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Comment by Animats | Hacker News Reader

You can't create any monopoly for generic drugs, by definition.

Sure you can. If you're the dominant player, you can pay or buy out new entrants. Happens all the time in generic drugs.[1]

[1] https://www.nytimes.com/2015/09/21/business/a-huge-overnight...

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Sounds like the perfect start-up plan: just open a 50 bucks vitamin C store, and the dominant player will buy you out for $$$. Rinse and repeat for infinite money.

There's usually a x-year non-compete agreement when this happens... I know a guy that does exactly what you describe, starting a new garbage pickup service every 3 years, when the agreement elapses. He then works for ~3-4 years to build it back up. Sold twice already, and on his third.

Laundromat -> liquor store -> hotel -> retire rich is a common path here. Rinse and repeat a couple times at each point, and because you sell each time to the guy trying to do the same thing behind you instead of to a big competitor, there's never non-compete agreements. Bonus in that the first two are recession proof and cash heavy businesses (if you wish to avail yourself of the possibilities that suggests).

Anecdotally, work from home put a crimp in many laundromat businesses. And liquor stores only work in states that do not let the big stores sell liquor. These days, any half decent hotel brand will require a couple million cash (for the down payment), and more for a new build. At least in the western US.

What if there were no agreement? seems like he is the driving successful factor in these businesses, but I'm guessing he'd rather sell his company than get hired by them.

there are example employees I've seen that have this kind of leverage too

For that to work you first have to scale up production and distribution significantly enough to be on their radar. That requires some investment and then the question is whether is an investment, with higher probability of returns.

You missed out the difficult part of distribution. This isn't exactly easy or cheap. Ask Walmart or any other retailer. Even the direct-to-consumer ones have to spend a lot on distribution.

It happens with a lot of stuff. Chocolate candy bars in gas station kiosks are always the same 5 brands. Anybody _could_ make chocolate bars, but the big players make deals to control retail, so you don't get a choice of other candy bars, in the situation you'd typically buy one. If I control the conditions under which you buy something, I can control what you are going to buy.

Because small chocolate manufacturers don’t have the scale to supply massive distribution companies. An little retail gas stations don’t have any incentive to go make deals with boutique manufacturers. That would be madness for a gas station owner to go to individual manufacturers for specific items. And the manufacturers would hate it. Dealing with hundreds of thousands of small orders would be a logistical pain. That’s the reason their is a distributor layer for those sorts of products. If customers at gas stations started demanding Valrhona chocolate, they’d ask their distributors to start getting it. I’d buy it, but most people at gas stations aren’t going to care about a $10 chocolate bar.

The monopoly is in the illusion of access to choice on shelves. The pharmacy markets is dominated in the US by 2 players - Walgreens and CVS. Heck they even have their own generic meds competing at the same prices

There has to be more to it. If not, a simple refusal to sell would allow you to move the market. If the sellout bundle is profitable enough, why doesn’t everyone start a generic drug company to be sold and retire rich?

Then the competition moves money from profit markets to undercut you... making it impossible to compete... your competition subsedize the costs and effectively sell for 20% below cost until you agree to sell or close shop

How can they sell vitamin c at 10x the bulk price and at the same time undercut you?

small businesses generally can't launch everywhere. a big drug manufacturer can switch to selling at cost in a region for a few months to kill the profit opportunity of a young competitor. also, once they've done that a few times, it prevents others from trying

By “all the time” you mean “so rarely it makes the NYTimes”?

I work in the industry. It doesn’t happen all the time.

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