Drug Wholesalers

Drug Wholesalers

Brief Excerpt from Industry Overview Chapter:

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).

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.