A world without distributors

Distributors are a critical link between pharmaceutical manufacturers and healthcare providers, helping to ensure patients can readily access the medications they need.
Cencora provides pharmaceutical distribution, a proficiency that extends well beyond healthcare logistics alone. Pharmaceutical manufacturers create life-changing therapies. Healthcare providers work to improve patient lives. As stewards of supply chain excellence, we are the critical link between the two, driving efficient, reliable, and secure access to the medications patients need.

Our robust and nimble distribution networks support the continuity of healthcare, even under the most challenging circumstances. The systems and processes we use every day ultimately offer providers more options and greater access to patient therapies.

But what would happen if distributors didn’t exist? Here are three ways healthcare in the United States could change.

1. Less innovation, more difficulty

For manufacturers, a world without distributors could shift focus away from innovation and toward infrastructure, ordering, billing, and collections. It could mean managing hundreds of thousands of healthcare provider customers.
For providers, it could mean managing accounts and orders from multiple manufacturers. The impact could be reflected in increased freight, ordering, and invoicing costs; delays in revenue generation; and financial risk exposure.
In 2022, the average number of…

23,636
Prescription drug SKUs distributors held in inventory
1,892
Active customer accounts served by company per distribution center
1,644
Customer shipping points serviced by company per distribution center
Source: 94th Edition HDA Factbook. https://www.hda.org/publications/94th-edition-hda-factbook-the-facts,-figures-and-trends-in-healthcare/

2. Billions in cost increases

Industry analysis quantified the financial benefits of distributors on healthcare and found them to be significant. Approximately 84 percent of distributor customers received deliveries of prescription pharmaceuticals five times per week or more, which can help control costs and reduce the need for long-term product storage.1
In 2022, distributors…

Statistic communicating that distributors picked more than 10M units per day. Also shown a warehouse worker packing boxes in one of our distribution centers.
Statistic communicating that distributors fulfilled an average of 22 units per order
A warehouse worker wearing a blue t-shirt reviewing inventory data on a small tablet device standing in front of a pallet of boxes.
A warehouse worker wearing red gloves carrying three medium-sized boxes down an aisle in one of our distribution centers.
Statistic communicating that distributors processed 4,600 orders per day per distribution center

Without distributors, considerable savings from value-added services like generic sourcing, patient adherence programs, and solutions that help independent community pharmacies thrive could vanish, and increased costs could be passed onto consumers.
Additionally, for manufacturers to ship directly to pharmacies and maintain the current service levels provided by distributors, the cost to the healthcare system could increase by as much as $63 billion dollars per year.2

[1] 94th Edition HDA Factbook. Accessed January 2024. Available online at https://www.hda.org/publications/94th-edition-hda-factbook-the-facts,-figures-and-trends-in-healthcare/
[2] https://www.hda.org/ Accessed January 2024.

3. Strained resources and elevated financial risk

Beyond these cost savings, distributors can help free up more of manufacturers’ time and resources for what they do best: developing innovative products.
Distributors also help mitigate financial risk for other stakeholders in the supply chain. We can help manufacturers recognize revenue sooner by taking immediate financial ownership of their products. Provider customers may then pay for these products on terms that reduce the time between dispense and reimbursement from third-party payers. Across the supply chain, this practice supports a marketplace that creates efficient, reliable access to the medications patients need most.
A pharmacist wearing a white lab coat standing in front of a desktop monitor fulfilling in order for a patient.
Three medical professionals (a light-skinned doctor standing holding a laptop, a dark-skinned person in business clothing holding a tablet device, and a light-skinned nurse in scrubs) having a conversation in a doctor’s office.
A pharmacist holding a tablet device consulting with another pharmacist while a patient waits behind the pharmacy counter.
Two Cencora team members wearing yellow safety vests in our distribution center, working to make healthcare products available and affordable.

Distributors are essential to modern healthcare.

Two Cencora team members wearing yellow safety vests in our distribution center, working to make healthcare products available and affordable.
Fortunately, patients all over the world can rely on the important work that distributors do to help make healthcare products available and affordable. The cost benefits, risk management, logistics, and efficiency provided by distributors to patients and 
partners throughout the healthcare continuum are invaluable.

 

As a leader in healthcare and through our work in pharmaceutical distribution and product commercialization, Cencora pursues our purpose to the benefit of the entire healthcare industry.
Two Cencora team members wearing yellow safety vests in our distribution center, working to make healthcare products available and affordable.

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