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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

                                Coronavirus Update

                                May 8, 2022 - China Will Continue With “Zero-COVID” Strategy
                                • Wholesalers that depend on products made in China may face shortages. China Vice Premier Sun Chunlan said that the country will continue its “dynamic zero-Covid” strategy “without hesitation or wavering.” Experts say that the strategy favors measures such as mass testing, forced quarantines, and city-wide lockdowns. China has rejected effective mRNA COVID-19 vaccine technology, relying instead on traditional, inactivated vaccines to achieve its 86.6% fully vaccinated rate. Inactivated vaccines are less effective against Omicron and, analysts suspect, China's exclusive use of the old technology is the primary reason why China's borders remain mostly sealed to the outside world. Experts also say that, while President Xi Jinping hoped to minimize the cost of a zero-Covid strategy, this renewed campaign will rapidly and exponentially take a heavy economic toll. It will further suppress exacerbate supply chain disruption, suppress domestic consumption, and encourage the exodus of investors.
                                • Supply chain experts say that China’s strict Covid-control policy could cause renewed supply-chain disruptions in the US as shuttered factories there cause orders to back up. The effects of lockdowns in southern Chinese megacity Shenzhen — home to the nation’s most-important port after Shanghai — will affect the Los Angeles-area sea-cargo hubs, the busiest container gateway in the US, according to Noel Hacegaba, of the Port of Long Beach. Backups building at other ports in China may be indicate what's to come at Shenzhen, according to Alex Charvalias, of maritime-analytics firm MarineTraffic. The number of container vessels waiting to berth in the eastern city of Qingdao climbed to 22 from 9 in one week, he said, and the queue is also growing at the biggest port in Shanghai, he said. This will affect the US in the next month or so because fewer vessels will leave for the West Coast, he added.
                                • Americans may feel less comfortable about going to physician offices as the number of new COVID-19 cases increases, and the number of prescriptions written may decrease as a result. New COVID-19 case rates increased in early May, with the seven-day rolling average increasing to roughly 72,300 on May 7, up from 58,000 on May 1 and 30,000 cases per day on April 8, according to a New York Times COVID-19 case tracker. Experts note that the American population has different vaccination rates, levels of previous exposure to the virus, and degrees of underlying health conditions, so the trajectory of new cases could vary. Analysts note that the data regarding new cases are getting less reliable as the public testing infrastructure continues to wind down and home test results are less likely to be reported to officials.
                                • Firms looking for new options to deal with a pandemic-driven scarcity of storage are signing deals for new space long before ground is broken and expanding searches for sites farther from coastal ports. Areas including Knoxville, TN; the Lehigh Valley in Pennsylvania; and Reno, NV. “The supply-and-demand imbalance is more significant than I have seen,” said Robert Thornburgh, the chief executive of the Society of Industrial and Office Realtors. “There is limited inventory of industrial space. It is almost evaporating before your eyes, if you are even lucky enough to know about it.”
                                • Atlanta, the Dallas-Fort Worth area, the Lehigh Valley in Pennsylvania, and California’s Inland Empire had the most industrial space under construction in the first quarter of 2022. The national vacancy rate fell to 3.1%, according to a study from CBRE Group. Rents rose 3.7% quarter over quarter and 11.8% year over year the study showed.
                                • Executives from pharmaceutical distributors Cardinal Health, AmerisourceBergen, and Henry Schein asked the director of the Federal Emergency Management Agency to develop a plan of action “to maximize the resilience and efficiency of the Covid-19 vaccine distribution system by utilizing the entire US commercial medical supply and pharmaceutical distribution system,” according to Bloomberg News. The immunization operation is the largest and most complex public-health effort in U.S. history and requires the entire medical infrastructure, the companies said. The distributors haven’t participated in vaccine distribution. McKesson Corp. is handling two of the three Covid-19 vaccines now available in the US through a federal contract that predates the pandemic.
                                • Wholesale sales of drugs increased 2.5% in value month over month on an adjusted basis and 15% year over year on an unadjusted basis in February, according to the US Census Bureau.
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