By: AllPennyStocks.com News

Wednesday, November 14, 2012

Major pharmaceutical manufacturers are facing strong headwinds from the generic drug industry of late. Not only is the so-called patent cliff hitting leading drug makers’ pocketbooks as they lose protection of their name brand drugs, but the re-election of Barrack Obama as president has analysts examining the impact of the Heathcare Reform Act, or “ObamaCare,” on big pharma. As a result, junior drug makers with strong pipelines are surfacing as great speculative investments as acquisition targets or partners for bigger peers. Companies in the generic space are particularly appealing as well with aging populations, new regulations and leaner budgets giving companies in the space a solid upside. This premise is what made the news from ScripsAmerica Inc. (OTCBB:SCRC) pop from the hundreds of other headlines in small cap news on Wednesday. ScripsAmerica, a supplier of prescription and nutraceutical drugs, said that Marlex Pharmaceuticals, which the company has signed a Letter of Intent to acquire, has renewed its pharmaceutical supply contract with national nursing home chain GeriMed through 2014. Prior to this renewal, GeriMed and Marlex were engaged in a two year pharmaceutical packaging and distribution agreement.

In business for almost 30 years, GeriMed is a group purchasing organization offering unique contracts and pharmacy services to long term care, independent pharmacies across the U.S. In short, GeriMed helps independent pharmacies compete against national long-term care pharmacies.

The new contract is anticipated to generate about $2 million in revenue for Marlex, according to ScripsAmerica. In September, the New Castle, Delaware-based company said that Marlex secured a $25 million pharmaceutical distribution contract with the Office of Health Affairs, a branch of the U.S. Department of Homeland Security, in conjunction with the Defense Logistics Agency.

Upon completion of the acquisition of Marlex these contracts will catapult sales for ScripsAmerica, a company that only began operations in February of 2010, began trading on the Bulletin Boards in July and posted just shy of $6 million in revenue in 2011.

"The renewal of Marlex's pharmaceutical supply contract by GeriMed's national chain of nursing homes is an expected, yet very positive development for the company,” said ScripsAmerica's CEO, Bob Schneiderman in a statement today. “I firmly believe that the company can reach the contract's maximum potential which would generate $2 million over the next two years."

ScripsAmerica delivers its products to end users through McKesson Corporation (NYSE:MCK) and has some household names in its client portfolio, including, Cardinal Health (NYSE:CAH), CutisPharma, Inc., MedVet and the United States Veterans Administration.

ScripsAmerica has about 56 million shares outstanding currently, which will grow to approximately 100 million with the acquisition of Marlex. With a current market cap of only $24 million, based upon today’s current share price of 43 cents, there appears to be plenty of headroom for share appreciation as this upstart continues to cement its position in the generic drug industry. Proper due diligence is, as always, encouraged.

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