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 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 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.
The company operates more than 30 distribution centers throughout the US and has more than 150 offices in more than 50 countries worldwide.
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. The company’s two largest customers, Walgreens Boots Alliance and Express Scripts, accounted for 30% and 16% of total revenue, respectively, for fiscal 2016 (September year end).
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.
AmerisourceBergen's net revenue has been increasing for the last five years (2012-2016).
In fiscal 2016, net revenue increased by 8% to $146.85 billion due to higher revenue.
The Pharmaceutical Distribution segment’s revenue increased by 7% due to growth in both ABDC and ABSG revenue.
ABDC revenue increased by 5.6% driven by overall market growth, including sales to Walgreens Boots Alliance.
ABSG revenue increased by 17.1% due to the continued growth in its oncology business (including an increase in sales to community oncologists), higher third party logistics sales, and increases in the blood products, vaccine, and physician office distribution businesses.
Net income had been decreasing from fiscal 2012 on and plunged into a net loss in fiscal 2015, but recovered in fiscal 2016.
In fiscal 2016, AmerisourceBergen posted a net income of $1.43 billion (compared to net loss of $138.17 million in fiscal 2015) mainly due to higher net revenue and an income tax benefit of $37 million in 2016 as compared to an expense of $407 million in the prior fiscal year.
Net cash inflow decreased by 19% to $3.18 billion compared to fiscal 2015.
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.
AmerisourceBergen occasionally divests non-core operations to focus on key areas of growth. To supplement organic growth the company also makes selective acquisitions
Mergers and Acquisitions
Acquisitions have helped AmerisourceBergen expand its reach to new customer segments and geographic markets.
In 2016, MWI Animal Health, a part of AmerisourceBergen acquired St. Francis Group, the UK’s largest animal health buying group. The acquisition expands AmerisourceBergen and MWI’s global footprint in the animal health space, and also positions MWI to better support independent veterinary practices internationally.
In 2015 the company boosted its presence in the animal health industry when it acquired MWI Veterinary Supply. Also that year it bought $2.7 billion for PharMEDium Healthcare in a move to expand its compounded drug distribution operations.
In 2014 AmerisourceBergen purchased about 20% of Brazilian pharmaceutical wholesaler Profarma Distribuidora de Produtos Farmcêuticos; the two companies then launched a joint venture to provide pharmaceutical distribution in Brazil.