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When you deliver something people need for less money than if they schlepped to the store, you win. See: Amazon.
That’s what Mark Cuban of Shark Tank fame is doing with his new startup. Cost Plus Drugs, which just launched two weeks ago, sells a wide variety of generic medications for less than anyone else.
Let’s see how much cheaper Cost Plus Drugs is for some common meds:
Albuterol (Proair) inhaler for asthma: $30 on Cost Plus vs. $86 on GoodRx (for pharmacies near me)
Prednisone (Deltasone) for asthma: about the same on Cost Plus vs. GoodRx
Norgestimate / Ethinyl Estradiol (Ortho Tri-Cyclen (28)) for birth control: $7 on Cost Plus vs. $13 on GoodRx
Atorvastatin (Lipitor) for high cholesterol: $4 on Cost Plus vs. $8 on GoodRx
Imatinib (Gleevec) for leukemia: $17 on Cost Plus vs $120 on GoodRx. Wow.
You don’t need me to tell you that medical care in the United States is ridiculous. Massive bills and no transparency make even me, an unusually fortunate person, hesitant to go to the doctor.
Cost Plus Drugs changes that. You know exactly what you’re paying, every time.
Even better, you know where that money is going. The website clearly breaks down the costs for manufacturing, shipping and labor.
Cost Plus also builds in a 15% profit margin. This may seem greedy, but it’s a lot less than competitors, and they have to make some margin to stay in business and expand.
You can’t disrupt the medical system if you go bankrupt!
Cost Plus has another big advantage: strong word of mouth. From Mark Cuban:
“When people save a lot of money on their medications, they often will tell others they know that have the same challenges. That word of mouth impacts our growth the most.”
This is critical for a consumer company. Consumer companies have to acquire tons of customers that may not spend very much each.
So, the cost of customer acquisition can make or break a company. Cost Plus has a great strategy here to grow organically at zero cost.
Cost Plus plans to begin manufacturing its own drugs and building distribution centers across the country. They’re going to control the whole stack, which is the best way to control prices.
As a startup investor, I’m itching to get in. A huge problem, a brilliant entrepeneur, an innovative solution….what’s not to like?
And as a consumer, you can bet I’ll be getting any meds I need from Cost Plus from now on!
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