An Overview of Wholesalers' Roles in Complex Supply Chains

The pharmaceutical industry has a large market, with a revenue of nearly $1.3 trillion each year.

FREMONT, CA: The pharmaceutical industry generates nearly $1.3 trillion in revenue annually. Despite this, many people are unaware of how their medications are transported from the manufacturer to their local pharmacy. The most common method is to use pharmaceutical wholesalers.

Here's how it works.  

A wholesale drug distributor

Wholesale drug distributors purchase medication directly from manufacturers, and pharmacies purchase medications from wholesale drug distributors. Full-line wholesalers purchase complete product lines, and certain medications may be excluded from manufacturer-distributor contracts. Pharmacies account for 75 percent of distributors' profits on average. In addition to wholesale drug distributors, there are specialized companies as well. These distributors purchase specialty drugs for distribution to hospitals and clinics.

How do drug wholesalers make money?

The business model for drug distributors is straightforward: Buy medications at low prices in bulk, and sell them at a higher market price to customers and pharmacies. The difference between what the distributors paid and what the medications sold for generates the distributors' income. As pharmacies need to profit from medications, consumers typically pay the most through the supply chain. Instead of purchasing medications from pharmacies, direct purchases can be made from distributors. Wholesalers still profit from direct sales but retail the products to patients instead of pharmacies. This business model has experienced significant growth over the past two years since specialty drugs make up about 30 percent of wholesale revenue.

Savings for customers and clients

Wholesale pharmaceutical products provide customers and clients with savings, although some may argue that wholesale pharmaceutical products no longer need wholesale providers. Retail, pharmaceutical supply, and home healthcare companies must provide quality products at reasonable prices.

Pharmaceutical suppliers and consumers alike face high healthcare costs. Pharmaceutical wholesalers provide clients with better buying power and lower costs. Retailers also receive products from pharmaceutical wholesalers. It's vital to get the best prices for your retail pharmacy since pharmacies offer a wide range of products. For example, wholesale vitamins are big sellers, but pharmacies compete with big-box stores, vitamin shops, and health food stores for consumer dollars. Customers are often reluctant to buy vitamins from pharmacies.

Pharma wholesalers offer a full range of services.

Distributors who provide full-service pharmaceutical products and services meet the needs of clients and customers. Independent pharmacists and home care companies can save valuable time and money by using a pharmaceutical provider that offers wholesale drugs and over-the-counter pain relievers.

Wholesale pharmacy supplies

It makes sense to increase revenue and save money by buying wholesale pharmacy supplies, whether you are an independent pharmacy or part of a chain.

Medical supplies wholesale

The cost of medical supplies can quickly add up for chronically ill patients. Purchasing diabetic testing supplies, insulin syringes, arthritis treatments, joint support devices, and incontinence supplies can save money.