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 7,200 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 36 workers, and generates about $107 million annually.

    • The drug and druggists' sundries wholesale industry consists of about 7,200 firms that employ about 260,000 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

                                Jul 2, 2024 - Prices Decrease
                                • Drug and druggist’s sundries wholesalers moderately decreased their prices during the first quarter of 2024, according to the US Bureau of Labor Statistics (BLS). Drug and druggist’s sundries wholesaler industry employment increased slightly during the first quarter of 2024, according to the BLS.
                                • AARP, formerly the American Association of Retired Persons, is among the interest groups advocating for state-level legislation that would allow lower-priced prescription medication to be imported from other countries. "The federal government has cleared the way for states to create their own importation programs, noted Joe Stelling, Associate State Director at AARP. Advocates are now pushing for New York State to pass legislation that would make it legal to import prescription drugs from Canada and other countries. The US Food and Drug Administration (FDA) has authorized Florida to import prescription drugs from Canada, granting preliminary clearance for bulk purchase medicines from wholesalers there. The FDA has long resisted drug importation efforts on grounds that it could not ensure the safety and supply of medicines shipped from abroad. Florida reported that it expects to save approximately $183 million annually once its Section 804 Implementation program (SIP) pathway is approved. SIP is relatively new and is the first drug importation pathway to be independent of the individual patient and the drug manufacturer. A SIP is a “pathway” under Section 804 of the Federal Food, Drug, and Cosmetic (FD&C) Act that allows for the importation of certain prescription drugs from Canada. The state’s Agency for Health Care Administration must submit additional drug-specific information for the FDA’s review and approval, ensure eligible prescription drugs have been tested for authenticity and degradation, and are in compliance with the specifications and standards set forth in Section 804(e)(1) of the FD&C Act, and relabel the eligible prescription drugs to be consistent with the FDA-approved labeling requirements.
                                • The US Federal Trade Commission (FTC) and the US Department of Health and Human Services (HHS) said in early 2024 that they are looking for evidence that competing drug suppliers are playing a role in generic drug shortages by being disincentivized from competing in generic markets. A Request for Information jointly issued by the agencies is intended to help determine how a lack of competition between group purchasing organizations (GPOs) and drug wholesalers is impacting patients, pharmacies, and providers, particularly those that are smaller or rural; or other potential causes for “chronic” generic drug shortages. Advocacy groups have highlighted the substantial negotiating leverage of these groups resulting from consolidation and regulatory exemptions, according to Fierce Healthcare. They’ve also pushed the government to review GPOs' sole-source agreements with members that prevent providers from tapping other sources of supplies, which could contribute to care disruptions and higher prices.
                                • Patients are having difficulty obtaining drugs to treat conditions including anxiety, attention deficit hyperactivity disorder, and addiction, according to the New York Times. Some experts say that a 2022 opioid settlement which imposed new requirements on distributors that provide medications to pharmacies may be a key contributor to lack of access. The $21 billion settlement, which was brokered between the three largest American pharmaceutical distributors and the attorneys general of 46 states, was designed in part to correct practices that had flooded the country with prescription painkillers which intensified the nation’s opioid crisis. Distributors are placing stricter limits on drug supplies to individual pharmacies and heavily scrutinizing their dispensing activity. Oversight is not limited to opioids, however. It applies to some potentially addictive or habit-forming controlled substances like muscle relaxants or medications like Xanax, which is used to treat anxiety and panic disorders.
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