| SIC Codes: | 5122 |
| NAICS Codes: | 424210 |
Companies in this industry serve as wholesale distributors of drugs and other pharmaceutical products. Major companies include AmerisourceBergen, Cardinal Health, Express Scripts, and McKesson (all based in the US), as well as Alliance Boots (Switzerland), Celesio (Germany), and Medipal (Japan).
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 industry is highly concentrated: the top four companies account for more than 40 percent of revenue; the top 50 companies account for nearly 85 percent.
Major products include branded and generic patent drugs, over-the-counter (OTC) medications, personal care products, and surgical and medical supplies and equipment. 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.