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HDA: Drug chains still Rx distributors’ biggest customers

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ARLINGTON, Va. — Chain drug stores remain the largest customer segment for U.S. pharmaceutical distributors, according to the HDA Research Foundation.

The 88th Edition HDA Factbook (2017‐2018) said chain drug retailers accounted for nearly 30% of all sales to drug distributors last year. Dollar sales to independent pharmacies dipped 1.1%, while sales to hospitals and HMOs edged up 1.3%.

Drug distributors handled an increased percentage of U.S. pharmaceutical sales in 2016, with 95.7% of U.S. pharma sales going to market via drug wholesalers, up about 2% from a year ago.

Of all products distributed by pharmaceutical wholesalers, 98% were prescription drugs and 2% were nonprescription health products, including over‐the‐counter medicines, health and personal care, general merchandise, medical equipment and home health care items, said the foundation, the research arm of the Healthcare Distribution Alliance (HDA).

On average, primary pharmaceutical distributors handled over 5,100 orders daily in 2016, with a raw order fill rate of 95.3% according to the 2017 HDA Factbook.

“The 2017 Factbook highlights the outside forces that are shaping the pharmaceutical distribution industry, from continued consolidation to upcoming Drug Supply Chain Security Act (DSCSA) implementation milestones,” Perry Fri, chief operating officer of the HDA Research Foundation, said in a statement. “It continues to provide important metrics to help industry experts and supply chain executives analyze the pharmaceutical supply chain performance.” Fri also serves as executive vice president of industry relations, membership and education for HDA.

Pharmaceutical sales for the top 20 therapeutic classes rose to 81.1% last year. The diabetes therapy classes garnered the most sales, growing by 17.3% since 2015, followed by oncology products, which saw 16% growth, according to the 2017 HDA Factbook.

In 2016, the total number of SKUs that distributors held in inventory, on average, was approximately 55,000, up 5% from a year earlier. Of that, nearly 31,000 were OTC health products, which including nonprescription drugs, health and personal care items, general merchandise, durable medical equipment and home health care.

The HDA Research Foundation said 71.2% of distributors used automated picking methods last year. Also, pharma distributors are continuing to invest in information technologies, which account for 56% of total capital expenditures, up from 20% in the previous years). That gain may stem from the next phase of DSCSA implementation and enhancements that distributors are making to their web-based ordering systems for customers, according to HDA.

Total annual costs associated with the returns process have climbed since 2015 and now average $4.7 million per company, according to the Factbook.


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