PANTHERx Specialty Pharmacy provides medicine and care for patients afflicted with rare diseases in all 50 states. Patients with HIV/AIDS, multiple sclerosis, or hypophosphatasia cannot go to a regular pharmacy because they don't carry orphan drugs, or medicines made for small populations. With the company's 13,380 percent three-year growth rate, CEO and co-founder Gordon Vanscoy was able to grow PANTHERx's revenue to $42.4 million last year while battling it out with big-box pharmacies like Walgreens and CVS. Here's how Vanscoy, also associate dean for business innovation at the University of Pittsburgh School of Pharmacy, ?zeroed in on a niche his company could count on.
--As told to Will Yakowicz
There are 7,000 rare diseases out there, and we only have treatments for 5 percent of them. In 2012, my co-founders and I learned that 49 orphan drugs--or roughly 10 percent of all orphan drugs--were going to be approved by the Food and Drug Administration shortly. CVS and Walgreens targets mass market drugs, but if we could manage small communities of people who need these rare drugs that come with very specific directions on storage and usage, we thought we could help a lot of people and our business could survive. So we decided our business would target this niche: rare disease and orphan drugs.
We started building the business in Pittsburgh the old fashioned way--we hired a sales force and started calling doctors and stocked a mix of specialty drugs. Pittsburgh is a hub for pharmacy students because of the different pharmacology schools. With all this young talent, we began to grow. By 2013, we grew to $2 million in revenue.
In 2014, we won our first big contract: an exclusive with South Carolina to manage its HIV/AIDS population. We beat out CVS and Walgreens. By the end of the year, our revenue grew to $5 million.
In 2015, we got our first exclusive contract with a pharmaceutical company that makes an enzyme replacement therapy for hypophosphatasia, which is a genetic bone disease where babies are born without this specific enzyme. The ailment causes a lack of calcium and phosphate mineralization in their bones, which could result in bone deformity and even death. Less than 500 people are afflicted with this disease.
We were selected to distribute the medication and manage the patients. This medication we take very seriously, it literally saves lives. The drug itself needs to be refrigerated at a specific temperature, so we send a smart refrigerator along with the prescription and the medication has an RFID tag on it so we can make sure it is stored correctly at all times. We also send out a nurse to train parents in how to inject the medication. By the end of 2015, we reached $42.4 million in revenue. We are projected to grow our revenue by 637,000 percent and reach $200 million by the end of this year, as we continue to work with pharmaceutical companies to forge more exclusive or restricted relationships.
The medications we carry and the patients we manage are unique. This is not like picking up your blood pressure medication. We work hand-in-hand with the manufacturers and patients to make sure the drugs are being administered correctly. We send nurses to train patients, track results, and make sure the therapies are being used correctly. The big pharmacies do not have this type of soft touch, they are in an efficiency model.
Another hurdle for the patients is the price. Orphan drugs are expensive, some therapies can cost hundreds of thousands of dollars a year. We started a separate company, Summit Specialty Solutions, to help manage these co-pays for patients who cannot afford it. We also work with drug manufacturers to lower the price of some drugs or give drugs to people in need for free. If you're talking about a drug that affects only 500 to 1,000 people, that means regular pharmacies are not going to carry these medicines.