The pharmaceutical supply chain is set to undergo a big
change. Walgreen, the largest drug retailing chain in the US, Alliance Boots
and AmerisourceBergen signed a $400bn 10-year agreement that will create what
Forbes magazine coined the “Earth’s Drugstore”. Not only will the agreement
create “Earth’s Drugstore” but it appears it is set to create one of the
largest and most influential global supply chains.
As pressure mounts on the healthcare industry to cut costs,
manufacturers, distributors, retailers and all others involved in the industry
are looking for ways to increase profitability. In 2012, Walgreen took a 45%
stake in Alliance Boots as part of a three year merger. Alliance Boots was formed
in 2006 through a merger of the British high street pharmacist Boots Group and
the pan-European wholesale and retail pharmacy group Alliance Unichem. It has
locations in 25 countries and its operations are split in three areas – health
and beauty retail, pharmaceutical wholesaler and contract manufacturing.
Meanwhile, in its attempt to expand globally, AmerisourceBergen acquired World
Courier, a global specialty logistics provider in clinical trials.
AmerisourceBergen has serviced Walgreen’s specialty business
for years. However, as it gets set to replace Cardinal Health, it will expand
its services to include distribution of branded and generic pharmaceuticals to
Walgreen’s 11,000 plus retail stores, mail order and specialty pharmacies.
Daily deliveries of drugs will also be provided to Walgreen’s stores, thus
reducing inventory in Walgreen’s existing warehouses. Previously, Walgreen had
its own network in which it distributed more than 80% of its own drugs but over
time this will all be transferred over to AmerisourceBergen.
The three companies have also agreed to collaborate and
share best practices to provide manufacturers with integrated solutions for
global clinical trial logistics and “innovative” global 3PL services.
Another interesting part of the agreement is that Walgreen
and Alliance Boots will have the right to invest up to 23% in
AmerisourceBergen. Combined the three companies hope to provide a force in
which it is able to negotiate pricing with manufacturers and pass those costs
on to consumers world-wide.
Partnerships such as this are likely to not only increase
due to rising costs and increasing government regulation, but they are also
likely to increase competition with global logistics providers such as DHL and
UPS.
