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As one of the Big Three US wholesaler-distributors, AmerisourceBergen is a major gateway between pharma manufacturers and nearly all distribution channels, including retail pharmacy, hospitals, federal agencies and mail order. It is also a major force in specialty distribution and services through its AmerisourceBergen Specialty Group, which includes some well-known brands in pharma services such as ION Solutions, ICS, World Courier, Lash Group, US Bioservices and ASD Healthcare. It also has a business unit that produces unit-packaged pharmaceuticals for hospitals (American Health Packaging), and an extensive independent-pharmacy network, branded as Good Neighbor Pharmacy. This year, it added to its operations with the acquisition of MWI Veterinary, a leading animal-health distributor. It has operations or ventures in Canada and Brazil, and over 150 company-owned offices around the globe.
In March 2013, AmerisourceBergen rocked the US—and global—pharma distribution industry with a pioneering relationship with Walgreens and Walgreens’ merger partner, Alliance Boots. Through cross-investments and a 10-year supplier agreement, the three organizations (now two, after Walgreens’ subsequent restructuring as Walgreens Boots Alliance) are closely aligned; a new business entity, Walgreens Boots Alliance Development, has been created to unify the companies’ global drug-procurement business.
Now, a little more than two years after that milestone, Pharmaceutical Commerce sat down with Steve Collis, president and CEO of AmerisourceBergen since 2011, to see how the WBA partnership is going, and what lies ahead for the company. Here’s what he had to say.
1) The 2014 AmerisourceBergen annual report calls that year “historic,” primarily through the relationship with Walgreens Boots Alliance. Now that you’re two years into the relationship, how is it going? AmerisourceBergen is building new distribution center capacity in the US; but is the internationalization of pharma distribution evolving?
The short answer to your question is that the relationship with Walgreens Boots Alliance is going remarkably well—especially on the distribution side, where we became the first wholesaler to take over the supply of brand, generic and specialty medications for a national pharmacy chain. We even completed customer onboarding ahead of schedule. Today, we’re providing daily delivery of products to Walgreens’ network of more than 8,000 stores. So from an operations perspective, we’re starting to hit our stride.
From a more strategic perspective, the relationship with Walgreens Boots Alliance has pushed us to develop new ideas and invest in ways that will allow us to work with all our customers to shape healthcare delivery on a global basis.
You mentioned our new distribution centers, and they are a great example of this. We have invested over $1 billion on our infrastructure over a period of 10 years. The new distribution centers we’re opening in Mississippi, Minnesota and New York will play a crucial role in updating and expanding our distribution network.
From a global perspective, AmerisourceBergen is now part of the largest global purchaser of generic products, and we’ve already seen the impact that can have on our customers. Leveraging our purchasing power, we’ve been able to secure product supply for generic launches that is well beyond what we would have been able to achieve a few years ago.
And—even apart from our work with WBA—we continue to expand the breadth of our services in non-US markets. A great example is the new World Courier facility we opened in Melbourne, Australia this year. This is the first location in AmerisourceBergen’s global network to be purpose-built to support the storage and logistics needs of clinical trial and commercial pharmaceutical products.
So what you’re seeing from us is a continued growth in scale, efficiency and innovation. The healthcare industry is in a period of such rapid change and consolidation. For example, it seems that manufacturers are announcing new mergers each week. Amid all this activity, AmerisourceBergen intends to use our strength to be a stable presence for all our customers, and to ensure that they are able to access the products and solutions they need to move care forward.
2) A part of the WBA relationship is the opening of AmerisourceBergen Switzerland, which is said to be evolving into a key gateway for non-US manufacturers to enter the US market. But is there some “outreach” going on as well, with AmerisourceBergen Switzerland paving the way for US companies to access global markets more readily?
AmerisourceBergen has a long and successful track record of helping international manufacturers enter the US market and US manufacturers access global markets. The opening of our office in Bern, Switzerland is indicative of the progress we have made in developing the next generation of AmerisourceBergen programs and services for generic and brand manufacturers, and an indication of our commitment to supporting manufacturers on a global basis. As an added bonus, the office is near the headquarters of Walgreens Boots Alliance Development, which helps streamline our interactions on that front as well.
In Canada, we provide an integrated solution for product commercialization, everything from strategic consulting and patient programs to third-party logistics and specialty pharmacy services.
In Europe, we now have offices in three different countries that address manufacturers’ challenges around market access, health technology assessments, health economics and outcomes research. We’re working side-by-side with them to quantify and effectively communicate the value of their products in a diverse and constantly changing market environment.
In more than 50 countries worldwide—in large, mature global markets, as well as smaller, emerging markets like Croatia or Peru or Malaysia—we have offices where our associates combine their localized knowledge with global standards to help ensure the safe, secure and timely transport of critical healthcare products.
And it’s really that idea of local expertise plus global best practices that’s driving our approach to non-US markets. We know there’s no “one size fits all” approach; we also know there are some fairly universal challenges and needs, like patient access to quality care, that we’re working to address in all our markets.
3) Steve, you were instrumental in making the acquisitions that created AmerisourceBergen Specialty Group, which has become a real force in the industry. What are the current and future drivers of ABSG—is it simply growing as the volume of specialty pharmaceuticals grows, or will there be new types of services to offer to manufacturers?
As you know, Nick, I led AmerisourceBergen Specialty Group when the entire company roster could be handwritten on an index card. So to watch it grow into the industry-leading company and the benchmark for the specialty pharmaceutical services industry has been rewarding. You mentioned that the business’ continued growth could parallel the continued growth of the specialty segment overall, but of course, it’s much more layered than that.
We have to continue demonstrating value to our manufacturer and provider customers to maintain our leadership in specialty. In our work with manufacturers, this means keeping the patient experience at the core of the services we provide, while tailoring services around the needs of patients and the characteristics of products.
For example, our patient support services address barriers to affordability and access, while taking into account the patient as a person for adherence services. This means considering how the totality of factors in a patient’s life—family, economic situation, job situation—might affect his or her ability to stay adherent to prescribed therapies.
On the provider side, especially in oncology, we know that practices struggle to find more time to care for their patients. So we’re helping them boost operational efficiency and clinical effectiveness through technologies built for their individual specialties, with tools like oncology-specific workflow management solutions or urology-specific electronic medical records. The goal here is to give them practical, tangible ways to take back some of their time, and in the process, do more to ensure the health of their practices and their patients.
I should mention as well that we see specialty permeating all parts of our business—not just what has traditionally been served by AmerisourceBergen Specialty Group. Almost all of our customer segments come to us with questions about specialty. Independent pharmacies ask us about how they can dispense specialty products for their patients. Health systems ask us how they can manage their oncology spend more efficiently. They all want to know how to prepare for the influx of new products coming to market. It’s because of our decades of leadership in specialty that we’re able to answer those questions expertly and guide them toward the right solutions for their business.
4) A relatively recent development within ABC is BluePoint, the generic branding business. Let’s talk first about why this came about, what value it brings and how other offerings like American Health Packaging are maturing.
Constant innovation and development are keys to our success, and our BluePoint private label generics offering is a prime example of that.
BluePoint has grown to 50 product families in less than two years, which we consider to be an impressive accomplishment. But looking beyond those numbers, BluePoint is not just a sales success. It streamlines the generic purchasing process for clients. It has a market-leading service score for product availability. It includes quality measures beyond industry standards. So for community pharmacy, BluePoint represents reliability in all ways, with more expansion to come. In fact, we just launched our first BluePoint injectable product.
I’m also glad you asked about American Health Packaging (AHP); it’s an excellent resource for many of our clients. We’re excited to talk about the improvements and innovations we’re making on the packing front. AHP’s unit dose line has always added value, especially to our health system clients. We’re currently making investments so that we can expand the capacity of the AHP offering. As we know from our distribution centers, the more volume we handle, the more efficient we are. We’ve also made hires of outside talent to drive this process and build greater operational excellence to keep up with the growing demands placed on that part of our business.
5) And what about your additional connections to community pharmacy? How has your service to that market changed or grown, especially in light of the WBA agreement?
Well, it may seem a bit counterintuitive, but our agreement with Walgreens Boots Alliance actually benefits our community pharmacy customers, especially from a product access perspective. More than any other time in AmerisourceBergen’s history, we’re able to use our aggregated purchasing power to make sure that our customers have access to the products they need, at the moment of need.
Beyond product sourcing and distribution, though, we’re working to deepen the level of partnership we have with our customers. One area of opportunity for us is to help our customers address their number one challenge: reimbursement.
At our recent Good Neighbor Pharmacy ThoughtSpot conference, we announced a new set of capabilities for our pharmacy services administration organization, which we’ve rebranded as Elevate Provider Network. Our aim is to improve profitability for our community pharmacy customers by making it easier for them to navigate the reimbursement maze—and in doing so, allow them to give greater attention to patient care.
We’re also launching a new customer relationship management tool for our community pharmacy customers, which allows them to schedule and automate outbound interactions with customers. This will become increasingly useful as pharmacies look to grow patient engagement, loyalty and adherence.
6) There are powerful dynamics occurring in US hospitals/health systems, with some of them equaling chain pharmacies in the volume of pharmaceuticals and medical supplies being dispensed, and with tough pricing and reimbursement issues. How would you characterize ABC’s current interactions with them, and how will this evolve over the next few years?
The role of pharmacy and pharmacists is changing every day, so it’s no surprise that health system pharmacies have been presented with new and exciting opportunities, along with elevated responsibilities and risks. More than ever, pharmacy leaders will need to play a key role in addressing health systems’ challenges.
Our goal is to extend the continuum of care beyond the four walls of a health system to enhance patients’ lives and create a healthier community. We’re able to do this through a number of solutions, including developing ambulatory pharmacies and pharmacy concierge services as core components of the care team. As more specialty products become a standard part of care, the ability for hospitals to offer a specialty pharmacy to patients is also something we work with health systems to evaluate and develop.
While there has indeed been a shift to larger health systems, I want to emphasize that the importance of community pharmacy has not been diminished. Personalized care means that it’s critical that trusted pharmacy professionals know and successfully monitor their patients’ care. This level of personalized attention is a significant reason that we’ve seen such an increase in the integration between independent and health system pharmacies over the last year. Whether it’s within the health system or in the community pharmacy setting, quality healthcare today demands more individualized attention and connection among all stakeholders. That’s one of the reasons AmerisourceBergen remains so dedicated toward fostering deep engagement among our customers across all sites of care.
7) ABC’s biggest recent acquisition is MWI Veterinary, a leading distributor for animal health products. Is this a “tuck in,” mostly, to ABC’s network of DCs, or does it represent a new distribution channel?
We continue to invest in growth and the MWI acquisition is a perfect example of this commitment. MWI is the premier supply chain company in animal health, with leading positions in both the companion and production markets. It represents entry into a significant and growing new market for us. In some ways, it’s similar to where we were with the specialty market so many years ago.
One key aspect to the acquisition is that MWI is hugely complementary to our core expertise in sourcing and distribution—especially as we consider that many of the manufacturers we will be sourcing products from in animal health are the same manufacturers we have worked with for years in human health. Through the acquisition we gained additional distribution facilities, so yes, it does serve as a new distribution channel. Learnings are being shared to leverage the expertise for each customer group we serve.
Our intent is to grow MWI’s business and its capabilities, and we have already begun to do so with the addition of specific assets from ComCo Controls, including its micro ingredient system for cattle feeders and Post Pellet Liquid Application (PPLA) system. The PPLA system, which boasts technologies that dispense small amounts of liquid product onto pelleted feed, diversifies the offering into pork and poultry, and is in 20 countries, expanding our global reach.
8) Aside from the relationship with WBA, and the connection to the European market there, ABC has invested recently in South America. How is that market evolving? What are the services ABC provides that helps manufacturers deal with Latin American markets?
That’s right, Nick, last year we acquired a minority stake in Profarma, a leading pharmaceutical wholesaler in Brazil. We’re also partnering with Profarma to establish a joint venture for specialty distribution and services—we and Profarma each own 50% of this venture. With its long-term macroeconomic growth outlook, favorable demographics, and increasing access to healthcare services and specialty pharmaceuticals, the Brazilian market affords us a tremendous opportunity to expand our international offerings. Profarma’s success in the wholesale distribution, chain and independent retail, and specialty markets, combined with our expertise in specialty distribution and manufacturer services, provides a compelling opportunity to shape the delivery of healthcare in Brazil.
Beyond Brazil, World Courier is very active throughout Latin America, as more clinical trials are occurring in the region than ever before and more specialty products are becoming available to patients there. Conducting these trials and transporting temperature-sensitive specialty products, however, can be challenging. There are 20 different countries, each with its own regulatory requirements. There are language barriers, especially with rural local dialects. There are infrastructure challenges and significant social divides. All of this can cause great difficulties for manufacturers looking to serve patients in the region. That’s where the knowledge and reach of World Courier comes into play. With local representatives in nine Latin American countries and vast industry experience throughout the region, World Courier helps manufacturers navigate the regulatory guidelines and provide logistical, transportation and storage support to address manufacturers’ challenges in the region. All of this, of course, helps medications gain approval and reach patients faster.
9) Another part of ABC’s “history making” in 2104 is The AmerisourceBergen Foundation. Let’s hear about why it was started, how it’s evolving, and what it’s doing to improve the delivery of healthcare in the US.
As a global healthcare solutions leader, we recognize that we have a responsibility to inspire and improve access to health and pharmaceutical services. The launch of The AmerisourceBergen Foundation is an important milestone for our leaders, associates and customers. Our Foundation is committed to upholding our core values and we look forward to supporting organizations that share our goal of driving a positive and sustainable impact to healthcare delivery in the communities we serve across the globe.
Project HOME, an organization that helps local Philadelphia residents by responding to the root causes of homelessness, was the first beneficiary of the AmerisourceBergen Foundation. The organization utilized the grant to build a new community pharmacy in North Central Philadelphia, which offers discounted prescription medications, over-the-counter products and additional health services to the area’s population. Given its location in our headquarters’ backyard, helping bring another source of quality care to this community is especially meaningful to all of us at AmerisourceBergen.
The AmerisourceBergen Foundation focuses on health and well-being initiatives that improve patient outcomes including pharmaceutical accessibility programs, pharmaceutical adherence programs and health improvement research. The Foundation will further help affect positive change in the patient experience and empower providers through support for K-12 education, nursing programs, pharmacy programs and needs-based scholarships for youth.
Through future grants, the AmerisourceBergen Foundation is focused on inspiring passion and leadership within the healthcare industry to ensure that we create opportunities for a better tomorrow.