Drug Wholesalers
Description
Companies in this industry serve as wholesale distributors of prescription drugs, over-the-counter medicines, and related products. Major companies include Cardinal Health, Cencora, and McKesson (all based in the US), as well as Jointown Pharmaceutical (China), Medipal (Japan) and PHOENIX (Germany).
Aging populations worldwide drive demand for wholesale drug distribution. In addition, countries such as Brazil, Canada, Mexico, and the US will likely lead to expansion of the industry, according to Atradius.
The US drug wholesalers industry includes about 10,300 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $930 billion. The industry includes manufacturers' distribution units.
COMPETITIVE LANDSCAPE
Demand for pharmaceutical distribution is driven by the need to treat illness and disease. The profitability of individual companies is determined by the efficient distribution of a wide variety of drugs and medications. Large companies compete intensely on price, size of generic drug portfolio, product volume and variety, and the quality of value-added support services such as supply chain management. Small companies can compete by focusing on rural areas, independent community pharmacies, or the distribution of drugs that have special handling requirements. The industry is highly concentrated: the 50 largest firms generate about 90% of revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products include specialty pharmaceuticals, which account for 30% of the industry revenue, followed by vaccines at 10%. Other products include diagnostic reagents and in-vivo and in-vitro products (10%); patent medicines (10%); and cosmetics, beauty supplies, perfumes, and colognes (10%). Distributors generally act as intermediaries in the ordering and delivery of pharmaceuticals and related products obtained from manufacturers. Because the drug manufacturing industry is highly concentrated, some distributors may purchase inventory from a fairly small number of suppliers.
Products are ordered from manufacturers in bulk, processed at distribution centers, and delivered to customers though through owned, leased, or contracted vehicle fleets. Large companies typically have dozens of distribution facilities that are strategically located to efficiently serve most if not all US states. Distributors may arrange for products to be shipped cross-dock (sent from the manufacturer to the distributor and then to the customer's warehouse) or drop-shipped (sent directly from the manufacturer to the customer). Oncology medicines and other complex drugs may require special handling. Distributors typically bear full contractual responsibility and product risk for deliveries, whether cross-docked or drop-shipped.
In addition to distribution and logistics services for drug retailers and health care providers, some companies also provide services to pharmaceutical manufacturers, including promotion and marketing, product data reporting, logistics, and packaging. Companies may also have complementary wholesale medical and surgical equipment supply businesses.
Aging populations worldwide drive demand for wholesale drug distribution. In addition, countries such as Brazil, Canada, Mexico, and the US will likely lead to expansion of the industry, according to Atradius.
The US drug wholesalers industry includes about 10,300 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $930 billion. The industry includes manufacturers' distribution units.
COMPETITIVE LANDSCAPE
Demand for pharmaceutical distribution is driven by the need to treat illness and disease. The profitability of individual companies is determined by the efficient distribution of a wide variety of drugs and medications. Large companies compete intensely on price, size of generic drug portfolio, product volume and variety, and the quality of value-added support services such as supply chain management. Small companies can compete by focusing on rural areas, independent community pharmacies, or the distribution of drugs that have special handling requirements. The industry is highly concentrated: the 50 largest firms generate about 90% of revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products include specialty pharmaceuticals, which account for 30% of the industry revenue, followed by vaccines at 10%. Other products include diagnostic reagents and in-vivo and in-vitro products (10%); patent medicines (10%); and cosmetics, beauty supplies, perfumes, and colognes (10%). Distributors generally act as intermediaries in the ordering and delivery of pharmaceuticals and related products obtained from manufacturers. Because the drug manufacturing industry is highly concentrated, some distributors may purchase inventory from a fairly small number of suppliers.
Products are ordered from manufacturers in bulk, processed at distribution centers, and delivered to customers though through owned, leased, or contracted vehicle fleets. Large companies typically have dozens of distribution facilities that are strategically located to efficiently serve most if not all US states. Distributors may arrange for products to be shipped cross-dock (sent from the manufacturer to the distributor and then to the customer's warehouse) or drop-shipped (sent directly from the manufacturer to the customer). Oncology medicines and other complex drugs may require special handling. Distributors typically bear full contractual responsibility and product risk for deliveries, whether cross-docked or drop-shipped.
In addition to distribution and logistics services for drug retailers and health care providers, some companies also provide services to pharmaceutical manufacturers, including promotion and marketing, product data reporting, logistics, and packaging. Companies may also have complementary wholesale medical and surgical equipment supply businesses.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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