AmerisourceBergen is the source for many of North America's pharmacies and health care providers. The distribution company serves as a go-between for drug makers and the pharmacies, doctors' offices, hospitals, and other health care providers that 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. Other operations include pharmaceutical packaging. AmerisourceBergen also provides commercialization and consulting services to its customers.
The company operates distribution centers and other locations throughout the US and in Canada, as well as in select global markets.
The company operates through an alphabet soup of subsidiaries. Its main operating segment -- pharmaceutical distribution -- consists of its AmerisourceBergen Drug Corporation (ABDC) and AmerisourceBergen Specialty Group (ABSG). The company's remaining revenues (classified under the "other" segment) come from the AmerisourceBergen Consulting Services (ABCS) and World Courier (specialty logistics) units. Its AmerisourceBergen Packaging Group (ABPG) was taken apart in 2012 and its American Health Packaging and AndersonBrecon businesses were moved into other divisions. (AndersonBrecon was divested in 2013.)
Its primary distribution business, ABDC, offers a full range of generic and brand-name pharmaceuticals, over-the-counter products, and home health care supplies and equipment. Meanwhile, ABSG delivers specialty drugs for particular diseases (especially cancer) directly to the doctors who administer them.
The company's consulting services business helps retailers and manufacturers coordinate marketing programs to successfully launch new biotech drugs and increase sales of existing drugs. ABCS also provides sales tracking and logistics support, as well as research, field staffing, co-pay assistance programs, and risk mitigation services. In addition, the division provides group purchasing, merchandising, and managed care services to independent and hospital-based pharmacies.
Sales and Marketing
AmerisourceBergen's ABDC division serves customers including hospitals and health systems, retail and mail order pharmacies, medical clinics, and long-term care facilities throughout North America.
Each of the company's segments have independent sales and marketing personnel who specialize in the unit's specific offerings. AmerisourceBergen also has a corporate marketing group for branding and broad-scale initiatives.
Revenues were flat (declining by about 1%) at some $79.5 billion in 2012 due to a 3% decline in sales within the ABDC division, which was offset by a 6% increase in ABSG sales and growth from acquisitions. The slight decline in revenues followed three years of earnings growth for AmerisourceBergen.
Profits have risen steadily over the last five years, including a 2% rise to $719 million in 2012 on lower intangible asset impairments and cost of goods, as well as decreased operating expenses in the pharmaceutical distribution segment.
AmerisourceBergen's mission is to help its customers reduce health care expenses, increase channel efficiencies, and improve the quality of patient outcomes.
The company benefits from forming large supply agreements with key clients, and factors such as competitive pressures and industry consolidation can occasionally hamper (or assist) the company's growth efforts in this area. In 2012 its biggest customer, Medco Health Solutions (17% of revenues) merged with Express Scripts, which contracted with one of AmerisourceBergen's competitors; however, following the merger, Express Scripts alleviated concerns when it signed a new supply agreement with AmerisourceBergen. The company expects the new Express Scripts contract to boost revenues in 2013.
AmerisourceBergen occasionally divests noncore operations to focus on key areas of growth. In 2013 the company sold its AndersonBrecon division, which provided contract packaging services, to an investor group led by Frazier Healthcare for some $308 million. It also sold its AmerisourceBergen Canada Corporation (ABCC) pharma distribution business that year, while retaining its Canadian specialty distribution operations.
Mergers and Acquisitions
Acquisitions have helped AmerisourceBergen expand its reach to new customer segments and geographic markets. In 2012 the company acquired World Courier, a specialty transportation and logistics provider. World Courier specializes in delivering specialty medicines used in clinical trials to locations around the globe. The $520 million purchase allows AmerisourceBergen to expand its specialty drug distribution services outside of North America.
In late 2011 the company paid $250 million to acquire TheraCom from CVS Caremark. The business brought in additional commercialization and reimbursement support activities to fatten up ABCS' consulting services. Also in 2011 AmerisourceBergen acquired IntrinsiQ to enhance its data service offerings for providers of cancer care services and medicines.