Magazine article Drug Topics


Magazine article Drug Topics


Article excerpt

Outside Marriott's Orlando World Center Resort hotel, Gordon was lashing winds and rain across Florida with unpredictable fury. Inside, drug wholesaling leaders were battening down the hatches in the face of equally unpredictable business storms: The managed care movement is putting big-time pressures on profit margins for everyone, after wholesalers have wrung most of the costs out of the system.... Healthcare reform is switching to the states as Washington fiddles.... Wholesalers are caught in the middle of a fierce pricing war between community pharmacy and the drug industry.... Consolidations are continuing to shrink the number of full-line wholesale players.

Despite the current overcast, however, the future for the wholesaling business is bright--or so agreed its leaders at the National Wholesale Druggists' Association's annual meeting in Orlando last month.

Forecast is positive

"Preliminary data suggest 1994 will be an improvement over 1993, and 1995 looks promising," said John F. McNamara, chairman, president, and CEO of AmeriSource Corp., speaking as outgoing chairman of NWDA. He placed much of the credit or this growth on:

*Efficiencies obtained through technology. Expansion of wholesaler sales in the retail and hospital settings and in the "all other" customer categories, including nursing homes, clinics, home health-care groups, mail-order pharmacies, and oncology centers. ("The net is that full-service wholesalers will follow the business wherever it goes.")

*The industry's ability to fill millions of lines of orders quickly and capably. Yet, even with all this going for them, wholesalers find themselves in the crossfire of a pricing conflict between drug manufacturers and retailers, according to McNamara. "Let me state, however, wholesalers are not the villains in this scenario," he affirmed. "In fact, quite the opposite is true. Wholesalers provide our retail customers with value-added programs and services that allow them to compete more effectively in their markets. We've made them more efficient, better asset managers, and better marketers to their consumers." If there are savings gained through increased efficiencies and higher volumes, they can be, and are, passed on to customers through more and better value-added services, McNamara said.

One of wholesaling's main goals, he emphasized, is to continue searching aggressively for ways "to keep community pharmacy as a viable customer group," The reason is simple: "Financial well-being frees the pharmacist to manage patients in his or her pharmacy, and this, in turn, assures that each patient will achieve the appropriate and desired drug therapeutic outcome. Ultimately, this will mean a savings to the health-care delivery system."

Adding value a plus

It also will mean more business for the wholesaler. As Melburn G. Whitmire, vice chairman of Cardinal Health Inc. and new NWDA chairman, pointed out, "Through development of value-added services, wholesalers have become the most desirable means for customers to purchase product, and investment in technology and other added values have made the wholesale drug channel the most attractive means for manufacturers to go to market. As a result of this success, we've seen our market share of pharmaceutical product rise from less than 60% in 1980 to almost 90% last year."

For wholesalers, Whitmire continued, "the bottom line is no longer measured on our ability to cut costs--but on the value we provide our customers and suppliers--and our ability to maintain and expand relationships with both. …

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