Mark Cuban is in talks with hospitals to identify generic drugs that often run in short supply, which he aims to make in a robotics-driven manufacturing plant currently in development in Dallas.
Mr. Cuban appeared on the Motley Fool podcast Nov. 23 with host Chris Hill to talk about disrupting healthcare, which Cost Plus Drugs has managed to do since its establishment in May 2020. The company's portfolio now has nearly 1,000 generics, which are sold with a 15 percent markup for price, a $3 pharmacy fee to pay the pharmacists it works with and a $5 fee for shipping.
Mr. Cuban shared his plans for the $11 million Dallas manufacturing plant on the Motley Fool podcast with Mr. Hill. He said robotics in the plant will allow Mark Cuban Cost Plus Drugs to be nimble in manufacturing simple drugs "that are supposed to be regularly available" and turn around numerous injectables in a day to boost hospitals' supply. For instance, once the company has met hospitals' demand for sterile water, the robots can switch over to make Pitocin, before switching four hours later to make another drug.
"In terms of looking forward two or three years, if that market is as big as we think it is, and we're able to end shortages for drugs that hospitals need, particularly pediatric drugs, not only are we going to feel really good and make a little bit of money, but we'll be able to expand our capacity hopefully by 10 times and buy some time so that the robotics get better, cheap or faster," Mr. Cuban told Mr. Hill.
The 22,000 square-foot sterile fill-finish facility — designed "to respond rapidly to drug shortages and price hikes" — is scheduled to open in Dallas in the fourth quarter of 2022, according to the company website.
Mr. Cuban also said his Cost Plus Drugs has received little to no reaction from pharmacy's legacy players, which is just fine. Mr. Hill asked Mr. Cuban what reaction he has seen from the CVS and Walgreens of the world — the legacy pharmacy players.
"They think we're just tiny and they ignore us, which is great. Exactly what we want," Mr. Cuban said. "They don't pay a ton of attention to us yet. But it's because they're vertically integrated that we have this opportunity because that enables them to distort prices, to play left pocket, right pocket. 'If I don't make it at the pharmacy, I'll make it at the PBM. If I don't make it at the PBM, I'll make it through our insurance company.'
"To quote Jeff Bezos, their margin is our opportunity," Mr. Cuban said. "I don't think they're paying attention to us yet. They know we exist. We've heard them say things to politicians and heard them say things to others. But it's going to be very difficult — as these huge public companies — to adapt as quickly as we can."