How do pharma distributors make money?

Pharmaceutical distributors buy products from manufacturers at list price and we sell them to customers at list price. Pharmaceutical distributors make money by charging manufacturers a percentage of the wholesale acquisition cost (WAC) of their products, or list price, for distribution services. Manufacturers create drugs and sell them wholesale to wholesalers, who in turn sell drugs to pharmacies. In this process, wholesalers use complex logistics and packaging methods to receive and deliver medicines on time and in good condition.

As logistics experts, distributors don't manufacture, prescribe, or promote drugs. Distributors also don't make clinical decisions about who should or should not receive a medication or what medication is best for a particular patient. Getting a drug starts with a prescription, and distributors help ensure that what your healthcare provider prescribes reaches your hospital, pharmacy, or other healthcare facility safely and reliably. As the healthcare system changes rapidly, distributors are constantly envisioning new ways to move and protect medicines from the country, while protecting patient safety.

Supply chain intermediaries, wholesalers, PBMs, pharmacies and payers benefit from a combination of scale and opacity. Distributors continuously monitor, protect and improve the safety of the pharmaceutical supply chain to ensure that medicines are handled, stored and delivered appropriately and safely. In the absence of a wholesaler, pharmaceutical companies may have to designate their own distribution team or have to give their sales team additional work to distribute along with sales as well. In addition, the net profit margin of pharmacy benefit managers (PBMs) is misleading, because they list the cost of drugs as an expense even though they never actually handle drugs.

Due to the complicated nature of the pharmaceutical supply chain, it is not surprising that there has been significant vertical integration in space. As more pharmaceutical companies launch and require more people for the wholesale and distribution of their products. The industry purchases prescription drugs and other medical products directly from pharmaceutical manufacturers for storage in warehouses and distribution centers across the country. When a covered payee fills a prescription at a retail pharmacy, the pharmacy collects the payee's copayment or coinsurance and dispenses the drug from inventory.

The complexity of the drug supply chain and the new regulation in space mean that the pharmaceutical landscape is changing. For example, mail-order pharmacy PillPack sorts and packages patients' medications based on their dosing schedules and then delivers them directly to patients' homes. Patients no longer have to go to a doctor, payer, PBM, wholesaler and pharmacy to receive these generic drugs, but can use a single application to receive and complete a subscription. Patients never pay directly to manufacturers who develop their drugs or to the pharmacies that distribute them.

The pharmaceutical wholesale business in India is one of the most profitable businesses in India and will not be affected by any pandemic situation.

Rachel Celli
Rachel Celli

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