A merger creating a new kid on the block, NEXT GENeSYS Corp., hopes to capitalize on an $8 billion-plus healthcare and prescription drug market.
The merger will bring together four companies, specializing in RFID, online pharmaceuticals, and other wireless technologies. Announced in August, the merger isn’t complete yet and there has been no indication when it will be.
In addition to growing the combined companies’ existing wholesale prescription drug and e-lodging businesses, NEXT GENeSYS Corp. will initially target the 40 million minority Americans without any presently available healthcare focus through a directed campaign, offering prescription support via clinics, physician networks, and wellness checks. This merger, according to one of the participating companies, creates an organization with the technology, capitalization and relationships with medical and government agencies necessary to capture market share.
The companies involved in the new marriage include: CareDecision Corp., a Wi-Fi PDA technology provider to the lodging and satellite media industries, and the developer of e-health and EMR applications; and Kelly Companies’ KCWG Pharmaceutical Solutions, a $100 million-plus wholesale prescription drug distributor; CareGeneration, Inc., a provider of direct mail order distribution of retail prescription medicine for uninsured and under-insured Americans; and FutureCom Global, Inc., a distributor of wireless products for the medical and hospitality sectors, and other applications, such as tablet PCs, PDAs, prepaid cellular, and security systems.
According to CareDecision, the merger is expected to generate $175 million in revenue during the first 12 months.
“This merger is the final element in a series of strategic activities initiated over two years ago,” said Ronald Kelly, the incoming chairman and chief executive officer of the new company. “In anticipation of such a conclusion we have conducted meetings with government officials, major pharmaceutical companies, and healthcare organizations encompassing more than 25,000 physicians. We have also developed significant infrastructure related to our mail-order pharmacy through wireless technologies,” he added. “We have basic agreements with multiple minority and other client organizations, providing confidence in our ability to achieve a significant presence in this market. Our ability to couple wireless connectivity solutions for doctors with a state-of-the-art e-pharmacy for direct drug distribution has the capability to revolutionize the way targeted Americans receive medications. We will speed delivery, minimize bureaucracy, and fulfill prescription drugs through our Illinois-based automated e-pharmacy, as we work to streamline the process and carve out a significant market share.”
These CareDecision-provided wireless handheld devices supplied to participating clinics and doctors, allow them to directly prescribe prescription drugs through the company’s direct mail order fulfillment center.
In a conference call in early September with CareDecision shareholders to discuss the new merger, Mr. Kelly said: “From a strategic perspective, Kelly companies were planned to be a rapid growing diversified group of companies, particularly our KCWG pharmaceutical solution subsidiary, which recently entered into a prescription drug distribution business. While we have grown rapidly, we realized we needed increased access to growth capital and additional diversification to successfully execute our strategy. We found CareDecision to be an ideal candidate with which to merge allowing us to accelerate our growth (and) capture market share in the prescription drug delivery industry.”
He went on to say that as a result of this merger, “the current owners of the various Kelly companies will control the majority of the combined company. We believe this is justified due to the revenue position, which the various Kelly companies contribute, to combined organization. Current CareDecision shareholders will continue to hold stock in the NEXT GENeSYS Corp. in the same way they do now.”
Mr. Kelly also said that one of its subsidiaries, CareGeneration, “was created because we have always envisioned transitioning from a wholesale pharmaceutical… into a retail mail order subscription fulfillment, (which is) the key to retail prescription delivery.”
He said “there are two niches in (the) retail prescription delivery market that present huge opportunity and equally large incentives: the medically insured and the un-insured.”
Up to now, “many companies have spent their resources trying to out discount the Canadians…We feel that entering this particular niche places us in competition with companies whose business plans are based on high prescription buying and low margin.”
Instead, he added, the company has chosen to focus on a market currently void of competition: electronically delivered prescriptions from any location to a single fulfillment distributor. “This is why we are excited about the merger with CareDecision,” he added. “They have a unique and established technology for the electronic delivery of prescriptions…a technology which will allow 25,000 physicians that we have identified (to) almost immediately begin prescribing drugs directly to our Illinois based mail order pharmacy location. This software technology coupled with our array of wireless products and technologies will allow us to hit the ground running with solutions that do not presently exist…and allow us to create a unique approach in providing health care for the disadvantaged…”
There are major advantages in targeting pharmacy sales for two reasons, he said: The current size of the aging population and the fact that this population can only grow because people are living longer. “Pharmacy sales in the United States are expected to grow 75% over the next five years, and 250% in the next 10 years. Projected retail pharmaceutical sales will increase $446 billion in the next decade,” he added.
In the meantime, next up for the proposed new company is lots of paperwork and SEC approval followed by a vote of CareDecision shareholders (the Kelly company affiliates are privately-held). There was no indication in the conference call when that vote would transpire.
“It is our plan to consummate the merger as soon as possible after the shareholder meeting provided the CareDecision shareholders vote in favor of the merger,” said Keith Berman, CareDecision’s CFO and proposed nominee for the NEXT GENeSYS board.
