Pharma’s 90% Problem

Source: Forbes

There are three main wholesalers, AmerisourceBergen, Cardinal Health, and McKesson Corporation that account for more than 90 percent of wholesale drug distribution in the United States.

With multiple suppliers, wholesalers end up having a lot of bargaining power. Additionally, there are always new suppliers entering the market, who are willing to drop prices further to enter the market. So wholesalers negotiate with the existing players to offer the same price, for them to retain their existing market share—hence constantly hitting the prices.

This leads to almost 90 percent price erosion, from the price at which the innovator sold the drug versus the generic drug prices.

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