Drug and Druggists' Sundries Wholesalers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 7,000 drug and druggists’ sundries wholesalers in the US distribute biological and medical products; botanical drugs and herbs; pharmaceutical products; and related goods. Prescription drugs account for over 80% of industry sales. Other product categories include cosmetics and beauty supplies; vitamins and nutritional supplements; non-prescription drugs; and personal care items.

Regulated Environment

The distribution, compounding, purchase, and storage of pharmaceuticals is highly regulated by the Drug Enforcement Administration (DEA), FDA, and US Department of Health and Human Services (HHS).

Reimbursement Rates and Coverage

The drug wholesale industry is affected by changes to medical reimbursement rates, which continue to fall as the healthcare industry looks for ways to cut costs.

Industry size & Structure

The average drug wholesaler operates out of a single location, employs 32-33 workers, and generates about $109 million annually.

    • The drug and druggists' sundries wholesale industry consists of about 7,000 firms that employ about 231,000 workers and generate $770 billion annually.
    • The industry is concentrated; the top 50 companies account for 86% of industry revenue.
    • Large companies include McKesson, Amerisource Bergen, Cardinal Health, and JM Smith. Large firms may have international or pharmacy retail operations.
                                Industry Forecast
                                Drug and Druggists' Sundries Wholesalers Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Dec 1, 2022 - Persistent Drug Shortages Plague Healthcare Industry
                                • Drug shortages are being reported across the US health system, according to the National Academies of Sciences, Engineering, and Medicine. There are currently shortages of amoxicillin and Tamiflu in the midst of a surge in respiratory infections. Young patients with asthma who contract the respiratory syncytial virus (RSV) might need albuterol to ameliorate breathing problems, but that medication has been in short supply for months. There is an ongoing shortage of Adderall. Shortages of saline, morphine, and cancer drugs have occurred in recent years.
                                • The reasons for drug shortages are generally consistent no matter the drug, according to a report from the Food and Drug Administration. The cause is either a shortage of raw materials or a problem at the plant where the drug is manufactured. Shortages of medicines that a patient can pick up at the pharmacy often draw the most headlines, but most of the medications that end up in short supply are generic, injectable drugs that are used in hospitals. Generic injectable drugs often have only one or two suppliers. If there is a problem at the factory of one company, there is not an easy way to scale up production to make up for a shortfall. Generics are usually cheap, which means that the companies which manufacture them do not have a strong economic incentive to produce any excess supply.
                                • A federal judge ruled in favor of three major US drug distributors in a lawsuit accusing them of causing a health crisis by distributing 81 million pills over eight years in one West Virginia county ravaged by opioid addiction. The plaintiffs had argued that AmerisourceBergen, Cardinal Health, and McKesson should be held responsible for sending a "tsunami" of prescription pain pills into the community and that the defendants' conduct was unreasonable, reckless, and disregarded the public's health and safety in an area ravaged by opioid addiction. The companies blamed an increase in prescriptions written by doctors along with poor communication and pill quotas set by federal agents. "Plaintiffs failed to show that the volume of prescription opioids distributed in Cabell/Huntington was because of unreasonable conduct on the part of defendants," US District Judge David Faber wrote.
                                • The US Food and Drug Administration (FDA) wants expanded authority to detect and address supply chain shortages well before they become problems, citing the COVID-19 pandemic’s persistent effects on availability of many medical products. Experts say that the FDA is seeking additional power outside of pandemics and other public health emergencies, for example, when product recalls and natural disasters cause shortages that put patients at risk. The FDA called for new ways to “assure a more resilient domestic supply chain and help reduce dependence on foreign production.” One proposal targets shortages of critical drugs due to “unnecessarily short expiration dates.” The FDA wants drugmakers to study the maximum shelf life of drugs that are life-supporting, life-sustaining, or that prevent or treat debilitating diseases and conditions. The law would include a financial penalty for noncompliance.
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