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AmerisourceBergen SWOT & PESTLE Analysis

ID : 52505153| Jan 2019| 15 pages

COMPANY PROFILE -AmerisourceBergen

Business Sector :Pharmaceuticals Sourcing and Distribution

Operating Geography :North America, Global

About AmerisourceBergen :

AmerisourceBergen is an American pharmaceutical sourcing and distribution services company that was formed in 2001 by the merger of AmeriSource Health Corporation and Bergen Brunswig Corporation. The network of businesses under the company are ASD Healthcare, Besse Medical, Cubixx Solutions, HealthForward, ICS, Innomar Strategies, IntrinsiQ Specialty Solutions, ION Solutions, Lash Group, MWI Animal Health UK, Micro Technologies, MWI Animal Health, Oncology Supply, Pharmacy Healthcare Solutions, PharMEDium, Securos Surgical, US Bioservices, World Courier and Xcenda. The company’s expertise includes improving product access, increasing supply chain efficiency and enhancing patient care. The markets served by its businesses are health systems, pharmacies, physician practices, manufacturers and animal health. The company is ranked 11 on the 2017 Fortune 500 list.

AmerisourceBergen Revenue :


US$ 167.93 billion – FY September 30, 2018 (year-on-year growth of 4%)
US$ 153.14 billion – FY September 30, 2017 (year-on-year growth of 4%)
US$ 146.84 billion – FY September 30, 2016

Competitive Analysis of AmerisourceBergen

SWOT
PESTLE
The SWOT analysis of AmerisourceBergen is presented below:
Strengths
Weaknesses
1. Widespread reach and large distribution network across USA
2. Expanding global footprint due to the growing world courier business
3. Leadership in speciality and distribution services
4. Leveraging technology for best-in-class patient support system
1. Suspension of Pharmedium unit in three US states
2. Majorly dependant on few major customers
Opportunities
Threats
1. New pharmaceuticals, increased use of generic pharmaceuticals and drug therapies
2. Multifaceted alliances and partnerships
1. Highly competitive business environment
2. Increasing government regulations
3. Declining reimbursement rates for pharmaceuticals
4. Disruptions in relationship with WBA
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of AmerisourceBergen

 

Strength

This section is available only in the 'Complete Report' on purchase.

Weakness

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Opportunity

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Threat

1. Highly competitive business environment: The pharmaceutical distribution business is highly competitive with AmerisourceBergen facing competition from McKesson Corporation, Cardinal Health, FFF Enterprises etc. There is also competition from regional distributors, manufacturers who indulge in direct sales, drugstores having own warehouses and healthcare technology companies. The recent consolidations happening in the healthcare sector pose a danger to AmerisourceBergen in the form of greater bargaining power of the consolidated enterprises of the customers, suppliers or competitors. The company would then be forced to reduce prices to stay in the market.

2. Increasing government regulations: In recent years there has been regulation of the healthcare industry by the government to increase drug utilisation, reduce costs and expand access to health insurance. The US Drug Enforcement Administration (DEA) and other agencies regulate compounding, storage, purchase and distribution of pharmaceuticals. The wholesalers must have valid licences and follow stringent regulations in sales, packaging and distribution. Any deviation from regulation can lead to suspension of the company’s distribution centers like what happened in Virginia, Alabama and California with the Pharmedium unit. There are chances of more regulations being introduced by the regulators and the resulting compliance efforts could incur huge costs for the company, especially if they have to shut down some centers. An example of regulation is the Drug Quality and Security Act passed by the US Congress in 2013 that requires labelling and tracking of drugs at the lot level, as well as participation of all supply chain stakeholders in an electronic drug traceability system.

3. Declining reimbursement rates for pharmaceuticals: In USA, the drugs administered in a physician’s office are covered in insurance under Medicare Part B, for which the reimbursement rates are declining. So the physician offices that used to buy these specialty drugs from AmerisourceBergen’s Pharmaceuticals Distribution Services segment, are now moving from private practice to hospitals, where the specialty drugs are purchased from hospital’s vendors instead of from specialty distributors. This trend is expected to increase due to the ability of hospitals to purchase these drugs at discounts mandated by law. More changes to reimbursement rates could have adverse effect on AmerisourceBergen’s business.

4. Disruptions in relationship with WBA: In 2016, AmerisourceBergen extended its distribution agreement with Walgreen Boots Alliance (WBA) to 2026, wherein the company distributes drugs to Walgreen pharmacies and WBA also provides services to AmerisourceBergen, like price negotiation with manufacturers. But maintaining the agreement is costly and time consuming. There is a risk that the expected benefits might not be realised and there could be potential disruptions to the company’s operations and cash flow. The disruptions can be due to natural disasters, labour disruption, government regulation etc. Also, there is a danger of losing a large customer if WBA decides not to renew the agreement in future. If WBA is affected by any regulatory issues, then it could also impact AmerisourceBergen because a troubled customer might decide to cut costs by removing vendors, or it might no longer have the finances to pay its vendors if there are any financial losses.

Major Competitors :

Major Brands :

  • World Courier
  • MWI Animal Health
  • Lash Consulting

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
H. D. SmithHealthcare distributor and wholesaler2017AcquisitionThe acquisition will help in expanding and enhancing AmerisourceBergen’s strategic scale in U.S. pharmaceutical distribution
St. Francis GroupAnimal health 2016AcquisitionThe acquisition helps in AmerisourceBergen and its subsidiary MWI’s continued global expansion in the animal health sector
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in AmerisourceBergen Analysis Report

1. AmerisourceBergen – Who we are: https://www.amerisourcebergen.com/abcnew/about-who-we-are

2. 2017 Summary Annual Report: http://investor.amerisourcebergen.com/static-files/f3db20fc-7f74-436c-a13e-013d60848198

3. AmerisourceBergen Annual Report 2018: http://investor.amerisourcebergen.com/static-files/9b5c8656-e68e-4dd0-aabe-253d6128c0c7

4. AmerisourceBergen compounding businesses in two states suspended over safety concerns: https://seekingalpha.com/news/3385919-amerisourcebergen-compounding-businesses-two-states-suspended-safety-concerns

Copyrights and Disclaimer

AmerisourceBergen SWOT and PESTLE analysis has been conducted by Nipunn V and reviewed by senior analysts from Barakaat Consulting.

Copyright of AmerisourceBergen SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

AmerisourceBergen SWOT & PESTLE Analysis
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