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2010 MDM Market Leaders: Top 10 Pharmaceutical Wholesalers

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Pembroke Consulting's Adam Fein, who writes the popular Drug Channels blog, provided the following list to MDM as a representation of the largest pharmaceutical wholesalers. Fein publishes an annual report on the pharmaceutical wholesale industry, which will be available June 15 here. The following list provides revenues attributable to drug distribution.


  1. McKesson Corp.: $93.7 billion
  2. Cardinal Health Inc.: $89.6 billion
  3. AmerisourceBergen Corp.: $73.8 billion

Other Large Wholesalers in This Sector:

  • Kinray
  • Morris & Dickson
  • FFF Enterprises
  • H.D. Smith
  • Smith Drug
  • NC Mutual Wholesale Drug
  • Value Drug Company
  • Anda Distribution
  • Harvard Drug Group

Below, Fein presents six significant trends that will affect the drug wholesaling industry during the next five years, adapted from the 2010-11 Economic Report on Pharmaceutical Wholesalers, available at

Consolidation of the Pharmacy Industry – The ongoing consolidation of the pharmacy industry will continue to pressure wholesaler profit margins from drug distribution. Larger chains and mail-order pharmacies, which have much lower profit margins on brand-name drugs for wholesalers, continue to grow faster than other segments of the market. Consolidation also hurts wholesalers because large, self-warehousing customers bypass wholesalers to purchase more-profitable generic drugs.

Slowdown in U.S. Pharmaceutical Spending – Revenues of drug wholesalers are linked to growth in prescription drug spending rather than overall economic cycles. As such, the projected slowdown in U.S. drug spending will keep wholesalers' revenue growth rates below historical levels. Although the slowdown in U.S. prescription drug spending will reduce drug wholesalers' revenue growth, the additional profits from generic drugs will cushion the profit impact on wholesalers.

Pressure on Generic Profitability – Pressure on pharmacy profits from generic drugs is rising as payers learn more about channel economics, implement new payment benchmarks and use novel cost-plus contracting strategies. The retail generic prescription price war also threatens the overall profitability of generic prescriptions. Drug wholesalers will face margin pressure on generic drug sales because pharmacies will be more price sensitive and require bigger discounts to remain competitive.

Manufacturer Consolidation and Value of Fee-For-Service Agreements – Recent mergers of brand-name pharmaceutical manufacturers could reduce wholesaler payments under fee-for-service agreements. The consolidation of manufacturers is generally negative for wholesalers because a larger drug maker would have additional leverage in a fee-for-service negotiation.

Supply Chain Regulation and Compliance Costs – Wholesalers must comply with a range of state and Federal regulations regarding the supply chain. There is substantial uncertainty regarding both future regulations as well as the potential impact on wholesaler business practices and operating costs.

The Battle for Control of Specialty Drug Spending – The complex channels for specialty drugs make it hard for payers to get full visibility on specialty drug spending or to manage drug utilization effectively. Some pharmacy benefit managers (PBMs) are developing services that shift responsibility for specialty drug management from the medical benefit to the pharmacy benefit. If successful, these programs will reduce the importance of specialty distribution channels by reducing the influence of physicians in the purchase decision.

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