Magazine article Drug Topics

Leviathans vs. Lilliputians

Magazine article Drug Topics

Leviathans vs. Lilliputians

Article excerpt

Wholesalers hold their breath over megamergers

Rampant consolidation continues to whittle down the number of players in the pharmaceutical wholesale field, with a pair of megamergers still going through the approval process.

According to Ron Streck, president/ CEO of the National Wholesale Druggists' Association, the merger-mania is the result of a trend that reaches far beyond the wholesale industry.

"Look at manufacturing, pharmacy, and hospitals," Streck said. "I believe a number of wholesalers have decided the only way they can work with those now megapartners is by being as large."

As the NWDA gets set for its annual convention, to be held in San Diego next month, the buzz will no doubt be on the proposed merger between Bergen Brunswig and Cardinal Health and the corresponding mating of McKesson and AmeriSource. Critics have said the mergers would create havoc in the marketplace; estimates of the initial market share of the two merged entities have been as high as 74%. Some retailers and smaller wholesalers, on the other hand, have downplayed the potential for dramatic change in the way they do business.

One independent retailer who is a longtime AmeriSource customer said he would continue to do business with the company if its merger with McKesson is approved, provided he continues to receive the same level of service and it continues to make good business sense. The pharmacist, who asked not to be identified, said he also has other options in the regional wholesalers he will also continue to do business with.

Chris Smith, executive v.p./COO of H.D. Smith Wholesale Drug Co., agreed that the potential harm to the industry is overstated. He claimed that the diminishing number of firms at the top could even benefit some smaller wholesalers.

"I think we will continue to compete on equal terms [for] a lot of the potential customers out there," he said. "Some are so big they'll do business only with a truly national wholesaler, but even they are running into fewer and fewer alternatives and may be more likely to consider dividing up some of their business rather than go with one-size-fits-all."

Amid all the projecting, analyzing and downright guessing, there is one solid fact. According to the market research firm Datamonitor, there are roughly half as many major pharmaceutical wholesalers in the United States today as there were in 1980.

NWDA has reacted by taking a hard look at itself, who it represents, and what their concerns are. It has redefined its active membership. As a result, its roster of active members has jumped from approximately 65 members to 81. …

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