Four out of five drugs sold in the United States pass through the hands of drug wholesalers AmerisourceBergen, Cardinal Health, Pfizer, and McKesson. Those four and some other companies essentially control the market.
According to Fladger Associates, pharmaceutical companies contribute two-thirds of the FDA’s annual budget and deploy an army of lobbyists to spread their message on Capitol Hill. But some are pushing back against their power.
McKesson is the biggest drug wholesaler, distributing drugs and healthcare supplies to hospitals, pharmacies, and large retailers like Walmart. It also provides automation systems and software for healthcare providers. The company’s products improve the quality of patient care, eliminate errors, lower costs, synthesize information for doctors, and help nurses work more efficiently. McKesson has about 10,000 employees in the United States and Canada.
The company has been in business since 1929 and is based in San Francisco. It has acquired many other companies, including Automated Healthcare and General Medical. It operates as a holding company for its subsidiaries and divisions. Its most profitable division is Pharmaceutical Solutions, which sells automated packaging systems and robotic dispensing machines to hospitals, pharmaceutical manufacturers, and other wholesalers. In addition, the division offers consulting and consulting services for pharmacies and pharmaceutical companies.
Its most recent acquisition was the assets of PACMED, which manufactures high-speed unit dose packagers for pharmacies and other clients. McKesson is also expanding its supply chain management technologies. It has developed an internet-based system for tracking drugs called Supply Management Online. This helps hospitals, pharmacies, and other customers get the exact medicine they need for each patient and allows them to keep track of inventory.
Some observers of the drug-wholesaling industry complain that the Big Three have grown too quickly and now control too much of the market. They say that when a small wholesaler tries to deal directly with a major drugmaker, it is often steered toward McKesson, Cardinal, or Amerisource. And the larger drugmakers want to deal with only the Big Three so they can avoid paying distribution fees to smaller wholesalers.
McKesson has been a leader in the development of advanced tracking systems for pharmaceuticals, including 2D barcodes and radio-frequency identification (RFID). The company is also working to develop an electronic pedigree system to allow customers to verify the authenticity of their shipments of pharmaceuticals.
Executive Vice President Marc Owen has been with McKesson since 2001 and is responsible for corporate strategy, mergers and acquisitions, and business development. Prior to joining McKesson, he was a senior partner with McKinsey & Company for over a decade, advising pharmaceutical manufacturers, distributors, and technology companies. He has also served as a board member for several private companies.
The pharmaceutical industry is booming, thanks to the development of new medications and an aging population. The global market was worth almost US$1.4 trillion in 2021, up from a record high of $1.1 trillion in 2018. Despite the recent COVID-19 pandemic, it is expected to grow further. This has fueled a huge increase in mergers and acquisitions and created an increasingly competitive environment for drug companies. Companies need to focus on improving their supply chain efficiency in this environment. This will help them save money and increase their bottom line.
One of the largest drug wholesalers in the world is AmerisourceBergen, which provides sourcing and distribution services for medical professionals and pharmaceutical manufacturers. It has facilities all over the United States and is an integral part of the country’s healthcare system. It distributes a wide range of generic and brand-name drugs, over-the-counter healthcare products, home healthcare supplies, and equipment to healthcare providers. It also provides services such as pharmacovigilance, clinical trial logistics, and other support for the healthcare industry.
AmerisourceBergen’s history dates back to 1871 when Lucien Napoleon Brunswig apprenticed as a U.S. druggist in New York City. In 1882, he joined the Wheelock-Finlay wholesale drug company and became a partner. Later, he founded his own company, the Bergen Brunswig drug company. In 2001, the two firms merged and changed their names to AmerisourceBergen. Today, the company has over 50 distribution centers across the country and offers a variety of services for pharmaceutical manufacturers and healthcare providers.
In addition to providing a comprehensive set of services for pharmaceutical and biotech manufacturers, AmerisourceBergen has expanded its specialty services to include orphan and rare diseases and cell-and-gene therapies. These efforts help improve patient access to innovative therapies. In addition to these services, AmerisourceBergen has a number of strategic investments and acquisitions that have helped the company expand its reach.
The Big Three dominate the wholesale drug market, but they’re facing a growing backlash from smaller distributors and healthcare providers. These complaints center around pricing tactics, such as spread pricing. They also include accusations of shady marketing practices. Large pharmaceutical companies have sometimes been forced to pay multibillion-dollar settlements for their misleading advertising and sales practices. In a 2013 study, Public Citizen highlighted some of these settlements.
Known as the Big Three, they control about 90% of the wholesale drug industry. This translates to a quarter-trillion dollars in sales. That’s enough to make lawmakers and regulators nervous and smaller rivals who say they’ve had enough.
Founded in 1971 by Robert Walter, Cardinal Health was originally a food distributor before branching out into pharmaceutical distribution in 1979 when it bought the Bailey Drug Company in Zanesville, Ohio. Over the next decade, it acquired a string of U.S. drug distributors and grew quickly.
The company’s business model is based on supplying drugs to pharmacists, hospitals, and other end-users. It also sells its own private-label medications to some hospitals and other institutions. Cardinal Health’s main reportable segments are Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceuticals, specialty pharmaceuticals, over-the-counter healthcare, and consumer products. The Medical segment supplies medical, surgical, and laboratory products as well as pharmacy management services.
Despite this massive size, the Company has maintained healthy margins by investing in profitable segments. Its acquisition of Pyxis’ groundbreaking dispensers, Medicine Shoppe retail pharmacies, and Healthtouch information systems, for example, helped to boost profits. It also sought out new profit centers when the growth of the wholesale drug market slowed.
One of the reasons that the Big Three have so much clout is that they can force customers to buy their products in bulk, which allows them to offer better discounts. This gives them an advantage over small independent wholesalers that may not be able to afford their prices.
As a result, the Big Three have been criticized for anticompetitive behavior. According to antitrust law, they have been accused of forming a monopoly or oligopoly. Although this isn’t necessarily illegal, it could lead to higher prices for consumers.
Despite the controversy, the Big Three have managed to keep their sales strong. They have also increased their market share through acquisitions and partnerships with major pharmaceutical companies. During the past two-and-a-half years, these pharma behemoths have invested in technologies that enable real-time visibility, improved logistics management, increased automation, and data analytics through the use of machine learning and artificial intelligence.
The US pharmaceutical giant Pfizer is one of the most well-known companies in the world. It is dedicated to research-based drug development and produces drugs for humans and animals. It has a rich history that spans over 150 years. It was founded in 1849 by two recent German immigrants to the United States, Charles Pfizer and Charles Erhart. The company was initially a fine chemicals business that incorporated the expertise of both men – Pfizer’s skills as a chemist and Erhart’s experience in preparing sweetened candies. Their first product, a palatable anti-parasitic drug, melded their backgrounds and set the tone for Pfizer’s research, manufacturing, and marketing approach.
During the early 1900s, Pfizer began to expand its market share through a series of acquisitions. By the end of the decade, the company was among the most valuable in the world. It was also a leader in the use of antibiotics, such as penicillin and erythromycin. It became the first company to mass-produce these drugs following the discovery of their efficacy by Alexander Fleming.
After a period of focusing on R&D, Pfizer went on an acquisition spree at the turn of the century. In 2000, the company bought Warner-Lambert and merged with Pharmacia in 2003. In 2009, it acquired Wyeth. The company sought to acquire generic drugmakers with promising pipelines through these moves.
As healthcare costs continued to climb, Pfizer sought new revenue sources. The company shifted its focus to developing and selling products that would lower healthcare costs by reducing the need for prescriptions. It also boosted its presence in the consumer health sector.
By 2022, Pfizer had the highest revenue of any pharma giant in the world, with $67 billion in sales. The top product was the COVID-19 vaccine Comirnaty, which generated $37.8 billion in alliance revenues and direct sales.
Like other big pharma companies, Pfizer uses its profits to buy political influence on Capitol Hill. It contributes about two-thirds of the Food and Drug Administration’s annual budget and employs an army of 1,378 paid lobbyists – more than any other industry. The company also pays for a significant percentage of the FDA’s regulatory expenses through user fees for its new drugs.