Drug, Cosmetic & Toiletry Wholesaling in the US Industry Market Research Report Now Available from IBISWorld
Los Angeles, CA (PRWEB) November 13, 2013 -- The success of the Drug, Cosmetic and Toiletry Wholesaling industry is driven by the essential nature of its main product: pharmaceuticals. Demand for many of the industry's products is largely unaffected by swings in the larger economy, as most healthcare spending is a necessity. The aging population has also strengthened demand for drugs over the past decade; older individuals typically spend more on healthcare because they are more likely to be affected by medical ailments. However, the “patent cliff” has shaken up the industry; because several brand-name pharmaceuticals have lost patent exclusivity, generic drug use has increased. Generic drugs are much cheaper than their branded equivalents and increased generic drug use has led to price deflation, hurting the industry's revenue. On the plus side, the expanding use of generic drugs has helped wholesalers maintain healthy profit margins. Generic drugs carry higher margins for wholesalers because manufacturers cannot charge a brand premium. Industry revenue is expected to decline in the five years to 2013.
The Drug, Cosmetic & Toiletry Wholesaling industry has a medium level of concentration. This concentration has increased significantly over the past decade following a wave of consolidation. Cardinal Health Inc., McKesson Corporation and AmerisourceBergen Corporation, which have benefited from this trend, are driving further changes in the market. Popularly known as the "Big Three," these companies account for more than 30.0% of industry revenue in 2013 (see IBISWorld report 42421 for major player market shares). In addition to being the major customers for manufacturers, the Big Three are in a powerful position to control delivery to pharmacies and other outlets. This dominance has come to the attention of regulators, especially because pharmaceutical pricing is a politically sensitive topic.
According to IBISWorld Industry Analyst Andy Brennan, “Consolidation has increased within the industry over the past five years as the already powerful major wholesalers have expanded their market share.” In 2013, the top pharmaceutical wholesalers (McKesson Corporation, Cardinal Health and AmerisourceBergen) are expected to earn close to half of industry revenue. Since competition between the industry's major players has intensified over the past five years and pricing pressure has increased, a number of smaller wholesalers have exited the industry after merging or being acquired by other wholesalers. Consequently, “the number of industry players is expected to fall over the period,” says Brennan.
The Patient Protection and Affordable Care Act of 2010 is expected to benefit the industry over the next five years due to increased access to insurance coverage for many Americans. However, the industry's decline is expected to continue for at least the next two years as the patents of a number of widely used pharmaceuticals expire. Furthermore, large retailers will continue dealing directly with manufacturers of generics, omitting the need for traditional wholesalers. Over the five years to 2018, industry revenue is forecast to decline.
For more information, visit IBISWorld’s Drug, Cosmetic & Toiletry Wholesaling in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Drug, cosmetic and toiletry wholesalers primarily distribute pharmaceutical products intended for internal and external consumption, such as tablets, capsules, vials, ointments and powders. The industry includes a range of biological and medical products and botanical drugs and herbs. The industry does not include businesses that primarily distribute surgical, dental, and hospital equipment.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
Gavin Smith, IBISWorld Inc., http://www.ibisworld.com, +1 (310) 866-5042, [email protected]
Share this article