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HDA: Pharmacy chains still drug distributors’ top customer

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ARLINGTON, Va. — Chain drug stores remain the largest customer base for pharmaceutical distributors, according to the Healthcare Distribution Alliance (HDA).

Drug chains accounted for 42.5%, or $152 billion, of sales by drug distributors, the HDA Research Foundation (formerly The Center for Supply Chain Research) said in the 87th edition of its HDA Factbook: The Facts, Figures and Trends in Healthcare (2016-2017), released on Tuesday.

Of total U.S. pharmaceutical sales, almost 94% — approximately $407 billion — were channeled through HDA-member drug distributors last year. The HDA Research Foundation noted that this percentage reflects a trend of rising sales for distributors over the past five years and a 16% gain since the previous edition of the HDA Factbook.

That increase stems in large part from the continuing growth of specialty drugs, including hepatitis C treatments, and from distributors capturing a greater share of chain drug store sales, the foundation said.

Prescription drugs represent 98% of pharmaceutical distributors’ sales volume. Sales of both branded and generic drugs edged up last year and accounted for 67% and 15.1% of distributor sales, respectively.

Looking more closely at the supply chain, the HDA Factbook said distributors reported buying from an average of more than 1,200 manufacturers or suppliers, with the same group reporting an average inventory of roughly 52,000 SKUs. A typical distribution center picked an average 100,699 units each day to fill 5,800 orders, and 67% of distributors use automated picking methods.

Overall annual costs related to the returns process have risen since 2014 and now average $3.3 million per company, according to the report.

“The Factbook provides pharmaceutical distribution executives, and others who analyze the industry, a snapshot of the intricate and efficient processes involved in moving prescription medicine and healthcare products through the supply chain,” stated HDA Research Foundation chief operating officer Perry Fri, who’s also executive vice president of industry relations, membership and education for HDA. “For the first time, we are pleased to provide the Factbook at no cost to supply chain stakeholders to ensure greater access to its valuable data and insights.”

This year’s edition was sponsored by Apotex Corp., Boehringer Ingelheim Pharmaceuticals Inc., Inmar Inc., Pharmacy First Third Party Station, RDC-Rochester Drug Cooperative, Smith Drug Co. and Teva Pharmaceuticals USA.


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