Wholesalers will move away from traditional distribution in favour of new business models.
Melbourne, Australia (PRWEB) August 05, 2014
Operators in the Pharmaceuticals Wholesaling industry in Australia are an important interface between local and international pharmaceutical manufacturers and the nation's 5,300 community pharmacies. Pharmaceutical wholesalers are involved in the procurement, distribution and sale of a range of pharmaceutical and medicinal products. These products include prescription medicines, pharmacy-only medicines, over-the-counter (OTC) medicines and other healthcare products.
According to IBISWorld industry analyst Arna Richardson, “following relatively strong revenue growth in the early 2000s, growth rates began to falter in 2005-06.” This was in line with changes to the industry's operating environment and slower growth in the Pharmaceutical Benefits Scheme (PBS). The PBS is a government scheme for subsidising the cost of pharmaceuticals to the community. PBS reforms instituted over the five years through 2014-15 have presented the most fundamental changes to the scheme over its 60-year history. “Changes have included mandatory price cuts on many generic and off-patent drugs as part of the move towards mandatory price disclosure,” says Richardson. There has also been a change in the pricing mechanism (to weighted average disclosed prices) that determines wholesaler margins. The industry has also been influenced by changes to the Community Service Obligation (CSO). Negotiations for the terms of the next CSO for 2015 to 2020 are expected to commence later in 2014.
The industry exhibits a medium level of market share concentration. Major players include Sigma Pharmaceuticals Limited, Ebos Group Limited and Australian Pharmaceutical Industries Limited. In 2014-15, industry revenue is anticipated to fall by 3.8%, due to several factors. The industry is expected to contend with challenging conditions within the downstream retail pharmacy segment, patent expiries in view of the passing patent cliff and cuts to generic prices as the first round of simplified price disclosure cuts comes into effect on 1 October 2014. Revenue for 2014-15 is estimated at $11.4 billion, down from $13.3 billion in 2009-10. The Pharmaceuticals Wholesaling industry is expected to contract by an annualised 3.0% over the five-year period. These variables will continue to affect the industry in the next five years, particularly if other upstream pharmaceutical manufacturers follow Pfizer's 2011 example and implement exclusive distribution arrangements. In addition, the market environment will generate pressure for further change, as wholesalers move away from traditional distribution in favour of new business models with a stronger retail and professional services focus.
For more information, visit IBISWorld’s Pharmaceuticals Wholesaling report in Australia industry page.
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IBISWorld industry Report Key Topics
The industry comprises companies that wholesale human-use pharmaceutical products, including prescription drugs, over-the-counter medicines and complementary or alternative medicines. It also covers companies involved in the wholesale of veterinary drugs and medicines. The products are obtained from the relevant upstream manufacturer and distributed to hospitals, veterinarians and various retail outlets, including pharmacies and supermarkets.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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