Companies in this industry serve as wholesale distributors of prescription drugs, over-the-counter medicines, and related products. Major companies include AmerisourceBergen, Cardinal Health, and McKesson (all based in the US), as well as Jointown Pharmaceutical (China), Medipal (Japan) and PHOENIX (Germany).
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 US industry is highly concentrated: the top four companies account for about 45% of revenue; the top 50 companies account for about 85%.
Products, Operations & Technology
Major products include branded and generic prescription drugs, which account for about 80% of industry revenue. Other products include over-the-counter (OTC) medications, personal care products, vitamins, and veterinary medicines. 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.