry experience

Pharma industry sales relationships and contacts

Deep operations and 3PL experience with many

successful start-ups

4 years experience operating an extremely profitable

pharmaceutical 3PL


Client Sales Channels and Connections Already Exist


Existing client relationships

Leverage relationships with pharma sales contacts

– Identify opportunities and drive business

– Incented via a commission structure

Cultivate relationships with pharma consultants

– Influencers that steer pharma manufacturers to service

providers

– No cost

Expand relationships with entities like MATTER4 and Healthbox5

– Chicago based incubator for healthcare, biopharma, medical

devices, etc. start-up companies

Fuel growth by performance and reputation

4 http://www.matterchicago.com/5 https://www.healthbox.com/

Pharma Logistics 2-year Time Line


Task

Partner / Rx Logic agreement negotiated & signed

Client #1 conditional SLA signed

Design, Layout, SOPs

Comm. Pharma Sales Rep contract drafted, submitted & signed

Procure & install HVAC and thermal wall for 25K SF

Wholesale drug distributor Illinois license

Wholesale drug distributor license (all states) and VAWD cert.

Market pharma operation and services to Pharma Consultants

Actively pursue additional clients through all sales channels

Engage Biopharma and healthcare incubators / participants

Client #1 final SLA and SOW signed

Client #1, Prog. #1 set-up, implementation & program training

Client #1, Prog. #1 project start (limited to licensed states)

Fiscal Year 1

May

'17

June

'17

July

'17

Aug.

'17

Sept.

'17

Oct.

'16

Nov.

'16

Dec.

'16

Jan.

'17

Feb

'17

March

'17

April

'17

Fiscal

Year 2

Concept and Model Expansion (phase II)…

Expand the existing footprint

Research / consider developing and operating new

locations


Future Service Offering Opportunities (phase III)…

Logistics

Transportation Solutions

Controlled Substance Cage and Vault

Medical Device Distribution

Literature Distribution

System Solutions

Online Web Portal / Customized reporting

Inventory and Data Management

Manufacturer Prescription Drug Supply Chain Track and Trace

Miscellaneous Services

Client A/R Collection

Client Contract Management

Client Chargeback Management

Packaging Programs

Finished Goods Testing Programs

Reverse Logistics


The concept is sound. The need is there. The sales

will come.

…we just need to decide how best to engage.



Appendix

*Financial Performance over time…


* Assumptions:

1. Based on 25,000 SF (receipt, storage, shipping & office) years 1 -3. Grown to 50K SF year 4.

2. Costs and rates used to generate the projected performance summary reflect in use, currently active operating numbers.

3. 5% sales commission paid quarterly in arrears.

4. 33% gross profit split after sales commissions paid to Rx Logic.

5. No transportation revenue included

Year 1 Year 2 Year 3 Year 4 Year 5

Projected Annual Gross Revenue 162,500$ 1,709,282$ 2,876,198$ 3,479,834$ 3,989,127$

Total CapEx (5 yr. amortization where applicable) 165,100$ 261,600$ 261,600$ 315,850$ 315,850$

Total Operating Expense 715,616$ 877,739$ 984,594$ 1,123,962$ 1,152,676$

Total Expenses 880,716$ 1,139,339$ 1,246,194$ 1,439,812$ 1,468,526$

Projected Annual Gross Profit (Loss) (718,216)$ 569,943$ 1,630,004$ 2,040,022$ 2,520,601$

Projected Annual Gross Margin -442.0% 33.3% 56.7% 58.6% 63.2%

Projected Annual Sales Commissions -$ 72,223$ 129,223$ 166,446$ 193,090$

Proj. Ann. Gross Profit (Loss) less Sales Commissions (718,216)$ 497,720$ 1,500,781$ 1,873,576$ 2,327,510$

Rx Logic share of gross profit -$ 164,248$ 495,258$ 618,280$ 768,078$

Projected "Partner" Net Profit (718,216)$ 333,472$ 1,005,523$ 1,255,296$ 1,559,432$

Projected "Partner" Net Profit Margin - 19.5% 35.0% 36.1% 39.1%

Rx Logic FTEs 2.83 4.00 6.00 7.00 7.00

In the Pipe line…


Client #1, 2 programs (prior client):

Program #1

– Estimated revenue $1.3MM

– CA, FL, IL, & NJ comprise 54% of the shipping volume.

– Can obtain 50% of the total program volume year 1 and

all volume inside of year 3.

Program #2

– Estimated revenue $1.0MM

– Require licensing in all 50 states prior to start-up

– Once licensed, can obtain 30% of the total program

volume year 1, all volume inside of year 3

Transaction / Cash Flow


Partner /

One possible layout…


Rx Logic Principal Biographies

Scott Hopper

(https://www.linkedin.com/in/scottjhopper)

Principal and founding member with over 25 years of experience in the logistics

arena, he has held various supply chain, operations and engineering roles. He

is a degreed Industrial Engineer with an M.B.A. in Operations Management and

holds certifications in Supply Chain Management, Lean and Six Sigma.

He has designed, operated and improved facilities and functional departments

and has substantial experience sourcing, procuring, improving processes and

reducing cost.

He has worked for and in various industries including CPG, wholesale

hardware, automotive, telecommunications and consulting. He has almost 10

years 3PL specific experience.


Rx Logic Principal Biographies cont’d

The other Principal and founding member provides Rx Logic with more than 25

years of experience in pharmaceutical distribution, logistics and transportation. He

served in a senior operations role for a large pharmaceutical company. In this role,

he was heavily involved in the selection, design, start-up and day-to-day operation

of a state of the art, 300K SF distribution center.

He has spent several years in the 3PL industry in business development,

procurement and operations functions.


RxLogic Pitch Deck 112216

Documents

Transcript of RxLogic Pitch Deck 112216