Health care distributors, or drug wholesalers as they are sometimes called, are an essential link in the health care supply chain. Distributors manage the warehousing, logistics and efficiencies to ensure that products required by their customers will be available in a safe and timely manner for the patients and consumers they serve.

Three major, publicly traded health care distributors — Ameri­sourceBergen Corp., Cardinal Health Inc. and McKesson Corp. — account for about 90% of the revenue within the U.S. pharmaceutical sector. There are also a number of privately held distributors, such as Burlington Drug, Dakota Drug, Dik Drug, F.W. Kerr, Morris & Dickson, NC Mutual Wholesale Drug, Rochester Drug, H.D. Smith, Smith Drug and Value Drug Co.

These full-line distributors serve many distinct groups, including such entities as chain and independent pharmacies, hospitals and HMOs, food stores and mass merchants, clinics and nursing homes, chain warehouses, and mail services. They stock everything from pharmaceuticals and biologics to over-the-counter and herbal products, health and beauty aids, medical and hospital supplies, durable medical equipment, and home health care items.

Consolidation has been one of the major themes within health care distribution over the last 30 years. When our company, Hamacher Resource Group (formerly D.P. Hamacher & Associates), was founded in 1980, there were more than 130 distributors serving the needs of independent and chain pharmacies around the country.

Since that time AmerisourceBergen, Cardinal and McKesson have been responsible for more than 100 acquisitions and buyouts, with at least 57 of them occurring in the past decade. Today there are fewer than 30 full-line health care distributors nationwide.

In one of the most recent acquisitions, in the fall of 2010 Cardinal purchased Kinray Inc., one of the largest regional health care distributors in the country. Acquisitions such as these increase the market penetration of the Big Three, but they may also increase their services and product offerings.

However, acquisitions in the United States aren’t the only prize the major players are after. The age of global wholesale is upon us.

In late 2010 Cardinal acquired Yong Yu in China. This entry into China firmly positions Cardinal within the world’s third-largest pharmaceutical market.

McKesson and AmerisourceBergen are also players in the global market. Earlier this year McKesson acquired a United Kingdom-based information technology company serving the health care market. McKesson also maintains a strong connection with Mexican distributor Nadro, and McKesson Canada supplies 40% of Canada’s pharmaceuticals.

AmerisourceBergen also has a strong Canadian presence as a leading pharmaceutical and specialty distributor, as a result of a number of successful Canadian acquisitions.

The top three health care distributors are also extending their repertoire of services into expanding markets, including specialty pharmaceuticals. Specialty pharmacy services generally have come to include access to, and support for, most pharmaceutical and biologic products that have high acquisition costs, are difficult to manage and present reimbursement challenges.

Major conditions treated by specialty pharmaceuticals include cancer, HIV/AIDS, hemophilia, infertility, Crohn’s disease and rheumatoid arthritis. McKesson completed a major acquisition this past winter with the purchase of US Oncology, a leading integrated oncology company that serves one of the nation’s largest networks of community-based oncologists. After the US Oncology acquisition, McKesson and AmerisourceBergen now represent almost 80% of all specialty pharmaceutical distribution, according to drugchannels.net.

Health care distributors — national and regional players alike — are also expanding more deeply into the home health care and medical-surgical markets. Forward-thinking distributors are strengthening their inventory and their marketing programs around these products in anticipation of the large number of baby boomers about to pass the threshold into old age. By 2025, 11,500 Americans will turn 65 every day.

Health care distribution is clearly marked by consolidation, globalization and growth in new and expanded sectors. While the implications for all of these changes are uncertain, here are a few predictions:

• The big will keep getting bigger. In order to compete, independent wholesalers must continue to differentiate their businesses by remaining close to their customer base and considering new ways to combine forces.

• Globalization will bring new technology, product offerings and delivery processes to the U.S., and vice versa.

• Expanded portfolios of value-added services and technology solutions — including marketing programs, Web-based initiatives and innovative inventory management tools — will become more available.

Editor’s Note: Jennifer Johnston is an industry writer and researcher with Hamacher Resource Group Inc., a retail consumer health care research and marketing company.