Tomahawk, WI 9/23/2013 (BasicsMedia) – Retail drug store chains don’t come any bigger than Rite Aid Corporation (NYSE:RAD) in the U.S. Recently the company announced that it had made profits in the latest quarterly reports. This came as a major surprise since it wasn’t expected and many analysts as well as the top executives at RAD had said so. Only one reason has been issued as being behind this quite surprising turn of events. This reason is the sudden upsurge in the sales of generic drugs sold at RAD. These generic drugs aren’t what the company had always stocked; they are relatively new in the market, and have been well received.

 RAD’s Financial Results for 2013 are Impressive

 RAD seems to have done quite well in 2013, at least going by the financial reports it has received every quarter in this fiscal year. The company has been able to declare profits for the last four quarters in a row. This is wonderful news for RAD and its many shareholders as well. It is generally accepted that these companies don’t make a lot of money from selling generic drugs. Retail drug stores make money from these generic drugs due to better margins, and this is what has happened in the case of RAD. This is what has helped RAD to post profits in the last four quarters consecutively.

 Can RAD continue on this path of profitability?

 However, there is real doubt as to whether the company will succeed in maintaining this level of profitability for a much longer time. Generic drugs may have replaced a number of the costlier drugs thus making them attractive to patients due to their cheaper prices. However, in the long run, RAD has to look for other ways of remaining profitable without heavy reliance on generic drugs. There is fear in the industry that at the number of firms supplying generic drugs continues to dwindle, the costs of these drugs will shoot up, thus messing up with the profits which companies such as RAD have enjoyed.

 This good news has not only been enjoyed by RAD. Other companies within this industry have also benefited greatly from improved rates of generic drugs. Some of these companies include CVS Caremark Corp and Walgreen Co. Most of these generic drugs from which RAD and other retail drugs stores have benefited in terms of profits are quite new in the market. As more patents for some of these drugs expire, the ability of firms such as RAD to make profits will be affected. Several are expected to expire from now until the end of the company’s fiscal year, by February 2014.

 However, I expect the company to probably get back to profitability during mid-2014 going forward. It is worth pointing out that this will depend on a number of factors, some of which are totally beyond RAD’s control. The company seems to have prepared itself for the future in that it is carrying out remodeling on its more than 4,600 stores. This swill help it attract more customers, this is very good for business. The Affordable Care Act, which has been put in place by the Obama administration, is also one with the capacity of bringing more business to RAD, America’s 3rd largest retail drug store.

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