US drug distribution market dominated by

The US drug market is the largest in the world, with more than 45% of all prescription drugs sold in audited nations worldwide, according to IMS Health figures. With three firms controlling 90%-95% of the US wholesale market, it is little surprise that there have been anti-trust investigations and regulatory scrutiny by the Federal Trade Commission of proposed mergers. However, the sector's low margins, capacity for innovation and responsiveness to the requirements of the manufacturing sector have so far limited criticism of what some term "the major invisible contributor to health care."

For the time being, the trend is for the last remaining independent wholesalers (numbering about 5,500) to be bought out by the Big Three: McKesson Corp, Cardinal Health Inc and the smaller AmerisourceBergen Corp. The last round of major consolidation followed the FTC's blocking of the creation of a duopoly, via the purchases of Amerisource and Bergen Brunswig by McKesson and Cardinal, respectively. In 2001, the FTC allowed the two acquisition targets to merge, in an attempt to stabilize the concentration of the wholesale market.

Instead, the three behemoths have focussed on buying up smaller and niche competitors, although this does limit the scope for expansion in the long term. According to the Dow Jones' Marketwatch, it is now estimated that about 80% of all prescription drugs are distributed via the wholesale market leaders, with much of the remainder being direct sales by manufacturers to pharmacies or clinics.