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Founder of the third of the Big Three wholesalers passes on the reins
A smoother succession is rarely executed as Steven Collis, now president and CEO of AmerisourceBergen Corp., takes over from R. David Yost, who had been CEO and board member. Collis, a 17-year veteran of the company, had been instrumental in building up AmerisourceBergen Specialty Group, and had been taking on increased leadership roles for several years at the company. In press statements, the company says that it will continue its focus on generics distribution (now 78% of the overall US drug market) and specialty distribution, which represents roughly a quarter of the overall company.
Longtime observers of the drug wholesaling business will remember Yost, an unpretentious leader who brought AmeriSource Health Corp. together with Bergen Brunswig Corp. in 2001. Today, the company has revenues of $79 billion, is ranked No. 27 on the Fortune 500 list, and has operations in the US, Canada and the UK, and 10,000 employees. A 2008 profile in Business Week magazine labeled him “Scrimp and Save Dave,” saying “Even in an industry known for its razor-thin margins, Yost is remarkably cheap. He answers his own phone, flies economy class, and rarely strays beyond a shortie turkey hoagie with provolone from the local deli near his sterile industrial park headquarters in Valley Forge, Pa.”
Investment analysts commenting on the transition noted that drug wholesalers have a bright prospects in the near term due to the volume of branded drugs going off—patent; generally speaking, generics are sold at higher margins (by wholesalers and retailers) than branded products. But in its annual assessment of the US drug market, IMS Health noted a “generic efficiency” of 93%, indicating that the US healthcare system has learned how to switch over to generics rapidly and economically; the historical margin of generics might not hold up so well in a more competitive market. Industry watcher (and Pharmaceutical Commerce Editorial Board member) Adam Fein noted that the company had been able to achieve a “startling” 25% reduction in SG&A expenses from 2007 to 2010, “but It’s structurally improbable for ABC to trim costs at the same rate over the next 10 years.”
But that’s Collis’ worry going forward. Yost has said that he’s looking forward to more personal time: “There are many things I’d like to do with my wife, my family, and my grandchildren, and other interests I would like to pursue while I am still in good health and I look forward to getting started on that chapter of my life.”