Magazine article Drug Topics

Bergen-Ivax Merger Could Benefit Independent Stores

Magazine article Drug Topics

Bergen-Ivax Merger Could Benefit Independent Stores

Article excerpt

The vertical merger between drug wholesaler Bergen Brunswig Corp. and generic drug manufacturer Ivax Corp. could result in lower generic drug purchase prices for community pharmacies, or so company officials claim.

Phillip Frost, chairman and CEO of Ivax, said that the merger will enable the two companies to develop greater efficiencies in producing and distributing generic prescription drugs. As a result, community pharmacies will be able to purchase generic drugs from Bergen Brunswig at a lower pricewhich will increase their profit margins.

That, he commented, is especially good news for the many independent pharmacies that are supplied by Bergen Brunswig-as opposed to the large selfwarehousing chain drugstore pharmacies. Generics are more profitable for wholesalers and independents than are brand-name Rx drugs, he added.

Robert E. Martini, chairman and CEO of Bergen Brunswig, explained that a wholesaler typically gains a margin of 15% on the generic drugs it buys and sells, which is three times the margin on brand-name drugs. The generic manufacturer, on its side, also obtains a profit margin on the drugs it sells to the wholesaler. But with both the wholesaler and the generic drug manufacturer working together as a single company, considerable savings can be gained.

For one thing, he continued, because Ivax will be the exclusive supplier of its line of generics to Bergen Brunswig, the generic manufacturer will be able to better schedule the volume of drugs it needs to produce in the course of a year. And Bergen won't have to juggle its inventory levels so much in relation to several different generic drug suppliers; the management of the wholesaler's inventory will become a much tighter, simpler, smoother operation.

Martini said that the driving force behind the merger was the demand of customers, especially the hospital megachain Columbia/HCA, to lower drug prices. …

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