Demand for Streamlined Pharmaceutical Distribution Networks Grows

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Jul 25, 2022, 09:00 ET

FinancialBuzz.com News Commentary

NEW YORK, July 25, 2022 /PRNewswire/ -- Pharmaceutical wholesale and distribution is a major market, and one that is currently growing worldwide. Generally, it is defined as the management of the physical flow of pharmaceutical supplies from manufacturing to the point of use. To manage the supply chain effectively, health care distribution is crucial. Pharmaceutical distributors are primarily responsible for distribution of OTC medications/vitamins, generic medications, and brand-name/innovator medications. In addition, they also distribute biopharmaceutical products such as monoclonal antibodies, vaccines, recombinant proteins, blood and blood products, cellular and gene therapy products, stem cell products, and tissue and tissue products. And, according to data provided by Technavio, the pharmaceuticals wholesale and distribution market is expected to grow by USD 548.7 Million from 2020 to 2025. Moreover, the market is expected to accelerate at a CAGR of 7.93% during the forecast period. E-Home Household Service Holdings Limited (NASDAQ: EJH), AmerisourceBergen Corp. (NYSE: ABC), Henry Schein, Inc. (NASDAQ: HSIC), Cardinal Health, Inc. (NYSE: CAH), Walgreens Boots Alliance, Inc. (NASDAQ: WBA).

Globally, pharmaceuticals wholesale and distribution services are highly dependent on the trucking industry for the transportation of pharmaceutical supplies to various locations. However, there is a shortage of skilled truck drivers in the global logistics market, which will grow steadily during the forecast period. In addition, the demand for pharmaceutical drugs increased significantly in 2020 owing to the outbreak of COVID-19. Furthermore, the U.S. witnessed significant disruption in the supply chain and an economic recession, which adversely impacted the regional pharmaceutical industry, primarily during the first half of 2020.

E-Home Household Service Holdings Limited (NASDAQ: EJH) announced last week breaking news that, "via its wholly-owned Hong Kong subsidiary E-Home Household Service Holdings Limited ("Hong Kong E-Home"), the Company has completed the acquisition of majority ownership of Zhongrun (Fujian) Pharmaceutical Co., Ltd. ("Zhongrun"), a leading medicine and personal care products operator in China.

Pursuant to the Agreement, Hong Kong E-Home will acquire 55% of equity interests in Zhongrun. Upon completion of the transaction, Hong Kong E-Home has the right to appoint at two-thirds of members of the board of directors of Zhongrun, including its executive director.

Founded in 2017 with RMB 100 million registered capital, Zhongrun operates as a drug wholesaler and logistics distributor specializing in all kinds of traditional (patent) Chinese medicines, antibiotics, dietary supplements and medical devices.

Mr. Wenshan Xie, Chairman and CEO of E-Home, commented: 'This is a big moment for our Company and Zhongrun. Zhongrun has already established itself as one of the top medicine distributors in China with a loyal customer base. We couldn't be more excited to bring them into our portfolio of world-class household service ecosystem. We look forward to improving upon Zhongrun's already strong results and expand our extensive and exclusive household services and other benefits to our customers and shareholders. It also represents E-Home's official entry into the pharmaceutical and health industry, which is currently under a strong development trend. We believe that our participation and integration with Zhongrun will bring better performance and development for E-Home in the short future.'"

AmerisourceBergen Corp. (NYSE: ABC) announced on March 4th, the launch of a unique supply chain elective course at Xavier University of Louisiana's (XULA) College of Pharmacy, a top-ranked historically Black university. The Advanced Pharmacy Practice Experience (APPE) Pharmacy Distribution Leadership Rotation course exposes students to the interconnectivity between pharmaceutical supply chain stakeholders such as distributors, manufacturers and providers and gives students an understanding of the system and its essential role in the delivery of patient care. "As one of the top producers of African American pharmacists in the nation, Xavier's College of Pharmacy is constantly evolving its curriculum to provide our students with a comprehensive education that prepares them for a long and successful career," said Dr. Kathleen Kennedy, the Dean of the College of Pharmacy at Xavier University of Louisiana. "We thank AmerisourceBergen for developing this program, which not only demystifies the pharmaceutical supply chain and its impact on a pharmacist's day-to-day operations, but also exposes our students to new industries where their expertise can add value."

Henry Schein, Inc. (NASDAQ: HSIC) announced on May 17th, the appointment of Dirk Benson to the position of Vice President and Chief Commercial Officer of the Company's North America Distribution Group (NADG). "Dirk is an outstanding professional," said Mr. Connett. "He is held in high regard in the industry, with a track record of growing innovative businesses and leading people. Dirk has a deep knowledge of health care distribution, experience building teams that work across boundaries, and the energy and insight needed to help Henry Schein fulfill our strategic plan." In addition, Nancy Lanni has been named Vice President and General Manager of the newly created Strategic Account Management Team, responsible for serving the Company's large dental and medical distribution customers in the U.S. as a part of Mr. Benson's team. Ms. Lanni, who joined Henry Schein in 1995, has held increasingly responsible leadership positions at the Company, most recently as the head of the Healthcare Services team of the Company's U.S. Medical Group, serving the group's largest customers.

Cardinal Health, Inc. (NYSE: CAH) announced on June 2nd, the addition of a new distribution center in the Columbus, Ohio, area as part of a multi-year warehouse modernization and growth plan. The new distribution center will support the company's at-Home Solutions business, a market-leading medical supplies provider and specialized business focused on providing comfortable care in the home for people with chronic and serious health conditions. "We have been committed to helping patients take care of their health at home for decades," said Rob Schlissberg, President, Cardinal Health at-Home Solutions. "As a result of the pandemic, the health care industry is experiencing accelerated consumer demand for personalized experiences when it comes to health care at home. Expanding our warehouse footprint optimizes our distribution network and enhances our customer service levels, while positioning us for sustained growth in an area of patient care that continues to evolve."

Walgreens Boots Alliance, Inc. (NASDAQ: WBA) and AmerisourceBergen Corp. announced last year, strategic agreements under which AmerisourceBergen will acquire the majority of Walgreens Boots Alliance's Alliance Healthcare businesses for approximately $6.5 billion, comprised of $6.275 billion in cash and 2 million shares of AmerisourceBergen common stock. In addition to this transaction, the two companies have agreed to strengthen their strategic partnership by extending and expanding their commercial agreements. Their US distribution agreement will be extended by three years until 2029 and their partnership is being expanded to include a commitment to pursue additional opportunities in sourcing and distribution. Furthermore, Alliance Healthcare UK will remain the distribution partner of Boots until 2031. Together, these agreements are expected to create incremental growth, synergies and efficiencies.

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