Among the challenges faced by the generic industry is the trend of wholesaler and pharmacy partnerships, alignment and amassing of scale. McKesson and Rite Aid, AmerisourceBergen and Walgreens, and Cardinal Health and CVS are among the generic purchasing partnerships that have shaped the generic drug distribution channel. These partnerships increase the purchasing power of both wholesaler and retailer, and squeeze price discounts at least two to five percent, putting increased pressure on generic manufacturers. Leading generic companies will need to think differently about the market. Offering unique value-added services, broadening drug and service portfolios, and ensuring reliable volume supply are critical strategies for maintaining profits and high quality affordable healthcare in light of this challenge.
Generic manufacturers will need to offer competitive drug prices to remain attractive to wholesaler and pharmacy partners. To manage these pressures, they will have to find ways to decrease production costs, optimize manufacturing and achieve operational efficiencies. Fortunately, there is opportunity for improvement and cost savings. On average, generic and branded pharmaceutical companies hold over 130 days of inventory, with top players holding around 100 days. To become more efficient, companies may want to adopt an end-to-end inventory
To read more about the generic industry and the trend of wholesaler and pharmacy partnerships, review the Wholesale Distribution of Generic Drugs article by clicking through the PDF below.