Full-line distributor sales topped $300 billion in 2012, representing 91% of pharma sales

The just-published 2013-14 Factbook, a compilation of HDMA member data as well as relevant industry statistics, finds that the long-term consolidation of drug wholesaling in the US has continued, with “full line” (offering essentially all types of branded, generic and OTC products) distributors who are HDMA members handling 90.49% of pharma sales, up from 89.75% in 2011. 2012 is notable for being one of the first years in decades when pharma sales overall declined, according to IMS Health’s tracking of gross sales.

Another ongoing trend is the almost-magical ability of full-line wholesalers to extract more value, and to increase operating efficiencies, year after year. In 2012, these wholesalers handled 57,002 SKUs, up from 2011’s average of 54,358, yet increased average turnover from 5.8X to 6.0X. And they did this while operating 6 fewer distribution centers (144 vs. 2011’s 150). Gross profit increased from 2.9% to 3.2% in that time frame.

The Factbook contains operational details often of high interest to vendors serving wholesalers’ infrastructure needs. One particular number to call out: two out of three HDMA members are already tracking lot-level barcodes through their systems for at least some of their products. Lot-level tracking is now the centerpiece of the Drug Quality and Security Act, which will mandate such tracking over the next four years. Data on item-level tracking (the next stage in DQSA) is occurring, but at significantly lower percentages. Pharmaceuticals requiring special handling now constitute 14.5% of wholesaler prescription SKUs, including 8.7% that require cold chain handling.

The Factbook is produced with support from Boehringer Ingelheim Pharmaceuticals; Apotex Corp.; RDC-Rochester Drug Cooperative, Inc.; TEVA Pharmaceuticals USA; EXP Pharmaceuticals Corp.; Ranbaxy Pharmaceuticals Inc.; and, Smith Drug Company, Div. J M Smith Corp. It is available for purchase from the Center for Healthcare Supply Chain Research, the research arm of HDMA. At $95, it’s a bargain!