Planned marriage of United, API heralds new power player in Rx
PHOENIX —Seeking shelter in an economic hurricane, two of the nation’s largest pharmacy cooperatives announced plans to merge last month. The result could be the rise of a far more powerful marketing and purchasing organization with national reach—and a joint membership of more than 2,000 independent pharmacies.
The combination of Phoenix-based United Drugs and Scottsboro, Ala.-based Associated Pharmacies Inc. could streamline costs for both organizations, boost their branding capabilities and give their independent members more buying clout with vendors. The merger also could help the hard-pressed members of both groups weather the nation’s worst economic collapse in decades.
Together, the two organizations would comprise one of the nation’s largest independent pharmacy networks, on par with McKesson Corp.’s Health Mart franchise, Cardinal Health’s Leader umbrella program for independents and its Medicine Shoppe franchise, or AmerisourceBergen’s Good Neighbor Pharmacy program. Only a handful of drug, supermarket or mass merchandise chains field as big a store network.
In business for 32 years, United Drugs is a pharmacy cooperative with national reach that provides more than 1,000 independent drug store affiliates with operating expertise, third-party contracting and buying services. What’s more, “Many United Drugs pharmacies are one-stop health centers…offering unique specialty health services and screenings, hard-to-find durable medical equipment, everyday retail items and fast and accurate prescription-filling services,” the company noted.
API, formed in 1987, is a member-owned buying cooperative that “provides independent pharmacy owners an opportunity to buy like a chain,” according to a spokesperson, as well as operating and marketing tools and other services.
United Drugs CEO Bruce Semingson described the two companies as highly compatible. “API is known for running one of the nation’s most successful cooperative-owned warehouse operations, and United Drugs has one of the strongest managed care programs out there,” he said.
Added API CEO Jon Copeland, “Both our companies have long histories of providing a wide array of services and programs, as well as being vocal advocates for independent pharmacies. Now, with this strategic move, we’re confident we will become the strongest co-op of independent pharmacies in the nation.”
Contributing to the synergies of the proposed merger is the fact that both cooperatives are customers of Cardinal Health.
Providing their members approve the merger, the deal is expected to close in June.
Walgreens set to expand distribution capacity
WOBORN, Mass. Walgreens is expanding the distribution capacity at its Mt. Vernon, Ill.-based distribution center by adding more portable robotic picking devices and upgrading many of its traditional conveyor-based systems into automated zones for sortation and movement of items to be shipped.
Walgreens uses the Kiva Mobile Fulfillment System from Kiva Systems in Mt. Vernon to store inventory and pick replenishment orders for its 6,700 stores and specialty pharmacies. Expanding the system in that distribution center puts nearly 1,000 mobile robots under a single roof, according to Kiva.
The upgrade marks the third expansion of the robotic picking system at the center since its initial deployment in 2007, Kiva noted. It also heralds a doubling of the throughput capacity at the center, the company reports.
“Productivity metrics from previous rollouts far exceeded Walgreens’ specifications for pick rate, accuracy, cycle time, tote utilization and installation time,” said Kiva CEO Mick Mountz. “By doubling capacity we expect Walgreens to quickly achieve an extraordinary new level of strategic competitive advantage and productivity.”
Congress takes up follow-on biologics bill
The long-awaited breakthrough for follow-on biologics may be close at hand.
Prompted by a far more supportive President and the growing crisis in healthcare funding, Congress has again taken up the call for a bill that would create a regulatory pathway for FDA approval of generic versions of biologically-engineered drugs. And with the strong affirmation of President Obama, who has campaigned for such an approval pathway, the newest iteration of the bill stands a far better chance of passage than previous attempts in the House and Senate.
The Promoting Innovation and Access to Life-Saving Medicine Act could mark the most significant change to the delicate balance of power between the branded and generic drug industries since passage of the landmark Hatch/Waxman compromise bill in 1984, which ushered in the modern era of me-too medicines. Tellingly, one of the new bill’s sponsors is an architect of that 1984 legislation, Democratic Rep. Henry Waxman of California.
The push for follow-on biologics augers well for both health plan payers and patients coping with the sometimes staggering costs of critically important but expensive pioneer biologics, and for the generic drug industry itself as it faces a critical shortage of new marketing opportunities as the number of blockbuster drugs facing patent expirations dries up. A new pipeline of me-too biologics could help fill the gap.
“With countless patients struggling to pay the high costs of brand biopharmaceuticals, an approval pathway for safe, effective and affordable biogeneric medicines that provides access sooner rather than later is desperately needed,” stated Kathleen Jaeger, president and CEO, Generic Pharmaceutical Association.
Cost-saving considerations aside, there’s no disputing the business potential follow-on biologics represent. Bio-engineered pharmaceuticals and specialized, highly targeted medications aimed at serious chronic or life-threatening diseases represent the only major bright spot right now in the global pharmaceutical market, with growth rates that far outpace the sluggish market for mainline meds. Indeed, most of the drugs that have reached blockbuster status in recent years have been biologically engineered specialty meds.