Competition increases in the pharmaceutical wholesale market

A range of developments have taken place in the US wholesale drug distribution market which is controlled for the most part by three companies – AmerisourceBergen, Cardinal Health and McKesson. The saturated US market and changes in the healthcare industry have spurred the three distributors into action, and each has been following drug manufacturers by expanding overseas.

Earlier in the year, AmerisourceBergen announced a $400bn, 10-year partnership with Walgreen, the largest drug retailing chain in the US and UK’s Alliance Boots. This agreement allowed for AmerisourceBergen to enter the European market.

Meanwhile, Cardinal Health has been focusing on China. Since 2010, the company has made over 7 acquisitions in the country, including that of Zuellig Pharma China, all to broaden its geographic reach.

McKesson recently announced its intentions to acquire Celesio, a German drug wholesaler that operates in 16 European countries, and also oversees retail pharmacies throughout the region and has a presence in Brazil as well.

Transportation and logistics providers have been quick to add life sciences capabilities to their repertoire in order to meet the increasing needs of manufacturers and distributors. UPS has been building out a global network of distribution facilities while DHL opts for competence centers throughout the world.

FedEx Express recently announced plans to construct a new temperature-controlled facility at its world hub in Memphis, Tennessee. As noted in last week’s briefing, Temperature-controlled facilities grow as air freight market seeks ways to attract business, FedEx Express’ anticipated 88,000 sq ft facility will have temperature-controlled rooms for -25° C to -10° C,  2° C to 8° C and 15° C to 25° C and will be compliant with the European Union’s Transported Asset Protection Association requirements.

Like many transportation and logistics providers, the life sciences industry is a major focus for FedEx. This week, the company released a statement announcing an even deeper partnership with long-time customer, Cardinal Health. This latest agreement combines the global transportation and logistics capabilities of FedEx with Cardinal Health’s healthcare knowledge along with its specialized facilities comprising of at least 40 warehouses and distribution facilities throughout the US to offer tailor-made supply chain services for the health care industry.

By leveraging FedEx’s global network, Cardinal could further expand its international presence. For FedEx, the relationship could particularly benefit its Asia-Pacific network because of Cardinal Health’s focus on the Chinese market.