New data released by the HDA Research Foundation reveal that total prescription sales through traditional pharmaceutical distribution jumped 15.5% in 2022 to reach $666 billion. As highlighted in the 94th Edition HDA Factbook, an estimated 95% of all pharmaceutical sales move through the traditional distribution channel. Moreover, distributors are operating on the lowest margins in the study’s history—in 2022, the industry’s net profit margin after taxes was 0.4%.
Prescription drugs made up the majority (98.1%) of distributors sales, split among sales of brand-name drugs (51.4%), branded specialty (35.5%), generic drugs (6.7%), biosimilar products (3.9%), and generic specialty (0.7%). Chain drug stores (46%) remain distributors’ largest customer segment, followed by hospitals and HMOs (14.3%) and independent pharmacies (12.5%).
The new Factbook reports:
- Each traditional distribution center processed 4,600 orders every business day, and these orders averaged 11 invoice lines and 22 units.
- Distributors worked with an average of 1,520 manufacturers in 2022, up from 1,350 in 2021.
- Inventory management remained a bright spot for healthcare distributors, with companies holding inventory for just 24 days in 2022 (the shortest holding period since the HDA Factbook was first published in 1929).
- From 2021 to 2022, sales of biosimilar drugs rose significantly from 0.7% to 3.9%. Brand-name specialty drugs also experienced a large jump in sales, from 33.5% to 35.5%. However, sales of other brand-name drugs fell from 55.3% in 2021 to 51.4% in 2022.
- Distributors filled 86% of invoice lines for their “raw orders” in 2022. The cited reasons for unfilled orders were the manufacturers being unable to ship (69%) and distributors being out of stock (31%).
- Continued investments in automation and other process improvements allowed for productivity gains. The portion of distribution companies using automated methods continued to climb (66%), and nearly half of the invoice lines were picked by automated methods in 2022.
The 94th Edition HDA Factbook: The Facts, Figures and Trends in Healthcare (2023–2024) is available as a complimentary download from HDA. Click here to download a copy.
