1
ΚΑΤΑΣΤΑΣΗ ΤΩΝ ΜEΓΑΛΥΤΕΡΩΝ ΧΟΝΔΡΕΜΠΟΡΩΝ, ΔΙΑΝΟΜΕΩΝ ΚΑΙ ΠΡΟΜΗΘΕΥΤΩΝ ΦΑΡΜΑΚΩΝ ΣΤΙΣ ΗΠΑ
A/A
COMPANY NAME, ADDRESS, PHONE,
FAX
1.
CVS Caremark
Corporation
2009
SALES
(MIL. $)
98,729.0
EMPLOYEES
OVERVIEW
295,000
Size matters to CVS Caremark (formerly
CVS), the nation's second-largest
drugstore chain and its third-largest
pharmacy benefits manager. With about
7,090 retail and specialty drugstores
under the CVS and Longs Drug banners,
it trails archrival Walgreen by about 400
stores. CVS has grown rapidly through a
string of acquisitions that included the
Eckerd chain, stores from Albertsons,
and most recently Longs Drug Stores
(2008). In 2007 CVS purchased
prescription benefits management (PBM)
firm Caremark Rx for about $26.5 billion.
Caremark was combined with CVS's PBM
and specialty pharmacy unit PharmaCare
Management Services to form Caremark
Pharmacy Services.
1 CVS Dr.
Woonsocket, RI 02895
United States
Phone: 401-765-1500
Fax: 401-762-9227
www.cvs.com
CVS's active acquisition schedule has
both greatly expanded the number of
retail and specialty pharmacies it
operates and the range of services it
offers to customers, employers,
insurance companies, unions, managed
care organizations, and other clients. The
company is betting that size will make it
a more convenient and efficient operator
and a preferred provider to health benefit
plans attempting to better manage their
health care costs. Indeed, acquisitions
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
CONTACT
Gener
al
Manag
er
Allan
Ackro
yd
2
have increased both revenues and profits
for the company. In 2009 revenues
increased by more than $11 billion and
gross profit by more than $2 billion
(more than half of each can be attributed
to the Longs purchase).
While size has its advantages, it can also
make a company a target. Indeed, the
Federal Trade Commission (FTC), which
approved the CVS-Caremark merger, in
August 2009 reopened its investigation in
response to lawmakers' pleas. In their
letter to the FTC, a bipartisan group of
eight US congressmen accused CVS
Caremark of unfair and deceptive
business practices, including arranging to
have consumers' prescriptions filled only
at CVS pharmacies. CVS is drawing fire
from consumer groups and the attorneys
general of two major states (California
and New York) over the alleged sale of
expired over-the-counter products in its
stores. The attorney general of New York
has also filed suit against the company.
The Caremark purchase positioned the
company as a leading manager of
pharmacy benefits in the US. The hardwon deal, launched in late 2006, led to a
bidding war between CVS and Caremark
rival Express Scripts that forced CVS to
raise its offer several times. Combined,
CVS and Caremark created a company
that's an industry leader in pharmacy
and specialty pharmacy sales, PBM lives
managed, mail-order pharmacy sales,
and retail-based clinics (through its
MinuteClinic business). Prior to the
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
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Caremark purchase, PharmaCare
Management Services had been key to
CVS's growth.
After more than doubling the number of
drugstores it operates in California and
adding Hawaii with its Longs purchase
and adding about 100 new drugstores in
2009, in 2010 CVS will continue to grow
its retail network with the addition of
between 250 and 300 new or relocated
drugstores and MinuteClinic locations.
MinuteClinic (acquired in 2006) operates
health clinics inside retail stores. The
CVS subsidiary runs about 570 clinics in
some 25 states, most of which are
located within CVS stores. Continued
expansion of its retail network is a key
element of the company's growth
strategy and essential if CVS is to keep
up with ever-expanding Walgreen, which
in 2010 acquired the 250-plus Duane
Reade drugstore chain based in New York
City. (With CVS and Walgreen drugstores
carpeting the nation's suburbs, Walgreen
is now seeking to conquer urban
America.)
In addition to opening new stores, CVS is
attempting to increase sales at existing
ones. Prescription drugs account for
more than two-thirds of sales, and the
retailer is attempting to grow revenues
from over-the-counter medications and
general merchandise through its privatelabel offering of more than 4,300
products. (CVS brand and proprietary
products account for about 15% of frontof-store revenues.) CVS is also doubling
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
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the size of grocery sections in about
3,000 stores during 2010, in an effort to
capture a wider slice of shoppers' food
budgets.
Chairman and CEO Thomas Ryan, a 36year veteran of CVS and its president for
the past 16 years, plans to retire as chief
executive in May 2011. Larry Merlo,
president and COO of the firm, is
expected to succeed him. CVS Caremark
has formed an office of the chairman to
help smooth the transition. The threeman office includes Ryan, Merlo, and the
president of Caremark Pharmacy
Services
2.
McKesson
Corporation
108,702.0
32.500
1 Post St.
San Francisco, CA 94104
United States
Phone: 415-983-8300
Fax: 415-983-7160
www.mckesson.com
McKesson moves medicine. The largest
pharmaceuticals distributor in North
America, McKesson delivers prescription
and generic drugs, as well as health and
beauty care products, to more than
40,000 retail and institutional pharmacies
throughout the US and Canada. The
company is also a major medical supplies
wholesaler, providing medical and
surgical equipment to alternate health
care sites, such as doctors' offices,
surgery centers, and long-term care
facilities. In addition to distribution
services, McKesson offers software and
technical services that help pharmacies,
health care providers, and insurers
manage supply chain, clinical,
administrative, and financial operations.
McKesson's distribution operations bring
in most of the company's money. The
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Patrick Carter
International
Operations Group
5
McKesson Distribution Solutions division
primarily provides prescription and overthe-counter pharmaceuticals and other
health care items to retailers and health
care institutions in the US; it also is a
wholesale of drug in Canada and owns
about half of Nadro, a Mexican pharma
distributor. The distribution division also
supplies medical equipment and beauty
care items, and it provides consulting
and inventory management services.
Major US pharmacy operators CVS
Caremark and Rite Aid are among the
company's key clients, each accounting
for more than 10% of sales.
Outside of its traditional retail and
institutional distribution operations,
McKesson provides disease management
programs that serve health providers,
drug manufacturers, insurers, and
employers. Its specialty pharmacy
solutions unit coordinates the delivery of
complex medicines directly to physicians.
Additionally, the company supplies
automated pharmacy dispensing systems
through its minority stake in North
Carolina-based Parata Systems, and it
provides first aid kits and workplace
safety training through subsidiary ZEE
Medical. McKesson launched a new
Plasma and BioLogics division in 2008;
the unit will deliver plasma and plasmarelated products to hospital pharmacies.
Strategic acquisitions have been
important to the growth of the company,
both in its core distribution operations
and its smaller but growing Technology
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
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Solutions (software and data
management) division. The company
regularly purchases small to midsized
regional distributors and distribution
support companies, including the 2008
purchase of Midwest pharmacy
distributor McQueary Brothers for $190
million. McKesson also widens its product
offerings by forming new partnerships
with its suppliers.
While McKesson seeks to grow its
operations to provide a complimentary
array of solutions and maintain its
leading edge, the company has also
trimmed some operations to focus on
core drug distribution and technology
initiatives. It sold specialty pharmacy
unit ivpcare to Walgreen in 2008
3.
Cardinal Health,
Inc
99,512.4
29,600
7000 Cardinal Place
Dublin, OH 43017 United
States
Phone: 614-757-5000
Toll Free: 800-234-8701
www.cardinal.com
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Cardinal Health seeks to deliver medicine
to all points of the compass. The
company is a top distributor of
pharmaceuticals and other medical
supplies and equipment in the US. Its
pharmaceutical division provides supply
chain services including prescription and
over-the-counter drug distribution, while
its medical division parcels out medical,
laboratory, and surgical supplies. The
divisions also provide logistics,
consulting, and data management
services. Customers include pharmacies,
hospitals, doctor's offices, and other
health care businesses. Cardinal Health
spun off its medical equipment
manufacturing and clinical technologies
Gener
al
Mana
ger
Enriqu
e
Espino
za
7
operations into CareFusion in 2009.
Cardinal Health completed the spinoff of
about 81% of CareFusion to its
shareholders in August 2009 to maximize
shareholder and customer value for all of
its businesses. It plans to divest its
remaining shares in CareFusion within
five years of the spinoff. Cardinal Health
aimed to increase growth within both
Cardinal Health and CareFusion by
separating the businesses; it also plans
to focus on improving customer
relationships across the board. Former
Cardinal chairman and CEO Kerry Clark
retired at the time of the spinoff, with
George Barrett (the former leader of the
distribution operations) taking over
Clark's roles.
Pharmaceutical distribution has
historically accounted for about 85% of
Cardinal Health's sales, with pharmacies
accounting for the largest chunk of
Cardinal's customer revenues. CVS and
Walgreen each account for about 20% of
the company's sales. The Cardinal Health
Pharmaceutical division operates
distribution facilities and nuclear
pharmacy labs (for the distribution of
medical imaging agents) across the US;
it also has limited operations in Mexico
(nuclear labs) and the UK (generic
drugs). The division also includes the
Cardinal Health Pharmacy Management
business, the Medicine Shoppe retail
pharmacy subsidiary, and a specialty
pharmacy unit that distributes plasma
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
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and intensive care therapies.
The smaller Cardinal Health Medical
distribution division offers branded and
private-label supplies, including fluid
collection devices, scientific laboratory
equipment, and general hospital and
physician practice supplies in Canada and
the US. It also assembles procedure kits
and makes exam gloves and surgical
drapes.
Cardinal has expanded through
acquisitions of companies and products
within all of its operating segments.
Since 1980 it has acquired more than 50
companies. In 2007 the company
dropped about $1.5 billion on medical
equipment manufacturer VIASYS
Healthcare, which was integrated and
later added to the CareFusion business.
The following year the company added to
its infection prevention line by acquiring
private health care firm Enturia, maker of
the ChloraPrep brand line of skin
disinfectant products, for $490 million.
Enturia also became part of the
CareFusion spinoff.
In 2010 Cardinal announced it would
bolster its specialty pharmaceutical
services by purchasing Healthcare
Solutions Holding in a deal worth up to
roughly $670 million (including an
upfront payment of $517 million and
another $150 million in milestone
payments). Healthcare Solutions Holding
is the parent company for a number of
subsidiaries, including P4 Pathways and
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
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P4 Healthcare. The company provides
tools and services that include product
data and claims management help for
specialty care industry doctors, payers,
and drug makers.
On the paring side, the company
unloaded its healthcare marketing
services unit and its UK Intercare
distribution business in 2007. Even more
significantly, Cardinal Health sold its
Pharmaceutical Technologies and
Services division, which offered drug
delivery systems, packaging services,
and development services, to The
Blackstone Group for $3.3 billion. As part
of the deal, Cardinal retained two
businesses that complement its generic
pharmaceutical operations.
In 2008 Cardinal divested two former
VIASYS businesses, Tecomet (orthopedic
implants) and MedSystems (feeding
tubes). It has also announced plans to
divest its SpecialtyScripts business, a
specialty medication distributor acquired
in 2007, and its UK Martindale injectable
drug manufacturing unit
4.
Medco Health
Solutions, Inc
100 Parsons Pond Dr.
Franklin Lakes, NJ 074172603 United States
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Administering some 700 million
prescriptions each year, Medco Health
Solutions is the country's top pharmacy
benefits management company and,
through its Accredo Health unit, its top
specialty pharmacy as well. The company
assists health plans in managing drug
costs by designing drug formularies,
negotiating discounts with
Laizer D. Kornwasser
SVP Channel and
Generic Strategy;
President, Liberty
Medical
10
Phone: 201-269-3400
Fax: 201-269-1109
www.medcohealth.com
pharmaceutical companies, and
processing claims. Members may fill their
prescriptions through a network of about
60,000 pharmacies, a mail-order
program, or the company's call-center
and Internet pharmacies. Medco Health
Solutions manages drug benefits for
clients that include unions, corporations,
HMOs, insurance companies, and federal
employees.
Customer cost containment is the
cornerstone of the company's business
strategy. Medco Health Solutions is able
to control costs through the use of
technology to process prescription
claims, automation to fill and distribute
prescriptions, and volume purchasing of
pharmaceuticals. It also encourages the
use of its mail order pharmacies and of
generic equivalents in place of more
expensive brand name drugs.
Medco's mail order business is a big part
of this cost reduction strategy. With
seven order-processing pharmacies and
two automated dispensing pharmacies
scattered across the country, the
company fills more than 100 million
prescriptions a year. It uses this scale to
get better deals from suppliers and to
force stricter compliance with health plan
formularies. To expand capacity and
improve efficiencies in the division, the
company is building a third automated
mail-order pharmacy fulfillment center in
Indiana, scheduled for completion by the
end of 2010.
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
11
Within its mail order pharmacy segment,
Medco has instituted what it calls Medco
Therapeutic Resource Centers, which are
specialized groups of pharmacists who
are focused on certain chronic or
complex diseases. One of its largest
Therapeutic Resource Centers provides
diabetes supplies under the Liberty
Medical brand (which it gained through
the 2007 purchase of PolyMedica). The
company further enhanced the Liberty
division when it bought the diabetes
distribution assets of Owens & Minor
subsidiary Access Diabetic Supply for $63
million in 2009.
Another key component of the company's
strategy is the growth of Accredo Health,
which dispenses sensitive biotechnology
drugs, usually injectable or infusion
drugs, to patients with serious diseases
such as cancer and hemophilia. Accredo
delivers medications and related supplies
either to patient homes or clinical sites
from three main distribution centers in
Tennessee and Pennsylvania.
Within its traditional retail pharmacy
operations, Medco has been working to
expand its complementary service
offerings to help pharmacists, patients,
and payers select the the most costefficient and accurate medical regime. To
further this goal, in 2010 the company
acquired personalized medicine company
DNA Direct, a telemedicine provider of
advisory services for gene-based and
biological medicines. It has also
established the Medco Research Institute
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
12
to pursue discovery efforts in
pharmacogenomics, or the study of how
a patient's genetic profile can assist in
the physician's prescription selection
process.
Medco has also been trying to take
advantage of the Medicare Part D
prescription drug benefit, by tailoring
some services to clients offering Part D
programs or other drug coverage to their
Medicare-eligible members. It has also
contracted with the Centers for Medicare
& Medicaid Services to offer a Medicare
Part D drug plan of its own.
Medco went international in 2008 when it
purchased a majority stake in Dutch firm
Europa Apotheek Venlo, which provides
mail order pharmacy and other health
care services in the Netherlands and
Germany. Earlier the same year, the
company partnered up with Apoteket,
the Swedish government agency that
oversees retail pharmacy operations in
that country, to develop an automated
prescription-review system. In 2009
Medco formed a partnership with United
Drug to provide specialty pharmacy
services in patients homes in the UK
5.
Omnicare, Inc
6,166.2
15,200
1600 RiverCenter II
100 E. RiverCenter Blvd.
Covington, KY 41011 United
States
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Omnicare strives to be omnipresent in
US nursing homes. The firm is the
country's largest institutional pharmacy
services provider, dispensing drugs to
nursing homes, assisted-living centers,
and other long-term care facilities in the
Deborah Brewer
SVP Global
Business
Development
13
Phone: 859-392-3300
Fax: 859-392-3333
www.omnicare.com
US and parts of Canada. It also provides
clinical and financial software and
consulting services to long-term care
facilities, as well as infusion and
respiratory therapy products and
services for nursing home residents and
hospice patients. The company has
some 250 pharmacy and distribution
locations across the US, and it serves
health care facility customers with a
combined capacity of some 1.4 million
patient beds.
The highly acquisitive Omnicare expands
its operations by purchasing small,
independent institutional pharmacies
and integrating them into its
organization; it made more than 20 such
acquisitions in 2008 and 2009. The
company has had to be nimble to absorb
its many acquisitions, however, and
keep up its level of service without
losing customers. It has also struggled
against lower reimbursements on drugs
from health insurers.
Omnicare has responded to these
challenges with a number of customer
retention efforts and restructuring
initiatives aimed at improving quality
and efficiency. The company has been
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
14
reorganizing its operations into a "huband-spoke" model, moving more
administrative activities, as well as some
routine prescription refilling, to larger
regional hubs where scale,
centralization, and automation can
produce greater efficiency. Smaller local
pharmacies (the "spokes") in turn focus
on activities requiring direct customer
interaction. The company has also been
working to divest some small businesses,
such as its home health operations, that
don't fit in with its core operations.
Omnicare's Pharmacy Services division,
which includes its institutional pharmacy
operations, brings in over 95% the
company's revenue. Serving nursing
homes and their residents, the
institutional pharmacy unit fills and
dispenses prescriptions to customers,
monitors medication safety and process
efficiencies, and provides purchasing,
billing, and inventory services. In
addition, the Pharmacy Services division
offers consulting, compliance, and data
management services and operates
divisions providing specialty pharmacy
(infusion and other complex
medications), pharmacy benefits
management (PBM), and disease
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
15
management services. Though it
primarily serves long-term care facilities,
the division also serves some hospitals,
hospice organizations, and other health
care centers.
A second division, CRO Services
(operating as Omnicare Clinical
Research) provides contract clinical drug
research and development services to
pharmaceutical, biotech, and medical
device companies. Its Clinimetrics unit
focuses on biotechnology clients.
Another Clinical Research unit
specializes in assisting drug companies
with the development of new
treatments for the elderly.
In late 2009 the company agreed to pay
$98 million to settle allegations from the
US Department of Justice that it had
accepted kickback payments from drug
manufacturers and nursing homes.
Omnicare settled the charges without
admitting any wrongdoing.
Omnicare sued UnitedHealth Group over
reimbursement reductions in its
Medicare Part D prescription drug
coverage in 2006, but a summary
judgment by an Illinois federal court
dismissed the lawsuit in 2009. Omnicare
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
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has appealed the ruling
6.
Express Scripts,
Inc
24,748.9
14,270
1 Express Way
St. Louis, MO 63121 United
States
Phone: 314-996-0900
www.express-scripts.com
Express Scripts knows that its customers
like their drugs fast. One of the largest
pharmacy benefits management (PBM)
companies in North America, Express
Scripts administers the prescription drug
benefits of millions of health plan
members in the US and Canada.
Members have access to a network of
about 60,000 retail pharmacies, as well
as the company's own mail-order
pharmacies. Express Scripts processes
claims for about 750 million prescriptions
per year, designs drug plans, and offers
such services as disease management
programs and consumer drug data
analysis. Clients include HMOs and other
health insurers, self-insured businesses,
and union benefit plans.
Express Scripts is one of the top three
players in the PBM industry, the other
two being Medco and Caremark
Pharmacy Services. The company and
the industry have grown rapidly, as the
PBMs strive to save money for their
customers by negotiating good deals for
prescription drugs with networks of retail
pharmacies, as well as by encouraging
the use of cheaper generic drugs and
home-delivered medications.
The company grew substantially in 2009
with the acquisition of NextRx, the PBM
business of Blue Cross Blue Shield
(BCBS) licensee WellPoint, for about $4.7
billion. As part of the acquisition, the
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Agnes Rey-Giraud
President,
International
Operations
17
company has a 10-year contract to
provide PBM services to WellPoint, the
nation's largest health insurer. The
purchase launched Express Scripts closer
to its top two rivals by increasing its
claims processing load from 500 million
to more than 750 million prescriptions
per year. It also enhanced the company's
online, generic drug, and mail delivery
service offerings.
Express Scripts had previously expanded
its PBM operations in 2008 by purchasing
the pharmacy services division of Medical
Services Company for $251 million. The
acquired business specialized in
managing pharmacy benefits for workers'
compensation insurers. In addition,
Express Scripts opened a new pharmacy
fulfillment center in St. Louis in 2010.
The center supports the company's
growing home delivery business, which is
experiencing increased demand from
clients and patients seeking to cut costs
on traditional maintenance medications
through the use of mail-order services.
Another element of Express Scripts' PBM
business that is experiencing higher
consumer demand is specialty pharmacy
subsidiary CuraScript. Through its
primary operating unit, CuraScript
Specialty Pharmacy (or CuraScript SP),
the subsidiary provides home distribution
of specialty prescriptions (primarily
injectable biotech drugs that require
special packaging and handling); the unit
also delivers to doctors' offices and other
health care providers. To focus on its
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
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core distribution operations, the company
divested its CuraScript Infusion
Pharmacy business, which operated
infusion therapy centers in six states, to
Walgreen's Option Care subsidiary in
2008.
In 2009 Express Scripts expanded its
contract with the US Department of
Defense, adding a number of services
beyond its existing management of the
pharmacy network of the TRICARE
military health care program. The
contract now includes home delivery,
specialty pharmacy, claims management,
and other integrated offerings.
While its PBM operations account for the
lion's share of Express Script's revenues,
the company has also been looking to
expand into new high-growth fields of
managed care through its Emerging
Markets segment. It has added such
services as group purchasing for doctors
and clinics (through CuraScript Specialty
Distribution, or CuraScript SD), fertility
drug packaging and delivery (Freedom
FP), and third-party administration of
consumer-driven health plans
(ConnectYourCare). In addition, Express
Scripts assists pharmaceutical and
biotech companies with activities such as
delivering marketing samples to doctors
and providing customized packaging and
logistics services through its
HealthBridge division
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
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7.
AmerisourceBergen
Corporation
71,760.0
10,300
1300 Morris Dr.
Chesterbrook, PA 190875594 United States
Phone: 610-727-7000
Fax: 610-727-3600
www.amerisourcebergen.com
AmerisourceBergen is the source for
many of North America's pharmacies and
health care providers. The company
serves as a go-between for drugmakers
and the pharmacies, doctors' offices,
hospitals, and other health care providers
who dispense drugs. Operating primarily
in the US and Canada, it distributes
generic, branded, and over-the-counter
pharmaceuticals, as well as some
medical supplies and other products,
using its network of more than two dozen
facilities. Its specialty distribution unit
focuses on sensitive and complex
biopharmaceuticals, such as cancer
drugs, vaccines, and plasma products.
The company also has some
pharmaceutical packaging operations.
AmerisourceBergen has one division
through which it operates a number of
business segments. The Pharmaceutical
Distribution division is comprised of three
operating segments which include
AmerisourceBergen Drug Corporation
(ABDC), AmerisourceBergen Specialty
Group (ABSG), and AmerisourceBergen
Packaging Group (ABPG).
ABDC is the business arm that distributes
generic and brand-name
pharmaceuticals, over-the-counter
products, and home health care supplies
and equipment to medical providers,
pharmacies, and the like throughout
North America.
ABSG, the company's specialty
distribution operations, are growing at a
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
General
Manage
r
Mike
Hamilt
on
20
fast clip, outpacing the growth
experienced by the rest of the business.
AmerisourceBergen intends to continue
growing the unit that delivers drugs for
particular diseases (especially cancer) to
the doctors who administer them.
The unit also provides marketing and
other services to drugmakers, helping
them successfully launch new biotech
drugs. Other services to pharmaceutical
manufacturers include consulting and
reimbursement support.
The specialty packaging group (ABPG)
provides contracting packaging services
to drug manufacturers in North America
and the UK. The company sells its
products through an in-house sales force
that is organized regionally and
specialized by healthcare provider type.
Acquisitions have helped
AmerisourceBergen expand its reach to
new customer segments and geographic
markets. For example, its $180 million
purchase of Bellco Health a few years
ago increased its access to independent
community pharmacies in the New York
City area. (Bellco's operations have since
been parceled out to the ABDC and ABPG
segments.)
AmerisourceBergen expanded into
Canada through several key acquisitions
that made it that country's second
largest drug distributor.
AmerisourceBergen further cemented its
position in Canada in 2009 by acquiring
Innomar Strategies for about $14 million.
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
21
Innomar is a specialty pharmaceutical
services company offering logistics
management, patient assistance, and
clinical research.
AmerisourceBergen tapped into the
growing market for electronic health
records (EHR) in 2010 when the
company by offering consulting services
to hospitals and other health care
providers looking to go digital with EHRs.
The company helps EHR users
understand how to meet new compliance
guidelines set by the Centers for
Medicare & Medicaid Services.
The company offers the service, which
includes a review of clinical operations to
help identify gaps in compliance, through
its Pharmacy Healthcare Solutions health
care consulting business unit.
Along with tapping into new markets, the
company has also worked to streamline
its existing operations by expanding
some distribution facilities while closing
others. Since 2001, the firm has cut its
distribution facility network in half -from 51 to 26 facilities. It chose to close
operations with administrative
redundancies and could be easily
consolidated into other, existing facilities.
AmerisourceBergen spun off its
PharMerica subsidiary a couple of years
ago, which delivers pharmaceuticals and
provides drug dispensing services in
nursing homes and other long-term care
institutions. It spun off the business as
PharMerica Long-term Care and merged
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
22
it with Kindred Healthcare's institutional
pharmacy unit to form the new
PharMerica entity. The combined entity
became the second-largest institutional
pharmacy operator in the US.
To further narrow its focus on its core
pharmaceutical distribution operations,
AmerisourceBergen sold its PMSI unit in
2008 for $34 million. PMSI provided
workers' compensation services to
insurance companies and other health
care payers.
Institutional clients (health care
providers and facilities and mail-order
pharmacies) account for about 70% of
the Pharmaceutical Distribution division's
sales, while retailers (chain drugstores,
independent pharmacies, and
supermarket and mass merchandiser
pharmacies) make up the rest.
AmerisourceBergen's top client is
pharmacy benefit manager Medco Health
Solutions, which accounts for about 15%
of revenue
8.
PharMerica
Corporation
1,841.2
6,900
1901 Campus Place
Louisville, KY 40299 United
States
Phone: 502-627-7000
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
PharMerica's former parents were
kindred spirits who believe in the power
of two. Created through the spinoffs and
merger of Kindred Pharmacy Services
(from Kindred Healthcare) and
PharMerica Long-term Care (from
AmerisourceBergen), PharMerica is the
country's second-largest institutional
pharmacy operator (behind Omnicare).
The publicly-traded company provides
purchasing, packaging, and dispensing of
Robert Mckay
SVP Sales and
Marketing
23
www.pharmerica.com
prescription and nonprescription drugs to
patients at nursing homes, assisted living
facilities, and psychiatric hospitals in
more than 40 states. PharMerica
operates about 100 institutional
pharmacies from which it packages and
delivers the medications in unit doses
(rather than in bulk) to its customers.
PharMerica also provides consulting
services to skilled nursing and long-term
care facilities in which specialists monitor
drug usage in accordance with
government regulations. The company
also manages on-site pharmacies at
more than 80 US hospitals, most of them
belonging to the Kindred Healthcare
family. Services include patient safety
and regulatory compliance, work force
optimization, and drug utilization
management. Other services include
inventory control and budgetary analysis.
In the company's 2007 merger,
PharMerica Long-term Care contributed
some 80 regional pharmacies that served
more than 200,000 patients, while the
smaller Kindred Pharmacy Services
added another 46 pharmacies serving
more than 100,000 patients. Also as part
of the deal, PharMerica agreed to
purchase nearly all (95%) of its
prescription pharmaceuticals from
AmerisourceBergen for five years, ending
in 2012.
The company's growth strategy hinges
upon developing its business in its
existing markets by adding new
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
24
customers and by using its larger size to
grab business away from its competitors
in those markets. PharMerica is also on
the lookout for acquisition targets
(including snapping up its competitors
when it can) particularly among the
small, regional providers that abound in
the fragmented institutional pharmacy
marketplace.
It found one such target in early 2010 when
it agreed to buy fellow institutional
pharmacy provider Integrity Pharmacy
Services, which expanded PharMerica's
operations further into Florida,
Massachusetts, and Pennsylvania.
PharMerica receives the nearly half of its
annual pharmacy services revenue from
government payor, primarily Medicare.
Other payors include institutional health
care providers, commercial insurance
companies, and contracted providers.
The company intends to beef up its generic
drug dispensing rates as a way to reduce
costs and capture more customers. About
three-quarters of the prescription drugs
PharMerica dispenses are generic, and it
expects to increase that number as more
pharmaceutical companies lose exclusivity
patents and additional generics are
introduced to the market
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
25
9.
Accredo Health,
Incorporated
n/a
6,530
1640 Century Center Pkwy.
Memphis, TN 38134 United
States
Phone: 901-385-3688
Fax: 901-385-3689
www.accredo.com
Accredo Health is one pharmacy where
you won't be able to pick up a bottle of
aspirin. As the specialty pharmacy
segment of pharmacy benefits manager
Medco Health, Accredo dispenses hightech injectable and infusion drugs for
chronic and serious illnesses such as
cancer, multiple sclerosis, hemophilia,
pulmonary arterial hypertension (PAH),
and certain autoimmune disorders. Under
contracts with managed care
organizations and drugmakers, it delivers
drugs and related supplies in
temperature-controlled packaging to
patient homes or clinics. It also provides
consulting and monitoring services to
make sure patients are complying with
their drug regimens, and it files claims on
behalf of patients and doctors.
The company dispenses drugs from three
main pharmacies (located in
Pennsylvania and Tennessee) and
through a number of satellite facilities
across the US. Parent Medco aims to
expand Accredo's service offerings to
provide patient solutions that simplify
administration processes and control
drug costs. President CommercialStrategy and
Operations
The organization's specialty pharmacy
services are offered through divisions
including Hemophilia Health Services,
which specializes in therapeutics for
bleeding disorders. Another unit, Critical
Care Systems (acquired in 2007),
provides patient infusions at outpatient
clinics or in patients' homes for anti-
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Michael A. James
President
CommercialStrategy
and Operations
26
infective, nutritional, pain management,
and chemotherapy treatments, among
others. Though most of Accredo's
dispensed products are injectable or
infusion therapies, it also deals with
some complex inhaled and oral medicines
that require enhanced patient support
services.
An affiliated company, Proherant Health
(formerly Accredo Clinical Business
Solutions), offers support services to
pharma, biotech, and medical device
companies. Its services -- including
doctor and patient education and clinical
call center support -- aim to assist clients
in successfully launching their products.
Accredo Health was acquired by Medco
for $2.3 billion in 2005
10.
US Oncology, Inc
3,511.7
9,700
10101 Woodloch Forest
The Woodlands, TX 77380
United States
Phone: 281-863-1000
Toll Free: 800-381-2637
www.usoncology.com
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
US Oncology has got the backs (and the
back offices) of more than 1,300
oncologists across the US. The company,
which is majority-owned by investment
firm Welsh, Carson, Anderson & Stowe,
provides management and support
services to some 500 oncology practices
and radiation treatment centers
throughout the US. Its range of
management services includes billing,
recruiting, data management, drug
purchasing, and accounting. It also offers
a separate drug purchasing service,
negotiating prices with pharmaceutical
and biotech companies for specialty
cancer drugs and distributing them to
client practices. Additionally, US
Rolando De Cardenas
VP, Pharmaceutical
Distribution
27
Oncology helps its affiliate practices
expand into full-fledged cancer treatment
centers.
US Oncology has helped develop more
than 80 such cancer centers, and it has
ownership stakes in about half of those.
It also manages some 15 radiation
clinics. The company provides
development capital and shepherds its
medical practices through the process of
negotiating regulatory issues, building
the facilities, and setting up operations.
For independent practitioners, the
company either offers a comprehensive
management package or select offerings
on a fee-for-service basis. Clients can
also elect to only participate in the group
purchasing and distribution segment.
Along with its services aimed at cancer
doctors, the company serves
pharmaceutical and biotechnology firms
by designing and supervising cancerrelated clinical trials. It enlists its
affiliated physicians in the trials, thus
giving them access to the latest available
treatments. The company also provides
services to insurance companies to help
them avoid unnecessary care costs.
US Oncology works to steadily expand its
network of affiliated practices, which
already includes some 1,300 doctors. It
has also been expanding its drug
distribution and mail-order operations,
and it plans to grow its offerings for
pharmaceutical companies.
In early 2008 long-time CEO Dale Ross
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
28
resigned and was replaced by company
president Bruce Broussard. Ross
remained with US Oncology for another
year as executive chairman.
Investment firm Welsh, Carson,
Anderson & Stowe (WCAS) owns more
than 70% of the company. Directors
Scott Mackesy and Russell Carson are
general partners of WCAS
11.
Watson
Pharmaceuticals,
Inc
2,793.0
5,830
311 Bonnie Cir.
Corona, CA 92880-2882
United States
Phone: 951-493-5300
Fax: 973-355-8301
www.wstsonpharm.com
Watson Pharmaceuticals tries to have the
best of both worlds, with operations in
the US generics market and the higherprofit-margin branded drug business. The
company's broad generics portfolio of
about 140 products includes treatments
for hypertension and pain, as well as
smoking cessation products,
antidepressants, and oral contraceptives.
Its line of about 30 branded drugs
focuses on urology and nephrology; it
markets its branded products, including
treatments for iron deficiency anemia
and overactive bladder, to specialist
physicians in the US. Additionally,
Watson distributes its own and thirdparty products to independent
pharmacies and health care providers
through its Anda and Valmed
subsidiaries.
Watson Pharmaceuticals' bread and
butter is its generics line, accounting for
about 60% of sales. An important part of
the company's generics business is its
generic oral contraceptive line. Watson
has a leading position in the US in
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Andrew Boyer
SVP Sales and
Marketing, U.S.
Generics Division
29
generic oral contraceptives with roughly
two dozen different oral contraceptive
products and about a 35% market share.
Its top five oral contraceptives TriNessa,
Low-Ogestrel, Necon, Lutera, and
Microgestin, account for almost 50% of
the total Watson oral contraceptives
portfolio.
The generics business overall has
struggled with the loss of a key product
and the general decline of generics
revenue over time. The big loss came a
few years ago when a distribution
agreement with Purdue Pharma for
oxycodone HCl (generic OxyContin)
ended. Name-brand drug companies
sometimes authorize an "official" generic
form when a drug goes off-patent, in
order to recoup some losses that
inevitably result from generic
competition. Watson had distributed the
authorized generic of OxyContin since
the drug lost patent protection in 2005,
and the drug was a big contributor to the
company's revenue.
Watson's strategy for combating
declining sales (as well as the loss of the
OxyContin deal) is to develop and
acquire new products to beef up its
pipeline. In 2009 alone the company
launched about a dozen new products
including Metoprolol ER to treat angina,
emergency contraceptive NextChoice,
and Galantamine for the treatment of
Alzheimer's disease.
The previous year Watson introduced a
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
30
generic version of Biovail's
antidepressant Wellbutrin XL, Johnson &
Johnson's Duragesic pain patch and its
Alzheimer drug Razadyne, Duramed's
Mircette oral contraceptive, and GSK's
Nicorette smoking cessation gum.
Additionally, the company co-promotes
AndroGel, a male hormone replacement
therapy, with Unimed and distributes an
authorized generic of Merck's Fosamax.
To pick up a few more products, expand
its development pipeline, and broaden its
geographic presence, Watson spent
about $1.75 billion to acquire privately
held Arrow Group in 2009. Arrow
develops and manufactures generic
pharmaceuticals in Canada, Malta, and
Brazil and distributes its products in
more than 20 countries.
Major products in the company's branded
drug segment include prostate therapies
Trelstar and Rapaflo. Watson is building
its branded product line through several
partnerships and joint ventures, as well
as through acquisitions of later-stage
drug candidates. Because it relies on
partnerships to augment its product line,
the company's bottom line is also
vulnerable to the expiration of those
deals. For example, Watson lost a key
product in 2009 when its license
agreement with Sanofi-Aventis for
anemia drug Ferrlecit ended.
To stave off losses related to losing
licenses, Watson has been trimming
costs by consolidating some operations
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
31
and moving some manufacturing
operations overseas. It established a
plant in Goa, India, for example, and has
announced the closures of some US
facilities, including the planned closure of
a facility in Carmel, New York (it will
transfer these operations to Goa). It
owns or has invested in plants in China
and other parts of India and plans to
continue its overseas growth; however,
Watson divested its interest in an API
(active pharmaceutical ingredient) plant
in Taiwan in 2010 after deciding that the
operation was not key to the company's
long-term growth strategy
12.
Prescription
Solutions, Inc
14,452.0
3,500
2300 Main St.
Irvine, CA 92614-9731 United
States
Phone: 949-442-8081
www.prescriptionsolutions.com
Prescription Solutions has the Rx for
insurance providers reeling from high
drug costs. The company provides
pharmacy benefit management (PBM)
services to health insurers, managed
care organizations, employers, unions,
and other clients, representing more than
10 million members nationwide. Its
services range from formulary
management and benefit design to
pharmacy network management, online
reporting, and claims processing. The
company also operates two mail order
pharmacies and provides specialty
pharmacy services for high-cost biotech
drugs. Founded in 1993, Prescription
Solutions is a subsidiary of UnitedHealth.
Along with its commercial and union
members, Prescription Solutions
manages the Medicare Part D
prescription drug benefits of millions of
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Brian Solow
VP Clinical Services
and Senior Medical
Director
32
US seniors.
The company works through a network of
about 65,000 pharmacies across the US,
as well as its two mail order pharmacies
located in Carlsbad, California, and
Overland Park, Kansas. In order to
improve its profit margins, Prescription
Solutions has been promoting the use of
its mail order pharmacy services and
cheaper generic drugs.
It encourages the use of generic drugs
by offering reduced or no co-pays for
generics through mail service; providing
a generic sampling program for
physicians; and offering a real-time Web
tool for Medicare Part D customers that
compares retail with mail order pricing
and brand with generic pricing.
As part of its strategy to promote the use
of its online mail order business, the
company has expanded ordering options
to include a range of over the counter
medications and personal care products
such as first aid ointments, pain
relievers, and vitamins.
In addition to order fulfillment and
benefit design consultation, the
company's pharmacy management
services include drug utilization reviews,
disease therapy management, and
adherence programs, all designed to help
clients keep drug costs manageable by
identifying high-usage areas and clients
and then determining ways to make their
usage more efficient (such as through
the use of generic drugs or by
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
33
disseminating information about how to
live healthier lifestyles).
In addition to its pharmacy management
services, Prescription Solutions operates
a consumer health products business
that delivers medical supplies, including
home respiratory equipment and
diabetes testing materials, to patients' in
their homes.
UnitedHealth gained Prescription
Solutions when it acquired PacifiCare
Health Systems in 2005, and it
established the unit as one of its main
reporting segments in late 2007.
Prescription Solutions' operations account
for about one quarter of its parent
company's revenues
13.
Kinray Inc
5,100.0
1,000
152-35 10th Ave.
Whitestone, NY 11357 United
States
Phone: 718-767-1234
Fax: 718-767-4388
www.kinray.com
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Kinray, the US's top private wholesale
drug distributor, is nothing if not
independent. It provides generic,
branded, and repackaged drugs, health
and beauty products, medical equipment,
vitamins, and diabetes-care products.
The distributor also offers about 800
private label products under the
Preferred Plus Pharmacy brand. It serves
more than 4,000 independent
pharmacies, long-term care facilities, and
specialty pharmacies in states stretching
from Maine to Delaware; though Kinray
is looking to supply generic drugs to
pharmacies nationwide. The firm was
founded in 1944 by Joseph Rahr. His son,
CEO and president Stewart Rahr, has
Jean Kappes
VP Generic Sales and
Business
Development
34
owned Kinray since 1975.
Like its bigger rivals McKesson, Cardinal
Health, and AmerisourceBergen, Kinray
had depended on speculative buying (the
practice of stocking up on drugs it
anticipated were about to go up in price)
for much of its rapid growth. However,
that mode of operation took a hit when
Bristol-Myers Squibb was sued by the
SEC over the practice several years ago.
The company also faces stiff competition
from mail-order pharmacies, and in
response has stepped up its online
ordering capabilities with its Weblink
system. The system allows pharmacies to
view real-time pricing information,
generate reports, invoices, and
statements for inventory management,
and order class 2 controlled drugs using
Kinray's Controlled Substance Ordering
System (CSOS).
Kinray is also focused on selling highermargin generic drugs, a big part of its
business, and private-label home health
care products. In addition, the company
offers merchandising and marketing
programs, including retail pricing
consultation, shelf-labeling, and
promotional materials.
The company's stock of goods doesn't
stop at medical supplies and prescription
drugs. Other products include DVDs,
fragrances, and household items (both
branded and the private Preferred Plus
Pharmacy label).
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
35
Kinray's billionaire CEO and owner, Rahr
also operates an informal lending system
in which he finances local pharmacy
owners looking to expand through
acquisitions or to make up financial
shortfalls. Rahr's lending activities have
grown to about $30 million, with the
tycoon charging prime plus 1% interest
on loans of up to about $1 million
14.
Stephen L.
LaFrance
Pharmacy, Inc
560.0
1,500
3017 N. Midland Dr.
Pine Bluff, AR 71603 United
States
Phone: 870-535-2411
Fax: 870-535-5601
www.usadrug.com
Stephen L. LaFrance Pharmacy (dba USA
Drug) boasts more than 150 drugstores
in Arkansas, Mississippi, Missouri,
Tennessee, and Oklahoma. Besides USA
Drug, company banners include Ike's
Discount, Super D Drugs, May's Drug
Stores, Drug Warehouse, and Med-X
Drugs. The pharmacy chain franchises
locations and fills prescriptions and sells
home health care products online at
usadrug.com. It markets its own line of
merchandise under the Select Brand
name. The firm's wholesale distribution
operation, SAJ Distributors, supplies
health, beauty, and general merchandise
to discount, drug, and grocery stores.
Founded in 1968 by pharmacist and
chairman Stephen L. LaFrance, the
company is still family-owned and operated.
The regional drugstore operator provides
shoppers an alternative to the
megachains, such as Walgreen and CVS,
which each number more than 6,000
locations. The company caters to
individual markets with a variety of
banners. About a third of its stores are
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Frank Muller
Manager Sales
36
USA Drug Express outlets, which
measure between 2,000 to 3,500 square
feet, and sell only pharmaceuticals and
first aid supplies, such as bandages, and
non-prescription pain relievers and other
medicines. The remaining stores are all
full-service outlets with a broad selection
of front-end merchandise. Its Ike's stores
in the Memphis, Tennessee market,
measure about 40,000 square feet. Like
the bigger chains, some of the firm's
pharmacies are opening in-store health
clinics to provide routine medical and
first aid care. In 2007 the company
struck a deal with MedBasics to begin
opening medical clinics within certain
USA Drug stores for a total of 60 within
three years.
The regional drugstore operator acquired
22 Med-X stores and the 39-store May's
chain in mid-2004
15.
J M Smith
Corporation
2,367.1
950
101 W. St. John St.
Ste. 305
Spartanburg, SC 29306 United
States
Phone: 864-542-9419
Fax: 864-582-6585
www.jmsmith.com
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
J M Smith Corporation has gone from
corner drug store to serving drug stores
and more. A holding company serving
pharmacies and government agencies,
the company consists of Smith Drug
Company, Integral Solutions Group,
QS/1 Data Systems, and Smith Premier
Services. Smith Drug Company provides
purchasing and distribution services for
independent pharmacies, while QS/1
develops computer systems for medical
equipment providers, institutional
pharmacies, and related businesses.
Smith Premier Service offers prescription
benefit management services for
Dave Brown
General Manager
37
16.
Diamond Drugs,
Inc
240.0
750
n/a
850
645 Kolter Dr.
Indiana, PA 15701-3570 United
States
Phone: 724-349-1111
Fax: 724-349-2945
www.diamondpharmacy.com
17.
Quality King
Distributors Inc
2060 9th Ave.
Ronkonkoma, NY 11779 United
States
Phone: 631-737-5555
Fax: 631-439-2388
www.qkd.com
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
employers and insurance carriers.
Integral Solutions serves local
government agencies providing
hardware, software, forms and offering
data processing services
Many of Diamond Drugs' customers are
behind bars. The company, through its
Diamond Pharmacy Services unit,
provides pharmacy services to
correctional facilities for adults and
juveniles in some 40 states and Puerto
Rico. Diamond Pharmacy Services also
serves nursing homes across
Pennsylvania, offering medical records
services, formulary management, and
respiratory and intravenous therapies.
The company also operates Diamond
Drug retail drugstores and a medical
supply business in its hometown of
Indiana, Pennsylvania. The company is
owned and operated by the Zilner family
Quality King Distributors rules a
gargantuan gray-market empire. It buys
US name-brand OTC pharmaceutical and
branded personal care products that
have been exported to overseas markets,
re-imports them, then sells them below
suggested retail prices. The practice,
deeply disliked by US manufacturers, has
been ruled legal by the Supreme Court.
Quality King distributes its products to
pharmacy and grocery chains, grocery
distributors, and wholesale clubs
throughout the US. Subsidiary QK
Healthcare distributes branded and
generic prescription pharmaceuticals.
Bernard Nussdorf and his wife Ruth
founded Quality King in 1961 in Long
Island, New York. The Nussdorf family
Barbara Wilson
Manager
Michael Ross
Sales Director
38
18.
The Harvard Drug
Group, L.L.C
n/a
400
31778 Enterprise Dr.
Livonia, MI 48150 United States
Phone: 734-743-6000
Fax: 734-743-7000
www.theharvarddruggroup.com
still owns the company
Drugs, not scholars, are what come out
of this Harvard. The Harvard Drug Group
distributes branded and generic
prescription and OTC drugs, vitamins,
and consumer products to independent
pharmacies, retail pharmacy chains, and
buying groups through more than 100
sales representatives and through
partnerships with about 35 different
vendors. The firm also offers
manufacturing services through its
partnership with Canadian drugmaker
Apotex. Founded as Great Lakes
Wholesale Drug in 1967, a steady
regimen of acquisitions helped it
transform into The Harvard Drug Group
in 1997. The company is controlled by
investment firm Court Square Capital
Partners.
In 2010 Court Square acquired Harvard
Drug Group from its former controlling
shareholder, H.I.G. Capital. The company
had been purchased through a
management buyout (MBO) transaction
led by investor H.I.G. in early 2007.
Along with its generics, the company
carries more than 3,000 brand products
and 600 controlled substances. The
group has five sales offices and three
distribution centers nationwide. One of
the company's biggest customers is the
federal government, to which it provides
more than 600 different items on the
federal supply schedule.
Harvard Drug distributes its products
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Robert Brown
SVP Business
Development and
General Counsel
39
through four subsidiaries. The Major
Pharmaceuticals division provides
consumer products. Medical supplies are
offered its through Expert-med division.
Its compounding agents are distributed
though Letco Medical and veterinary
products through its RS Veterinary
Supply division.
The company plans to grow its all of its
business segments through acquisitions
of specialty distributors and other
suppliers
19.
Fagen Pharmacy
55.0
254
915 S. Halleck
DeMotte, IN 46310 United States
Phone: 219-987-6468
Fax: 219-987-7226
www.fagenpharmacy.com
20.
H. D. Smith
Wholesale Drug
n/a
500
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
It's all in the family at Fagen Pharmacy.
The company operates more than 20
drugstores in small towns and midsize
cities throughout northwest Indiana and
the Chicago suburbs. Its store formats
vary and include full-line drugstores,
pharmacies within supermarkets, and
one pharmacy that supplies assisted
living facilities with pharmaceuticals. It
also operates an online pharmacy. Like
its national competitors, such as
Walgreen and CVS, the chain offers
health screenings, immunizations, and
other in-store services. The family-run
regional drugstore chain, founded by
president and CEO Gerald Fagen as a
single 4,000 sq. ft. location in 1972, has
grown by acquiring independent
drugstores
With a name like Smith you might think
it's all about generics, but H. D. Smith
Wholesale Drug is more than that. The
company supplies pharmaceuticals
(brand name and generic), over-the-
Melissa Fagen
Director, Retail
Operations
40
Company
counter supplements, and other health
care products to pharmacies, hospitals,
and retailers. It also provides inventory
management services for government
agencies, including most branches of the
military, veterans clinics, and federal
prisons. In addition to supplying drugs,
H. D. Smith offers a variety of marketing
and merchandising services including
point-of-purchase signage, store design,
direct-to-consumer advertising
programs, and loyalty program
implementation.
3063 Fiat Ave.
Springfield, IL 62703 United
States
Phone: 217-753-1688
Fax: 217-467-8299
www.hdsmith.com
H. D. Smith includes Texas Drug
Company, Smith Medical Partners (its
injectables and vaccine distributor),
Barnes Wholesale Drug (California), and
J.J. Balan (a generic drug telemarketer).
It also has distribution warehouses in
Illinois, Kentucky, New Jersey, Florida,
and New Hampshire. The company
announced a $46 million expansion
project at its headquarters facilities in
Illinois in 2007.
Chairman Emeritus Henry Dale Smith
founded the company in 1954. His
descendents, Henry Dale Smith Jr. and J.
Christopher Smith, hold the positions of
CEO and president, respectively
21.
Walgreen Co.
63,335.0
238,000
200 Wilmot Rd.
Deerfield, IL 60015 United
States
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
Walgreen offers an old-fashioned tonic
for fiscal fitness: quality over quantity
and homespun growth rather than
growth through acquisitions. It works. It
operates nearly 7,500 drugstores in 50
states, the District of Columbia, Guam,
and Puerto Rico, as well as two mail-
41
Phone: 847-914-2500
Fax: 847-914-2804
www.wallgreens.com
order facilities. Prescription drugs
account for about two-thirds of sales; the
rest comes from general merchandise,
over-the-counter medications, cosmetics,
and groceries. Walgreen usually builds
rather than buys stores, so it can pick
prime locations. Most stores offer drivethrough pharmacies, and almost all offer
one-hour photo processing. Walgreen is
slowing future store openings to focus on
strengthening existing stores.
Walgreen's strategic shift coincides with
a change in leadership, the deep
recession and looming health care reform
in the US, and follows a defeat by
archrival CVS in a takeover battle for
Longs Drug Stores in late 2008.
Walgreen proved more successful in its
acquisition of the specialty pharmacy
business of McKesson Corporation,
completed in December 2008. It made
the purchase to further strengthen the
#4 position of its Walgreens Specialty
Pharmacy business.
The sick US economy slowed sales and
earnings growth, along with prescription
drug sales, in fiscal 2009 and 2008
(relative to previous years) and caused
Walgreen to curtail its break-neck pace
of organic growth. In fall 2008 the firm
announced that it will cut costs, unclutter
its stores, and change the way it fills
prescriptions in response to increased
competition and slowing drug sales. In
2009 the company trimmed its
management ranks by about 1,000
positions (about 9% of its corporate
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
42
management). To grow sales at existing
stores, the company plans to begin
selling beer and wine at about 3,100 of
its stores as it procures liquor licenses.
(Rivals CVS and Rite-Aid also stock
alcohol in their stores.) Still, in fall 2009
the company opened its 7,000th
drugstore and sees long-term potential
for more than 13,000 US stores. With the
opening of a store in Wasilla, Alaska, in
mid-2009, Walgreen stamped its retail
footprint on all 50 US states.
Meanwhile, it picked up a regional rival
that wasn't faring too well. Walgreen
paid about $1 billion (including some
$460 million in debt) for New York-based
drugstore chain Duane Reade. The
purchase made Walgreen the market
leader in New York City, adding Duane
Reade's 250-plus stores in the metro
area to Walgreen's 70 locations. The
move is a strategic one for Walgreen,
which is looking to expand in urban
areas. Duane Reade was founded in
lower Manhattan and was purchased
from private equity firm Oak Hill Capital
Partners. In recent years, the regional
chain has worked to develop a new
"urban box" store format to maximize
sales per square foot in densely
populated Manhattan. Walgreen plans to
retain the Duane Reade name, as well as
many Duane Reade employees.
Walgreen boasts additional pending
purchases, including about 20 Ike's and
Super-D drugstores, based in Memphis,
Tennessee, to be acquired from USA
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
43
Drug. Walgreen also is buying several
drugstores in Puerto Rico from El Amal.
In early 2010 the uber retailer completed
the acquisition of a dozen Eaton
Apothecary pharmacies in Boston from
Nyer Medical Group. The Eaton
Apothecary deal was part of Nyer Medical
Group's liquidation and is worth about
$20 million. The pharmacy operator also
bought 25 pharmacies from Snyder's
Drug Stores, located in Minnesota, in
2010. (Ailing Snyder's was owned by
Canada's Katz Group.) In 2009 the
company acquired about a dozen Rite Aid
locations and 30-plus stores from New
Jersey-based Drug Fair. The scaled-back
growth plan through 2011 is designed to
reduce capital spending by about $1
billion and free up cash for investment in
other activities.
Walgreen also aims to play an
increasingly important role in the solution
to America's health care crisis through
about 375 convenient care in-store
clinics operated by Take Care Health
Systems. In a bid to diminish its reliance
on retail stores for growth and expand its
in-store network of health clinics,
Walgreen formed a new Health and
Wellness division to operate clinics and
pharmacies at large-company worksites.
To that end, it has acquired two
operators of worksite health centers, Itrax, Inc and Whole Health Management.
Previously, Walgreen acquired in-store
health clinic operator Take Care Health
Systems, which managed about 145
clinics in about a dozen states, and made
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010
44
it part of the new Health and Wellness
division. Walgreen also provides
additional services to pharmacy patients
and prescription drug and medical plans
through Walgreens Health Services. The
company's Walgreens Health Initiatives
subsidiary offers specialty pharmacy,
mail-order pharmacy, and pharmacy
benefits management services.
With more prescription drug business
going to managed-care health plans,
convenience has trumped price in the
race to attract new customers. (Co-pays
are the same at any chain, and sick folks
are often short on patience.) Walgreen
has led the movement in creating a
"convenience drugstore" chain with
freestanding stores. The strategy has
several advantages. Walgreen's
freestanding stores are more visible than
those in strip malls and offer shoppers
ample parking and easy in-and-out
access. About a fifth of its stores are
open 24 hours a day and the abundance
of drive-through pharmacies adds to the
chain's convenience offerings. Because
convenience also means being closer to
customers, Walgreen builds new outlets
at high-traffic locations (sometimes
relocating new stores to better locations
just blocks away)
Γραφείο Οικονομικών & Εμπορικών Υποθέσεων Σικάγο, Ιούνιος 2010