Meet Lannett, the 73-year-old generic drugmaker.
The top company on this year’s Fastest Growing Companies list rocketed up the charts from No. 29 last year — and you may not even know its name. It isn’t a sexy Silicon Valley startup or a sharing economy starlet. Quite the opposite: it’s a 73-year-old drugmaker based in Philadelphia.
Lannett Company LCI develops, manufactures, and distributes generic drugs for a wide range of diseases, from glaucoma to migraines to pain management. The company notched nine consecutive quarters of record net sales and a 3-year annual growth rate for earnings per share of 314% — making it the No. 1 fastest growing company.
The drugmaker is one of nine pharmaceutical companies to make Fortune’s list this year, including two in the top 10. Gilead Sciences GILD holds the No. 9 spot, thanks to impressive sales of its high-cost hepatitis C treatments, Harvoni and Sovaldi.
Lannett’s outstanding growth is a credit to a confluence of factors: rising health care spending, an aging population, and growing prices for generic drugs.
According to analyst Elliot Wilbur of Needham & Co., “the generics industry continues to enjoy a period of unprecedented pricing prosperity,” which he wrote in a November note to clients. “Nowhere do we see that more evident than in Lannett’s financials, which continue to benefit from major pricing leverage on key limited competition generics.”
That’s especially true for Lannett’s cardiovascular and migraine offerings, for which prices were up 150% and 124%, respectively, last year.
Such strong pricing pressure has raised eyebrows among regulators, and Lannett and other generic drugmakers have come under investigation by the Securities and Exchange Commission, which is exploring possible violations of the Sherman Act, an anti-monopoly statute that prohibits activities that restrict competition. The company says “it has acted in accordance with all applicable rules and regulations.”
Lannett is one of the smaller players within the generic drug market — many of its competitors are bulking up in an acquisitions race. For comparison, Lannett brought in revenues of $274 million in 2014. Two generics powerhouses, Teva Pharmaceutical Industries and Mylan, earned $20.3 billion and $7.7 billion, respectively, over the same time period. That isn’t even taking into account Teva’s recent purchase of Allergan’s generic drug unit last month for about $40.5 billion.
Lannett has been making its own moves, as well. It acquired privately-held Silarx Pharmaceuticals earlier this year and is interested in other opportunities that could expand its global reach. It also has a number of new generic drug approvals in the pipeline, including 21 Abbreviated New Drug Applications and another 43 drugs in various stages of development — all of which could help keep growth going.
Read Fortune‘s full list of the 100 Fastest Growing Companies.