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What Is a Pharmaceutical Wholesaler?

Sean Peek
Sean Peek
business.com Contributing Writer
Updated Sep 22, 2021

Pass savings along to customers and clients with wholesale pharmaceuticals.

The pharmaceutical industry is massive. It generates nearly $1.3 trillion in revenue annually. However, not everyone knows how their medications get from the manufacturer to their local pharmacy. In many instances, pharmaceutical wholesalers are the method. Here is more on how the process works.  

What is a wholesale drug distributor?

Wholesale drug distributors purchase medications directly from manufacturers. The wholesale drug distributor in turn sells the medications to pharmacies. The United States Food and Drug Administration urges all consumers to validate the licenses of wholesale drug distributors. Each state has a specific agency responsible for licensing wholesale drug distributors. This is extremely important for consumer protection. Without a license, a wholesale drug distributor may be linked to serious offenses, including counterfeit prescriptions and unapproved medication distribution. Any websites with taglines like “not a prescription pharmacy” are likely operating without a license.

There are two main business models that categorize wholesale drug distributors. Full-line wholesalers purchase a company’s complete product line. In contracts between manufacturers and distributors, certain medications may be excluded. On average, pharmacies make up 75% of distributors’ profits. The other type of wholesale drug distributor is a specialized company. These distributors purchase specialty drugs to sell to clinics and hospitals.

How do drug wholesalers make money?

Drug distributors make money by following a concise business model: buy medications at low prices in bulk, and sell them to customers and pharmacies at an increased market price. The distributors’ income comes from the difference between what they paid and what the medications were sold for. The consumer typically pays the most through the supply chain, since pharmacies also need to make a profit from medications. However, consumers are finding that purchasing directly from a distributor instead of a pharmacy can cut their overall medication costs. Wholesalers still make a profit from direct sales, but retail the products to patients instead of pharmacies. Since specialty drugs make up about 30% of wholesale revenue, this business model has experienced significant growth over the past two years.

Bottom LineBottom line: Pharmaceutical distributors make most of their money by charging a small percentage of their product’s market price, also known as a wholesale acquisition cost (WAC), in exchange for distribution services.

Savings for customers and clients

While some might argue wholesale providers aren’t needed anymore, wholesale pharmaceutical products do provide savings to clients and customers. Whether you’re in pharmaceutical retail, pharmaceutical supply or home healthcare, the goal is to provide the best-quality products and services at reasonable prices.

Healthcare is expensive for consumers and pharmaceutical suppliers alike. A trusted pharmaceutical wholesaler keeps costs low and inventory high, and gives clients better buying power. Pharmaceutical wholesalers also provide products for pharmaceutical retailers. Since pharmacies offer a wide variety of products, it’s vital to get the best prices for your retail pharmacy. Wholesale vitamins are big sellers, for example, but pharmacies compete with big-box stores, vitamin shops and health food stores for those consumer dollars. Getting customers to think of your pharmacy first when purchasing vitamins is a challenge.

Did you know?Did you know? Home healthcare providers rely on wholesale pharmacy supplies for medical equipment, wound care and sterile fields. Wholesale surgical gloves, sterile syringes, bandages and other supplies save patients money.

Full-service pharmaceutical wholesalers

Full-service pharmaceutical distributors supply their clients with a variety of products and services to meet the needs of clients and customers. A pharmaceutical provider offering products like wholesale drugs and over-the-counter pain relievers saves independent pharmacists and home care companies valuable time as well as money.

Here are a few benefits of pharmaceutical wholesale suppliers:

  1. Savings on pharmaceutical supplies for pharmaceutical retailers
  2. Savings for clients and patients on high-quality care
  3. A full line of pharmaceutical products and supplies to retailers, hospitals, and home healthcare companies
  4. Competitive pricing on vitamins and other products to attract customers

Wholesale pharmacy supplies

Whether you’re an independent pharmacy or a part of a pharmacy chain, wholesale pharmacy supplies are a sensible way to increase revenue and save money.

Wholesale medical supplies

Medical supply costs add up quickly for chronically ill patients. Regular purchasers of diabetic testing supplies, insulin syringes, arthritis treatments, joint support devices and incontinence supplies need every opportunity to save money.

FYIFYI: Small businesses that offer health insurance can provide ways for their employees to save even more money on their medications.

Wholesale vitamins and supplements

Vitamins, herbal remedies and supplements are a big business in the medical community. Patients who use nutritional supplements may find relief from symptoms and an improved sense of well-being from these products. Providing vitamins and supplements to your customers at competitive prices turns you into their one-stop source for all health-related purchases.

Here are a few ways to do that:

  • Visit pharmaceutical wholesaler trade show displays to develop relationships with industry specialists.
  • Meet with drug reps from various companies that offer significant savings on generic drugs for your customers. Drug reps also offer lots of free samples as an added incentive.

Who are the largest pharmaceutical distributors in the United States?

The largest pharmaceutical distributors include the companies below:

  • CR Pharmaceutical: This flagship subsidiary of the China Resources Group develops, manufactures and distributes an extensive range of pharma products.
  • Cardinal Health: This distributor and global manufacturer of medical and laboratory products is based out of Dublin, Ohio.
  • Alfresa Holdings: This wholesaler and distributor based primarily out of Tokyo aims to “support the pharmaceutical supply chains that are part of Japan’s social infrastructure, and strives to meet the full range of medical needs,” according to its website.
  • Anda Inc.: This company distributes over 15,000 different pharmaceutical products for nearly 400 manufacturers across a multitude of therapeutic categories.
  • AmerisourceBergen: Founded by lifelong druggist Lucien Napoleon Brunswig in 1871, this company distributed numerous vaccines and other medicines across the U.S. for most of the 20th century. AmerisourceBergen recently acquired Alliance HealthCare, hoping to expand its global reach.
  • Medipal Holdings: Another pharmaceutical wholesaler based out of Tokyo, Medipal also distributes animal care products and food processing raw materials.

All of these distributors have exceeded $4 billion in revenue. It’s possible that profits will decrease in the coming years due to legislation that blocks the overinflation of brand-name medications. Profits are also impacted by deflations occurring in the generic medication market.

Image Credit:

NanoStockk / Getty Images

Sean Peek
Sean Peek
business.com Contributing Writer
Sean Peek has written more than 100 B2B-focused articles on various subjects including business technology, marketing and business finance. In addition to researching trends, reviewing products and writing articles that help small business owners, Sean runs a content marketing agency that creates high-quality editorial content for both B2B and B2C businesses.