87th Edition HDA FACTBOOK - WDSrx€¦ · HDA RESEARCH FOUNDATION/2016-2017 HDA FACTBOOK | PAGE i. The HDA Research Foundation (formerly the Center for Healthcare Supply Chain Research)

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The Facts, Figures and Trends in Healthcare (2016–2017)

87th Edition HDA

FACTBOOK

HDA Factbook

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Letter of Introduction

The HDA Research Foundation (formerly the Center for Healthcare Supply Chain Research) is pleased to release the 87th Edition HDA Factbook: The Facts, Figures & Trends in Healthcare (2016-2017). Since its debut in 1929, the HDA Factbook has taken the lead in providing valuable benchmarks and trends for the pharmaceutical supply chain. It stands as a leading reference tool for the healthcare distribution industry. Produced by the HDA Research Foundation, the HDA Factbook continues to detail the complexities inherent in the delivery of millions of healthcare products to pharmacies and healthcare providers throughout the country. As in the past, this publication sheds light on the full range of distributor finances and operations. It also describes the adoption and use of new processes and technologies. This year’s edition highlights the continuing growth of the pharmaceutical distribution channel. Sales through pharmaceutical distributors increased by 16 percent from $349.9 billion in 2014 to $407.6 billion in 2015. The growth of distributor sales in 2015 can likely be attributed to the continued growth of specialty pharmaceuticals, including hepatitis C treatments, and distributors capturing a greater share of chain drug store sales. Approximately 94 percent of all U.S. pharmaceutical sales volume came to the market through pharmaceutical distributors. More than 98 percent of distributors’ sales were earned from pharmaceutical prescription products. The Foundation is most grateful to all who participated in the year’s surveys and to our sponsors who made the 87th edition of the HDA Factbook possible — Boehringer Ingelheim Pharmaceuticals, Inc.; Apotex Corporation; RDC-Rochester Drug Cooperative, Inc.; Teva Pharmaceuticals USA; Smith Drug Company; Div. J M Smith Corporation; Inmar, Inc.; and, Pharmacy First. Sincerely, Perry Fri Chief Operating Officer HDA Research Foundation

HDA Factbook

Editorial & Production Staff

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Editorial & Production Staff Publication Manager Madeline Nardacci, Associate Director, Research HDA Research Foundation Survey Program Data Tabulation Industry Insights Inc., Columbus, Ohio Questions/Comments Inquiries and feedback regarding the HDA Factbook are welcome. Please contact Perry Fri, Executive Vice President and COO, HDA Research Foundation [email protected]. The HDA Research Foundation is a 501(c) (3) non-profit charitable organization of the Healthcare Distribution Alliance (HDA). The Foundation serves the healthcare industry by providing research and education focused on healthcare supply chain issues. The Foundation’s mission is to provide thought leadership to further enhance the safety and security of the healthcare supply chain through future focused study and programming; and to conduct research and disseminate information that will enhance the knowledge base, efficiency and effectiveness of the total healthcare supply chain. Copyright © 2016 by the HDA Research Foundation. HDA Research Foundation 901 North Glebe Road, Suite 1000 Arlington, VA 22203 703-787-0000 (Fax) 703-812-5282 ISBN: 978-0-9906205-9-4

HDA Factbook

Table of Contents

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Preface Letter of Introduction ............................................................................................................ i Editorial & Production Staff .................................................................................................. ii Sponsors .............................................................................................................................vii Organization and Methodology ........................................................................................... ix Users’ Guide ........................................................................................................................ x QuintilesIMS Source Notes .................................................................................................. xii

Distributor Demographics & Characteristics

Section Overview ....................................................................................................................................... 1 Table 1: Pharmaceutical Sales Through Distributors: 2012-2015 ........................................... 3 Table 2: Distributor Sales by Product Category: 2014-2015 .................................................. 3 Table 3: Distributor Sales by Customer Category: 2014-2015 ............................................... 4 Table 4: Programs and Services Offered by Distributors: 2015 ............................................. 5 Table 5: Distributor Program and Service Details: 2013-2015 ............................................... 6 Table 6: HDA U.S. Distributor Member Companies and Distribution Centers: 2011-2016 ...... 7 Table 7: Average Square Footage of Warehouse Space per Distribution Center ..................... 7 Table 8: Average Square Feet of Warehouse Space per Distribution Center........................... 8 Table 9: States Where HDA Distributor Members Have Customers: 2015 ............................. 8 Table 10: Healthcare Distributors—Mergers and Acquisitions by Deal Value: 2015 ............... 9 Table 11: Distributor Sales Force Profile: 2013-2015 ............................................................ 9

Finance

Section Overview ..................................................................................................................................... 10 Table 12: Distributor Profitability: 2013-2015 .................................................................... 11 Table 13: Distributor Return on Investment Model (FIFO Results): 2013-2015 .................... 11 Table 14: Distributor Income Statement: 2013-2015 .......................................................... 12 Table 15: Distributor Company Expense Statement: 2013-2015 ......................................... 12 Table 16: Distributor Company Net Sales Growth: 2013-2015 ............................................ 13 Table 17: Distributor Capital Expenditures: 2013-2015....................................................... 13 Table 18: Distributor Company Personnel Expenditures: 2013-2015 ................................... 13 Table 19: Distributor Asset Management: 2013-2015 ........................................................ 14 Table 20: Distributor Company Asset Ratios: 2013-2015 .................................................... 14 Table 21: Distributor Company Credit Memos: 2013-2015 ................................................. 14

Administration ......................................................................................................................................... 15 Table 22: Due Diligence: 2013-2015 .................................................................................. 15 Table 23: Distributor Minimum Orders: 2014-2015 ............................................................ 15 Table 24: Distributor Chargeback Profile: 2014-2015 ......................................................... 15 Table 25: Frequency of Chargeback Submissions to Manufacturers: 2014-2015 .................. 15 Table 26: Chargebacks Denied: 2014-2015 ......................................................................... 16 Table 27: Sales per Distributor: 2014-2015 ........................................................................ 16 Table 28: Distributor Inventory Levels—Number of SKUs: 2014-2015 ................................. 16 Table 29: Distributor Company Customer Ordering Practices: 2013-2015 ........................... 16 Table 30: Distributor Personnel Productivity: 2014-2015 ................................................... 17

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Information Systems

Section Overview ..................................................................................................................................... 18

Electronic Data Interchange (EDI) .................................................................................................... 20 Table 31: Distributor's Scanning Profile .............................................................................. 20 Table 32: Barcoded Product Packaging ............................................................................... 21 Table 33: Distributor Purposes for Data Capture Through Barcoding ................................... 22 Table 34: Unreadable Barcodes ......................................................................................... 22 Table 35: Distributor Serialization Activity ......................................................................... 23 Table 36: Distributor Serialization Profile ........................................................................... 23 Table 37: Lot Number Tracking: 2015 ................................................................................ 23 Table 38: Lot Number Tracking .......................................................................................... 24 Table 39: Distributors’ Electronic Data Interchange (EDI) Profile: 2015 ............................... 24 Table 40: Distributor Electronic Data Interchange Transaction Set Use (Sales Under $1

Billion): 2015 ................................................................................................................ 25 Table 41: Distributor Electronic Data Interchange Transaction Set Use (Sales Over $1

Billion): 2015 ................................................................................................................ 26 Table 42: Distributor EDI Use in Support of DEA Controlled Substances Ordering System

(CSOS) ........................................................................................................................... 27 Table 43: Distributor Status of Electronic Commerce Initiatives .......................................... 27 Table 44: Product Identification Numbers: 2015 ................................................................ 28 Table 45: DSCSA Compliance: 2015 ................................................................................... 28

Operations

Section Overview ..................................................................................................................................... 29 Table 46: Distributor Supply Chain Management Agreements ............................................ 31 Table 47: Distributor Software Applications ....................................................................... 31 Table 48: Returns .............................................................................................................. 32 Table 49: Returns from Customers to Distributors .............................................................. 32 Table 50: Returned Goods Practices for Distributors ........................................................... 33 Table 51: Reasons Goods are Returned to Distributors ....................................................... 33 Table 52: Recalled/Withdrawn Prescription Products Handled by Distributors .................... 33 Table 53: Number of Manufacturers/Suppliers ................................................................... 34 Table 54: Distributor Human Resources ............................................................................. 34 Table 55: Companies Handling Temperature-Sensitive, Controlled Substances and

Hazardous Prescription SKUs ......................................................................................... 34 Table 56: Cold Chain Distribution ....................................................................................... 35 Table 57: Special Handling Rx SKUs: Branded & Generic .................................................... 35 Table 58: Over-the-Counter (OTC) Medicines ..................................................................... 36 Table 59: Distributor Handling Temperature-Sensitive, Controlled Substances and

Hazardous Over-the-Counter (OTC) SKUs ....................................................................... 36 Table 60: Health & Personal Care (HPC) Items .................................................................... 36 Table 61: Durable Medical Equipment (DME) and Home Healthcare ................................... 37 Table 62: General Merchandise (GM) ................................................................................. 37 Table 63: Distributor Specialty Products ............................................................................. 37 Table 64: Distributor Other Product Categories .................................................................. 37

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Table 65: Distributor Order Characteristics ......................................................................... 38 Table 66: Order Fulfillment ................................................................................................ 38 Table 67: Customer Accounts and Shipping Points Serviced by Company ............................ 38 Table 68: Distributor Product Delivery Methods ................................................................. 39 Table 69: Deliveries per Week of Prescription Products ...................................................... 39

Healthcare Products

Section Overview ..................................................................................................................................... 40 Table 70: Top 20 Therapeutic Classes by Non-Discounted Spending: 2015 .......................... 41 Table 71: Top 20 Therapeutic Classes by Prescriptions: 2015 .............................................. 42 Table 72: Prescriptions and Spending by Product Type: 2011-2015..................................... 42 Table 73: Top 20 Medicines by Non-Discounted Spending: 2015 ........................................ 43 Table 74: Top 20 Generic Medicines by Prescriptions: 2015 ............................................... 44 Table 75: Top 20 Biologic Medicines by U.S. Spending: 2015 .............................................. 45 Table 76: Small Molecule Patent Expirations: 2017-2019 ................................................... 45

Non-Prescription Products .................................................................................................................. 48 Table 77: Rx-to-OTC Switch List: 2009-2015 ....................................................................... 48 Table 78: Top 20 Over-the-Counter (OTC) Product Categories by Sales: 2015 ...................... 48

New Medications ..................................................................................................................................... 49 Table 79: Number of Active Drug Shortages: 2010-2015..................................................... 49 Table 80: The Drug Development Pipeline: 2010-2015 ....................................................... 49 Table 81: Number of New Medicines in Development by Disease ....................................... 49 Table 82: New Molecular Entity and Novel Approvals: 2015 .............................................. 50 Table 83: Novel Drug Approvals Per Year: 2005-2015 ......................................................... 51 Table 84: First-Time Generic Drug Approvals: 2015 ............................................................ 51

Customers

Section Overview ..................................................................................................................................... 55 Table 85: Non-Discounted Spending by Channel: 2014-2015 .............................................. 56 Table 86: Top 10 Drug Chains by Dollar Volume: 2015 ....................................................... 56 Table 87: Top 10 Drug Chains by Store Count: 2015 ........................................................... 57 Table 88: Pharmacies: 2015 Mergers and Acquisitions ....................................................... 57

Market Characteristics

Section Overview ..................................................................................................................................... 58 Table 89: U.S. Healthcare Expenditures: 2010-2016 ........................................................... 60 Table 90: Spending per Capita as a Percent of Gross Domestic Product (GDP): 2010-2016 ..... 60 Table 91: Projected U.S. Healthcare Expenditures by Selected Types of Services: 2016-

2017 .............................................................................................................................. 61 Table 92: Projected U.S. Healthcare Expenditures: 2014-2016 ............................................ 61

Prescription Use ...................................................................................................................................... 62 Table 93: Projected Growth of Medicare and Medicaid Spending: 2015-2025 ..................... 62 Table 94: Projected Prescription Drug Spending by Payer: 2015-2018 ................................ 62 Table 95: Retail Prescriptions by Payer: 2012-2015 ............................................................ 62

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Table 96: Dispensed Prescriptions (Mil): 2006-2015 ........................................................... 63 Table 97: Total Prescriptions Dispensed by Channel: 2014-2015 ......................................... 63 Table 98: Dispensed Prescriptions by Channel: 2011-2015 ................................................. 63 Table 99: Growth in Prescription Sales and Dispensing (%): 2004-2015 ............................... 64 Table 100: Estimated Retail Prescription Revenue by Channel: 2014-2015.......................... 64

Pharmaceutical Companies ................................................................................................................. 65 Table 101: Top 20 U.S. Pharmaceutical Manufacturers by Sales: 2013-2015 ....................... 65 Table 102: Top 20 Manufacturers by Prescriptions Dispensed: 2015 ................................... 66 Table 103: Top 20 Manufacturers by Total Unbranded Generic Prescriptions Dispensed:

2015 .............................................................................................................................. 67 Table 104: Top 20 Branded Products by U.S. Prescriptions: 2015 ........................................ 68 Table 105: Top 15 Manufacturers by Promotional Spending: 2015 ..................................... 69 Table 106: Top 20 Generic Manufacturers by Revenue: 2015 ............................................. 70 Table 107: Top 10 Biologic Manufacturers by Revenue: 2015 ............................................. 70

International

Section Overview ..................................................................................................................................... 71 Table 108: World Pharmaceutical Market by Market Share: 2015 ...................................... 73 Table 109: Top 10 Pharmaceutical Markets in the World by Dollar Sales: 2015 ................... 73 Table 110: Projected World Pharmaceutical Market by Market Share: 2020 ....................... 74 Table 111: Canadian Prescription Drug Sales: 2010-2015 ................................................... 74 Table 112: Top 10 Manufacturers in the Canadian Market by Revenue: 2015 ..................... 75 Table 113: Top 10 Canadian Branded Products by Revenue: 2015 ...................................... 75 Table 114: Pharmerging Nations by Growth Projections: 2015 - 2020 ................................. 76 Table 115: Projected Pharmerging Market Growth: Brands and Generics 2020 ................... 76 Table 116: Projected Indian Pharmaceutical Sales by Customer Categories: 2020 ............... 76 Table 117: Top 20 Pharmaceutical Companies by Sales in India: 2015 ................................ 77 Table 118: Top 20 Therapeutic Classes by Sales in India: 2015 ............................................ 78

Appendix Acknowledgements ............................................................................................................ 79 Industry Data Contributors ............................................................................................. 80 Glossary ............................................................................................................................. 82

HDA Factbook Sponsors

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Sponsors

HDA Factbook Sponsors The Foundation would like to give special recognition and thanks to the sponsors of the 87th Edition HDA Factbook: The Facts, Figures & Trends in Healthcare (2016-2017). We extend our sincerest gratitude to our sponsors whose generosity made this effort possible. SPONSORS Gold:

Boehringer Ingelheim Corporation is dedicated to the discovery, development and manufacture of innovative human and animal healthcare products in the United States. Boehringer Ingelheim values innovation, accountability, diversity among their employees, and

responsibility to the environment and the communities where they work. Boehringer Ingelheim Corporation is the U.S. member of the Boehringer Ingelheim worldwide group of companies dedicated to the discovery, development, manufacture and marketing of innovative human and animal healthcare products. Silver:

Apotex Corp., headquartered in Weston, Florida, is the U.S. affiliate of Apotex Inc., the 7th largest generic pharmaceutical company in the world. Apotex produces more than 500 products with another 300 products in development. With its worldwide manufacturing sites,

Apotex can produce up to 24 billion dosages per year and markets to over 120 countries globally. Apotex Corp. is ranked in the top 10 U.S. generic pharmaceutical companies.

Rochester Drug Cooperative is the nation’s fastest growing full-line healthcare distributor owned and directed by Independent Pharmacists. We provide daily service to pharmacies and Home Healthcare dealers in five states, including New York, New Jersey, Pennsylvania, eastern Ohio and western Connecticut.

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) is a leading global pharmaceutical company, committed to increasing access to high-quality healthcare by developing, producing and marketing affordable generic drugs as well as innovative and specialty

pharmaceuticals and active pharmaceutical ingredients. Headquartered in Israel, Teva is the world's leading generic drug maker, with a global product portfolio of more than 1,000 molecules and a direct presence in about 60 countries. Teva's specialty pharmaceutical businesses focus on CNS, oncology, pain, respiratory and women's health therapeutic areas as well as biologics. Teva currently employs approximately 46,000 people around the world.

HDA Factbook Sponsors

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Bronze:

With more than 25 years’ experience, Inmar is recognized as the benchmark of excellence in pharmaceutical returns. Inmar’s solutions drive increased efficiency and value retention, manage risk and minimize environmental impact of returns. We help clients minimize

liability and drive profitability in a compliant manner, through On-Site or Off-Site solutions that deliver industry-leading accuracy, automation, policy management, better reconciliation, documentation and benchmarking vs. the industry.

Smith Drug Company (www.smithdrug.com) is the original division of J M Smith Corporation, and one of America’s premier wholesale drug distributors. Launched in 1944, the division serves pharmacies in 25 states, the District of Columbia and the US Virgin Islands through distribution centers in Spartanburg; Paragould, AR; and Valdosta, GA.

Pharmacy First, a network with thousands of independent pharmacies, is dedicated to helping our members remain competitive and profitable in today’s challenging business environment. Offering a Business Center with focus on contracting assistance and reconciliation with both central and direct payment

options, as well as a Performance Center focused on medication synchronization, star ratings and cost containment, Pharmacy First has the solutions your pharmacy needs. Become a member of Pharmacy First and choose the services that are the best fit for you. To learn more, visit us online at www.PharmacyFirst.com or contact us at 1-800-460-1575, option 8.

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HDA Factbook Organization and Methodology

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Organization and Methodology

87th Edition HDA Factbook: The Facts, Figures & Trends in Healthcare (2016-2017) The HDA Factbook is an easy-to-use reference guide that features many descriptive data tables with regard to the traditional pharmaceutical distribution industry. The Factbook offers original data from the HDA Research Foundation’s annual surveys. Additional secondary data comes from other leading healthcare industry organizations. Information tables are organized into eight sections, each with a brief synopsis highlighting important trends and performance metrics. A User’s Guide is also included to facilitate readers’ easy retrieval of relevant data. Methodology The information provided in the Foundation’s data tables is collected from annual surveys and sent to all Healthcare Distribution Alliance (HDA) traditional distributor members. The data are reported solely at the corporate level. The full sample represents a spectrum of pharmaceutical companiesfrom distributors with a focused product portfolio and targeted customers to national distributors serving customers with multiple outlets. Traditional distributors supply pharmaceuticals to primarily chain warehouses, chain and independent pharmacies, hospitals, clinics, HMOs, nursing homes and mail order entities. To compile the information for this Factbook, distributors are requested by the Foundation to complete the following surveys:

• Company Operations Profile Survey; • Financial Survey; and • Information Technology Survey.

Distributor Response Rate The 87th Edition HDA Factbook: The Facts, Figures & Trends in Healthcare (2016-2017) publishes the responses received from companies whose annual sales are greater than $1 billion. This cohort, referred to as the industry profile, handles 98 percent of all distributor sales in the pharmaceutical supply chain and their business practices and operations are the best reflection of the pharmaceutical distribution industry. Some measures relating to information technology adoption include responses from distributors with annual sales less than $1 billion. Whenever this is the case, it is noted in the table. Confidentiality and Data Validation Process To ensure complete confidentiality and accuracy, the Foundation retained a leading and independent third-party research firm, Industry Insights, to conduct and collect the surveys. All survey data were tabulated and reported in aggregate, and were carefully scrutinized for accuracy and consistency. Any data inconsistencies are thoroughly tested through third-party data comparison and historical data panel review. At no point does the HDA Research Foundation or HDA have access to individual survey results.

HDA Factbook User’s Guide

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Users’ Guide

HDA Factbook Sections and Content The 87th Edition HDA Factbook: The Facts, Figures & Trends in Healthcare (2016-2017) has been organized to follow the order of the survey questions and has been divided into the following eight general sections of healthcare industry information:

1. Distributor Demographics and Characteristics: This section contains tables that illustrate healthcare distributors’ and distribution centers’ characteristics.

2. Finance: This section includes detailed financial measurements at the corporate level.

• Administration: This subsection is focused on administrative agreements.

3. Information Systems: This section contains tables that display trends with regard to the industry’s rate of technology adoption and use, and includes tables that depict industry use of the following:

• Electronic Data Interchange (EDI); • Electronic commerce (e-commerce); • Barcording; and, • Serialization.

4. Operations: This section provides measures of distributor operating

efficiency at the corporate level, which includes data on how orders are picked and processed.

• Special Handling: This subsection includes information regarding the processes by which distributors at the corporate level accommodate products with special handling requirements.

5. Healthcare Products: This section contains a number of different

market statistics for both general and discrete products handled by the healthcare supply chain, and includes tables that illustrate industry use of the following:

• Prescription products; • Non-prescription products; and, • New medications.

6. Customers: This section provides market information from distributors

about retail and institutional purchasers.

7. Market Characteristics: This section examines the overall United States healthcare market, and includes data on payers, utilization and market performance of top pharmaceutical manufacturers.

• Healthcare Overview: This subsection explores U.S. healthcare expenditures and payment methods.

• Prescription Use: This subsection includes tables that show trends in prescriptions dispensed and medication usage.

• Pharmaceutical Companies: This subsection includes detailed information on the top healthcare manufacturers.

HDA Factbook User’s Guide

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8. International: This section is focused on global healthcare trends as

they relate to pharmaceutical distribution markets. Understanding Reporting Units Median: The median represents the midpoint of the data when the data are arranged numerically from highest to lowest. This statistic of central tendency is used because it is less likely than an average to be skewed by extremely high or low responses (outliers). Weighted Averages: The weighted average includes data from all respondents but is adjusted to reflect the relative size of each company.

HDA Factbook QuintilesIMS Source Notes

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QuintilesIMS Source Notes QuintilesIMS Health: Information provided by QuintilesIMS (formerly IMS Health) has been collected either at the retail level or at the manufacturer level. As a result, tables reflect final sales, consumer measures or sales at the manufacturer level, as opposed to distributor transactions. QuintilesIMS tables are appropriate when seeking a total industry market figure. IMS National Sales Perspectives (NSP)TM: Measures spending within the U.S. pharmaceutical market by pharmacies, clinics, hospitals and other healthcare providers. NSP reports 100 percent coverage of the retail and non-retail channels for national pharmaceutical sales at actual transaction prices. IMS National Prescription Audit (NPA)TM: A suite of services that provides the industry standard source of national prescription activity for all products and markets. NPA measures prescriptions dispensed through retail, mail service and long-term care pharmacies. The IMS Institute's prescription universe includes prescription products and insulins. Over-the-counter products and flu vaccines are excluded from the market for the sake of this analysis. IMS MIDASTM: An analytics platform used to assess worldwide healthcare markets. It aggregates IMS's global audits and normalizes to international standards of product naming, company ownership, current exchange rates, volume metrics and product segmentation. IMS Market PrognosisTM: A comprehensive, strategic market forecasting publication that provides insight about the economic and political issues which can affect spending on healthcare globally. It uses econometric modeling from The Economist Intelligence Unit to deliver in-depth analysis at global, regional and country level about therapy class dynamics, distribution channel changes and brand vs. generic product spending. Source notes for Table 105: “Top 15 Manufacturers by Promotional Spending: 2015”

Integrated Promotional Services ™ (IPSTM) Measures:

Total Promotional Dollars (DOLP PROM): This IPS measure is the summary of all promotional spending for office promotion (including service visits), hospital promotion, professional advertising, DTC advertising and sampling. Total Promotion Dollars without Retail Value of Samples (DOLP WORVOS): This measure is the summary of all promotional spending, excluding Retail Value of Samples (RVOS). It includes promotional spending for office promotion (including service visits), hospital promotion, journals and DTC advertising. Retail Value of Samples (RVOS): Is the retail value of the product sampling activities of pharmaceutical representatives that are directed to office-based physicians. A panel of front-office personnel reports the quantity of product samples provided to office-based physicians through in-person discussions, service visits and the mail. Cost of Professional Promotion (DOLP PROF): This Combined Promotion and Journal measure shows the total cost of advertising that is directed to the professional audience. It adds Cost of Contacts, Journal Dollars, and Retail Value of Samples together to provide this total.

HDA Factbook QuintilesIMS Source Notes

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Cost of Professional Advertising (DOLP JRNL): This measure is an estimate of the cost of product advertising in medical journals. This figure is tabulated by relating observable advertising characteristics (for example, position, color, circulation) to rates and charges published in Standard Rates and Data. Total Promotion Dollars = Cost of Contacts + Cost of Professional Advertising + Cost of DTC Advertising + Retail Value of Samples

HDA Factbook Distributor Demographics & Characteristics

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Distributor Demographics & Characteristics

Section Overview The Distributor Demographics & Characteristics section offers information about sales volume, products, customers, programs and services. According to IMS, total spending on U.S. pharmaceuticals in 2015 increased to U.S. $425 billion from $373.9 billion in 2014. Sales through pharmaceutical distributors increased from $349.9 billion in 2014 to $407.6 billion in 2015. The 16 percent growth of distributor sales can likely be attributed to the continued growth of specialty pharmaceuticals, including hepatitis C treatments, and distributors capturing a greater share of chain drug store sales. In 2015, 93.8 percent of all U.S. pharmaceutical sales went to market through pharmaceutical distributors. This represents a 2.4 percentage point increase from 91.4 percent in 2014; the percentage of U.S. pharmaceutical sales sold via pharmaceutical distributors has increased steadily over the past five years (Table 1). This figure solely represents prescription sales volume, and is calculated by subtracting non-prescription sales and sales through other distributors from total distributor sales. Distributor Sales by Product and Customer Category Tables 2 and 3 illustrate distributor sales by product and customer, respectively. These tables delineate the percentage of distributor sales by channel and by product type. The total sales figures cited in these tables are those of traditional distributors, which thereby excludes specialty distributor sales. Prescription pharmaceutical products accounted for 98.2 percent of distributor sales volume in 2015, a marginal increase (0.3 percent) from 2014, and has remained relatively consistent since 2010. Generics again experienced a notable increase in volume during 2015 — rising from approximately $44 billion in 2014 to $54 billion in 2015. Chain sales represented the largest customer category for traditional distributors, accounting for 42.5 percent of total sales in 2015. Chain sales include chain drug stores, mass merchandisers and food stores, as well as chain warehouse sales. The weighted averages are calculated for distributor sales by product and customer categories, respectively. The weighted average includes data from all survey respondents, but is adjusted to reflect marketplace dynamics (Tables 2 and 3).



Table 4 highlights the programs and services offered by distributors. In 2015, 100 percent of distributors offered the following programs and services to customers:

• Data Management Services; • Generic Source Program; • Durable Medical Equipment/Home Health Care; • Medical/Surgical Services/Products; • Automated Pharmacy Dispensing; • Special Handling Distribution; • Specialty Pharmacy; • Third-Party Claims Processing; and, • Zone Pricing Systems.

Distribution Center Demographics As of October 2016, there were 34 HDA distributor member companies that together manage 203 distribution centers. This represents a 15 percent increase in the number of distribution centers from 2015 (Table 6). The average warehouse size increased between 2014 and 2015; in 2014 the average square feet per distribution center was 134,897. In 2015, this figure was reported as 147,892 for Full Line Distributors – Sales over U.S. $1 Billion (Tables 7 and 8).



1 Pharmaceutical Sales Through Distributors: 2012-2015

2012 2013 2014 2015 Estimated distributor sales1 ($bil) $299.53 $304.63 $349.90 $407.58 Estimated percent of pharmaceutical sales through distributors2 (%) 90.00% 90.10% 91.43% 93.79%

1This figure includes all HDA distributor sales for prescription and pharmacy-dispensed diagnostic products only. 2Estimated percent of industry sales through distributors is based on a combination of data from QuintilesIMS and the HDA Research Foundation. To calculate this

estimate, the total sales figure (reported by distributors) is adjusted to remove sales to other distributors (to avoid double counting revenue). Non-Rx sales are also removed to make the number comparable to the QuintilesIMS total prescription drug sales data. The adjusted distributor sales figure is divided by the QuintilesIMS total prescription sales figure to obtain the estimated percent of product sold through distributors.

Source: HDA Research Foundation

2 Distributor Sales by Product Category: 2014-2015 2014 Sales ($bil) 2015 Sales ($bil) Prescription drugs—brand name $197.70 $239.77

Prescription drugs—brand name, specialty $63.61 $57.61

Prescription drugs—generic $43.97 $54.04

Prescription drugs (total) $305.34 $351.42

Non-prescription drugs (OTC) $3.92 $3.94

Health & personal care $1.04 $1.43

General merchandise $0.33 $0.36

Durable medical equipment & home healthcare $1.17 $1.07

Total Sales1 $311.83 $357.86 Percent of total sales: Weighted Average Weighted Average Prescription drugs—brand name 63.4% 67.0%

Prescription drugs—brand name, specialty 20.4% 16.1%

Prescription drugs—generic 14.1% 15.1%

Prescription drugs (total) 97.9% 98.2%

Non-prescription drugs (OTC) 1.3% 1.1%

Health & personal care 0.3% 0.4%

General merchandise 0.1% 0.1%

Durable medical equipment & home healthcare 0.4% 0.3% 1Total sales figure excludes sales from specialty distributors or specialty divisions. NOTES: 1. The weighted average takes into account the proportional relevance of company size. 2. Rounding differences may result in slight calculation variations. 3. An “Other” category collected on the questionnaire is not included above. Its average percentage represented 0.007% of 2014 sales and 0.000% of 2015 sales. 4. 2014 data has been restated. Source: HDA Research Foundation



3 Distributor Sales by Customer Category: 2014-2015 2014 Sales ($bil) 2015 Sales ($bil) Chain drug stores $89.44 $106.28

Mass merchandisers & food stores $19.11 $19.32

Chain warehouse sales $14.74 $26.48

Chain sales (total) $123.30 $152.09

Independent drug stores $53.85 $60.12

Hospitals & HMOs $53.56 $51.89

Specialty pharmacies $4.83 $3.94

Clinics and long-term care $22.95 $27.20

Mail order $49.22 $56.18

Other distributors $0.53 $1.07

Physicians/physicians’ offices $0.75 $0.36

Other customers $2.86 $5.37

Total sales1 $311.83 $357.86 Percent of total sales: Weighted Average Weighted Average Chain drug stores 28.7% 29.7%

Mass merchandisers & food stores 6.1% 5.4%

Chain warehouse sales 4.7% 7.4%

Chain sales (total) 39.5% 42.5%

Independent drug stores 17.3% 16.8%

Hospitals & HMOs 17.2% 14.5%

Specialty pharmacies 1.5% 1.1%

Clinics and long-term care 7.4% 7.6%

Mail order 15.8% 15.7%

Other distributors 0.2% 0.3%

Physicians/physicians’ offices 0.2% 0.1%

Other customers 0.9% 1.5% 1Total sales figure excludes sales from specialty distributors or specialty divisions. NOTES: 1. The weighted average takes into account the proportional relevance of company size. 2. Rounding differences may result in slight calculation variations. Source: HDA Research Foundation



4 Programs and Services Offered by Distributors: 2015 Offered To: Offered Through: Of companies offering a program or service, the percent of those who do: (multiple responses allowed) Suppliers Customers Do Not

Offer Your

Company Subsidiary Outsourced

Compliance (Prescription)/Refill Reminders 40% 80% 20% 50% 50% 50% Data Management Services (Provide data on sales, inventory, returns, etc.) 100% 100% 0% 100% 17% 17%

Direct-to-Customer Order Fulfillment (Internet based pharmacies): HPC Products (Health/Personal Care) 20% 20% 80% * * *

Direct-to-Customer Order Fulfillment (Internet based pharmacies): OTC Products 17% 17% 83% * * *

Direct-to-Customer Order Fulfillment (Internet based pharmacies): Rx Products 17% 33% 67% * * *

Disease Management Program 33% 67% 33% 50% 75% 50% Generic Source Program 50% 100% 0% 100% 17% 17% Durable Medical Equipment/Home Health Care 50% 100% 0% 100% 17% 17% Home Infusion Program 33% 50% 50% 67% 67% 33% Indigent Patient Program 17% 50% 50% 100% 67% 33% Long-Term Care Facilities 33% 83% 17% 100% 20% 20% Medical/Surgical Services/Products 50% 100% 0% 83% 33% 17% Orphan Drug Distribution 17% 67% 33% 75% 75% 25% Packaging (e.g., assembling kits, blister packs) 33% 67% 33% 50% 50% 50% Repackaging (Bulk to bottle) 33% 50% 50% 67% 67% 33% Pharmacy Management Systems & Services 33% 83% 17% 40% 60% 40% Point-of-Sale Scanning Equipment 17% 83% 17% 40% 60% 40% Private Labels or Control Labels 17% 83% 17% 80% 20% 40% Product Testing (e.g., for stability/authenticity) 33% 17% 67% * * * Promotional Material Distribution 83% 83% 0% 100% 33% 33% Rack Jobbing (In store replenishment) 17% 67% 33% 50% 50% 75% Rapid Distribution (New product launches) 100% 83% 0% 100% 17% 17% Reverse Distribution 50% 83% 17% 100% 20% 60% Automated Pharmacy Dispensing 17% 100% 0% 20% 60% 60% Rx Data Capture for Customers 33% 83% 17% 75% 25% 50% Samples Distribution 33% 33% 50% * * * Specialty Distribution 50% 67% 17% 80% 60% 40% Special Handling Distribution (e.g., temperature sensitive, controlled substances, hazardous products) 50% 100% 0% 100% 40% 20%

Specialty Pharmacy (focuses on high cost, high maintenance, chronic diseases) 67% 100% 0% 67% 33% 33%

Third-Party Claims Processing 40% 100% 0% 60% 40% 40% Third-Party Contract Bids 20% 60% 40% 33% 67% 67% Third-Party Distribution 50% 33% 33% 50% 50% 50% Veterinary Products 50% 50% 33% 75% 25% 50% Voluntary or Co-Op Advertising Program 67% 83% 0% 100% 20% 20% Zone Pricing Systems 50% 100% 0% 100% 17% 33%

NOTES: 1. *Insufficient data 2. Rounding differences may result in slight calculation variations. Source: HDA Research Foundation



5 Distributor Program and Service Details: 2013-2015 2013 2014 2015

Average Median Average Median Average Median Offer generic source program (same as generic formulary) for customers: 100% 100% 100%

SKUs in generic source program 6,601 7,200 7,614 8,123 9,269 8,709

Manufacturers featured in generic source program 109 124 129 129 145 145 Over the last 12 months, performance of unit sales volume of products featured in generic source program compared to other generic program:

Outperformed generic 100% 80% 100%

Performed about the same 0% 0% 0%

Underperformed generic 0% 20% 0% Provide private labels, control labels and/or store brands to retail customers 100% 100% 100%

Number of SKUs in each private label 919 847 1,203 847 1,033 671

Offer voluntary and/or co-op advertising program: (%) 67% 67% 67%

Customer accounts that are voluntaries and/or co-op: 47% 50% 41% 39% 41% 39% Number of pharmacies participating in voluntary and/or co-op program 1,192 660 1,156 660 1,144 661

Provide retail customers with recommended zone pricing systems 100% 100% 100%

Zone pricing is provided for the following products1:

Prescription drugs–brand name 50% 50% 50%

Prescription drugs–generic 50% 50% 67%

General merchandise 100% 100% 100%

OTC drugs 100% 100% 100%

Health and personal care 100% 100% 100%

Durable medical equipment/home healthcare 100% 100% 100%

Other 50% 50% 50% 1Multiple responses allowed Source: HDA Research Foundation



6 HDA U.S. Distributor Member Companies and Distribution Centers: 2011-2016

Source: HDA Membership Database, October 2016

7 Average Square Footage of Warehouse Space per Distribution Center


34 34 32 32 33 34

158 150 144 153 176

203

0

20

40

60

80

100

120

140

160

180

200

2011 2012 2013 2014 2015 2016HDMA Distributor Members HDMA Distributor members' Distribution Centers

60,917

147,892

70,000

149,800

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Full Line Distributors--Sales Under $1 Billion

Full Line Distributors--Sales Over $1 Billion

Average Median



8 Average Square Feet of Warehouse Space per Distribution Center


9 States Where HDA Distributor Members Have Customers: 2015 Average

Distributors serving all states and District of Columbia 9

NOTE: Entries include the active HDA distributor member, not the parent company. Source: HDA Research Foundation

146,616

136,306

135,666

136,731

149,800

165,298

131,448

133,791

134,897

147,892

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000

2011

2012

2013

2014

2015

Average SF Median SF



10 Healthcare Distributors—Mergers and Acquisitions by Deal Value: 2015 Acquirer Target Company Deal Value ($mil) Closing Date

naviHealth Inc RightCare Solutions Inc Unk 12/16/2015

Cardinal Health Inc navi Health Inc 290 8/25/2015

Cardinal Health Inc Outcomes Inc Unk 7/16/2015

Cardinal Health Inc Harvard Drug Group LLC 1115 6/5/2015

Cardinal Health Inc Metro Medical Supply Inc Unk 4/8/2015

Cardinal Health Inc Tradex International Inc Unk 3/13/2015

Cardinal Health Inc Cordis Corp 1944 3/2/2015

Henry Schein Scil Animal Care Unk 4/1/2015

MWI Supply (UK Acquisition) Ltd VTS Buying Services Ltd Unk 12/15/2015

AmerisourceBergen Corp ParMEDium Services LLC 2575 10/6/2015

MWI Veterinary Supply Inc Vetswest Ltd Unk 8/4/2015

AmerisourceBergen Corp MWI Veterinary Supply Inc 2523 1/12/2015 Source: Barclay's and HDA Research Foundation

11 Distributor Sales Force Profile: 2013-2015

Average

2013 2014 2015 Number of sales people (in FTEs1) employed on average over the last 12 months (excluding telemarketing personnel) 458 472 467

Type of sales force personnel company employs:

Inside sales force 100% 100% 100%

Field sales force 100% 100% 100%

Customer service center 100% 100% 100% 1Full-time employees (FTEs) calculation is based on the proportion of full-time hours worked for those who don’t work full-time. For example, includes an employee who worked 20 hours per week as 0.5 employees if the work week is 40 hours; employees who worked full-time for three months out of the year are counted as 0.25 employees. Source: HDA Research Foundation

HDA Factbook Finance


Finance

Section Overview The Finance section includes operating ratio measures of profitability and expenses solely at the corporate level. Administrative, chargeback and service agreement information are also included. Note the following clarifications: Some tables in this section report a weighted average, which is used to take into account the proportional relevance of company size to the performance measure. See the Organization and Methodology section (p. ix) for a description. Distributor profitability, Table 12 displays the following trends:

• Gross profit margin held steady at 3 percent from 2014 to 2015; • Net profit before taxes to gross profit increased from 56 percent in 2014 to 62.6 percent in

2015; • Net profit after taxes to gross profit increased from 42.9 percent in 2014 to 47.8 percent in

2015. Distributor company net sales growth is reported as a weighted average. In 2015, distributor company net sales decreased to 14.5 percent from 16.2 percent in 2014 (Table 16). The Administration tables in this section address business-partner interaction through contracts, score carding and service agreements. Section highlights include the following:

• Prior to opening a new customer account, all reporting distributors required a detailed application process, underwent a credit check, verified federal or state licenses and conducted on-site inspections (Table 22);

• One-half of distributors required a monthly minimum dollar volume to service customers (Table 23);

• The total number of annual chargebacks as a percentage of net sales increased from 23.6 percent in 2014 to 26.4 percent in 2015 (Table 24); and,

• The average percentage of chargebacks denied after initial submission decreased from 1.4 percent in 2014 to 0.5 percent in 2015 (Table 26).

In 2015, the average total number of SKUs that distributors held in inventory was 52,066. This represents a 10.7 percent increase from 2014. Of that, 28,659 were non-prescription health products, which includes non-prescription drugs, health and personal care, general merchandise, durable medical equipment and home health care. Prescription drug SKUs accounted for 23,407, an increase from an average of 20,896 in 2014 (Table 28). Table 29 represents distributor ordering practices. Online and order entry systems accounted for 92 percent of orders placed in 2015; followed by phone orders (5 percent), fax (1 percent) and other (2 percent).



12 Distributor Profitability: 2013-2015 Weighted Average 2015 2013 2014 2015 Average Middle Range Median

Gross profit margin1 3.4% 3.0% 3.0% 5.1% 3.1% - 6.6% 4.5%

Net profit before taxes to gross profit 54.6% 56.0% 62.6% 59.8% 61.7% - 71.6% 65.6%

Operating profit to net sales 2.0% 1.8% 1.9% 3.0% 1.5% - 3.9% 2.2%

Net profit after taxes to gross profit 40.0% 42.9% 47.8% 41.8% 41.0% - 48.5% 43.6%

Net profit before taxes to net sales1 1.8% 1.7% 1.9% 3.2% 1.5% - 4.1% 2.1%

Net profit after taxes to net sales1 1.3% 1.3% 1.4% 2.1% 1.0% - 2.7% 1.8%

Net profit after taxes to total assets1 7.4% 7.7% 8.1% 11.5% 5.3% - 14.4% 9.7%

Net profit after taxes to net worth1 38.1% 45.8% 46.7% 109.1% 19.1% - 96.9% 39.7%

Return on capital1,2 12.5% 11.1% 12.5% 18.4% 10.7% - 18.6% 14.7% 1FIFO 2Return on capital=[Net profits before taxes/(inventory + accounts receivable + cash + cash equivalents)] NOTE: The weighted average takes into account the proportional relevance of company size. Source: HDA Research Foundation

13 Distributor Return on Investment Model (FIFO Results): 2013-2015 Weighted Average 2015 2013 2014 2015 Average Middle Range Median

Net profit margin (after tax) (%) Operating productivity

Net Profit Net Sales 1.3% 1.3% 1.4% 2.1% 1.0% - 2.7% 1.8%

Total asset turnover Asset productivity (times)

Net Sales Total Assets 5.6x 5.5x 5.6x 5.4x 4.6x – 6.0x 5.5x

Financial leverage multiplier Capital structure (times)

Total Assets Net Worth 5.1x 6.5x 6.1x 9.6x 4.2x – 8.0x 5.6x

Return on net worth (after tax) (%) Return on investment

Net Profit Net Worth 38.1% 45.8% 46.7% 109.1% 19.1% - 96.9% 39.7%

NOTES: 1. The weighted average takes into account the proportional relevance of company size. 2. Some measures will, by nature, have wide variability in results, such as return on net worth. Source: HDA Research Foundation



14 Distributor Income Statement: 2013-2015 Weighted Average 2015 2013 2014 2015 Average Middle Range Median Income from product sales (FIFO) as a percent of sales

Gross sales to third parties 102.3% 103.5% 104.3% 104.5% 104.2% - 105.2% 104.4%

Total deductions from gross sales (returns, allowances & adjustments, and sales discounts allowed)

2.3% 3.5% 4.3% 4.5% 4.2% - 5.2% 4.4%

Net product sales 100.0% 100.0% 100.0% 100.0% 100.0% - 100.0% 100.0%

Cost of goods sold1 (FIFO) 98.4% 99.0% 99.5% 97.2% 95.5% - 99.4% 97.9%

Cash discounts on purchases (due to vendor payment terms) 1.7% 2.1% 2.5% 2.3% 2.2% - 2.5% 2.4%

Gross profit after all discounts 3.4% 3.0% 3.0% 5.1% 3.1% - 6.6% 4.5%

Total operating expenses 1.3% 1.2% 1.1% 2.1% 1.1% - 2.4% 1.5%

Drug operating profit (FIFO) 2.0% 1.8% 1.9% 3.0% 1.5% - 3.9% 2.2%

Other income (distribution center only: non-investment income—gains on sales of assets, rental income, dividends)

0.0% 0.0% 0.0% 0.2% 0.0% - 0.2% 0.1%

Other miscellaneous expenses (non-interest) 0.2% 0.1% 0.1% 0.0% 0.0% - 0.1% 0.0%

Net profit before interest and taxes (FIFO) 1.8% 1.7% 1.9% 3.2% 1.5% - 4.1% 2.1%

1Cost of goods sold=[beginning inventory plus purchases (net of trade discounts and returns, including freight) minus ending inventory] NOTE: The weighted average takes into account the proportional relevance of company size. Source: HDA Research Foundation

15 Distributor Company Expense Statement: 2013-2015 Weighted Average 2015 Expenses as a percent of total sales: 2013 2014 2015 Average Middle Range Median

Administrative expenses 0.2% 0.3% 0.3% 0.7% 0.3% - 0.6% 0.4%

Information Technology (IT) expenses 0.2% 0.1% 0.1% 0.3% 0.2% - 0.2% 0.2%

Buying expenses 0.0% 0.0% 0.0% 0.1% 0.0% - 0.1% 0.1%

Sales and marketing expenses 0.2% 0.2% 0.2% 0.3% 0.2% - 0.4% 0.2%

Warehouse expenses1 0.3% 0.3% 0.2% 0.3% 0.2% - 0.5% 0.3%

Delivery expenses 0.2% 0.2% 0.2% 0.3% 0.2% - 0.5% 0.2%

Contracts and chargeback reconciliation expenses 0.1% 0.0% 0.0% 0.0% 0.0% - 0.0% 0.0%

Occupancy expenses 0.1% 0.1% 0.1% 0.2% 0.1% - 0.2% 0.1%

Total operating expenses 1.3% 1.2% 1.1% 2.1% 1.1% - 2.4% 1.5% 1Excluding occupancy and capitalized expenses NOTES: 1. Rounding differences may result in slight calculation variations. 2. The weighted average takes into account the proportional relevance of company size. Source: HDA Research Foundation



16 Distributor Company Net Sales Growth: 2013-2015 Weighted Average 2015 2013 2014 2015 Average Middle Range Median Current dollars (percent sales change, not adjusted for inflation) 1.1% 16.2% 14.5% 7.4% 4.6% - 14.4% 9.2%

NOTE: The weighted average takes into account the proportional relevance of company size. Source: HDA Research Foundation

17 Distributor Capital Expenditures: 2013-2015 Weighted Average 2015 2013 2014 2015 Average Middle Range Median Capital expenditures as a percent of total capital expenditures—investment by category:

Information technology 22% 17% 20% 27% 11% - 34% 26%

Machinery & equipment 14% 30% 11% 19% 5% - 21% 14%

Land, building, vehicles & all other 64% 53% 69% 54% 37% - 75% 46%


18 Distributor Company Personnel Expenditures: 2013-2015 Weighted Average 2015 2013 2014 2015 Average Middle Range Median Personnel expenditures as a percent of gross profit:

Total company payroll as a percent of gross profit margin 12.8% 14.7% 13.7% 16.5% 9.3% - 15.5% 13.9%

Total company benefits as a percent of gross profit margin 2.1% 3.0% 3.0% 3.0% 1.7% - 4.3% 2.5%

Total company payroll/benefits as a percent of gross profit margin 14.9% 17.7% 16.7% 19.5% 11.3% - 18.8% 17.1%

Personnel expenditures as a percent of net total sales:

Total company payroll as a percent of net total sales 0.4% 0.4% 0.4% 0.8% 0.5% - 1.0% 0.6%

Total company benefits as a percent of net total sales 0.1% 0.1% 0.1% 0.2% 0.1% - 0.2% 0.2%

Total company payroll/benefits as a percent of net total sales 0.5% 0.5% 0.5% 1.0% 0.5% - 1.2% 0.8%




19 Distributor Asset Management: 2013-2015 Weighted Average 2015 2013 2014 2015 Average Middle Range Median Net sales to ending total assets (FIFO) (times) 5.6x 5.5x 5.6x 5.4x 4.6x – 6.0x 5.5x

Inventory turnover rate1 (Q/M, FIFO) (times) 12.8x 12.3x 12.5x 11.7x 10.4x – 13.0x 12.5x

Average monthly collection period (days) 19.0 19.3 20.2 22.2 17.6 – 24.4 22.4

Days sales in inventory (average monthly) (days) 28.6 29.6 29.2 32.5 28.0 – 35.6 29.3

1Inventory turnover is based on average quarterly or monthly FIFO-based inventories. NOTE: The weighted average takes into account the proportional relevance of company size. Source: HDA Research Foundation

20 Distributor Company Asset Ratios: 2013-2015 Weighted Average 2015 Asset Ratios: 2013 2014 2015 Average Middle Range Median Current assets to current liabilities (times) (an overall measure of liquidity) 1.1x 1.0x 1.0x 1.3x 1.0x – 1.4x 1.2x

Total assets to net worth (FIFO) (times) (a measure of financial leverage, or the extent to which debt versus equity financing is used to fund the business)

5.1x 6.5x 6.1x 9.6x 4.2x – 8.0x 5.6x

Days payable (days) (average monthly) (indicates the typical number of days for paying bills)

43.7 46.5 51.0 47.2 44.4 – 50.4 46.8

Debt to assets1 (%) (measures the percent of total funds provided by creditors)

80.4% 83.5% 84.3% 77.5% 76.0% - 87.4% 81.7%

Acid test ratio2 (times) (how well a company can meet its obligations immediately)

0.4x 0.4x 0.4x 0.6x 0.4x – 0.7x 0.6x

Cash ratio (times) (same as acid test, but leaves out AR) 0.01x 0.01x 0.01x 0.14x 0.03x – 0.24x 0.11x

1Debt to assets=total debt/total assets 2Acid test ratio=(cash + marketable securities + AR)/current liabilities NOTE: The weighted average takes into account the proportional relevance of company size. Source: HDA Research Foundation

21 Distributor Company Credit Memos: 2013-2015 Weighted Average 2015

2013 2014 2015 Average Middle Range Median Credit memo lines as a percent of total invoice lines (%) 2.8% 3.1% 2.6% 2.2% 0.2% - 3.8% 1.8%

Credit memo dollars as a percent of net sales 2.1% 2.4% 2.3% 2.3% 1.5% - 3.6% 1.7%

Dollars per credit memo line ($) $215 $234 $298 $377 $169 - $380 $254




Administration

22 Due Diligence: 2013-2015 Average Due diligence practices used prior to opening a customer account 2013 2014 2015 Detailed application process 100% 100% 100%

Undertake a credit check 100% 100% 100%

Verify federal or state license 100% 100% 100%

On-site inspections 100% 100% 100%

Require an insurance/indemnity agreement 50% 50% 50%

Require an application fee 33% 33% 33%

Other 17% 17% 33% Source: HDA Research Foundation

23 Distributor Minimum Orders: 2014-2015 Average

2014 2015 Distributors with monthly minimum dollar volume to service a customer 33% 50% Distributors with a required minimum monthly dollar volume to qualify for a buy plan1 40% 50%

1A buy plan is an internal financial analysis model for a given piece of business. Source: HDA Research Foundation

24 Distributor Chargeback Profile: 2014-2015 Weighted Average 2015 2014 2015 Average Middle Range Median Chargebacks as a percent of net sales:

Total annual chargebacks (%) 23.6% 26.4% 21.3% 16.6% - 26.6% 21.8%

Monthly chargebacks outstanding (%) 0.1% 0.2% 0.3% 0.3% - 0.4% 0.4% Source: HDA Research Foundation

25 Frequency of Chargeback Submissions to Manufacturers: 2014-2015 Weighted Average 2014 2015 Daily 67% 67%

Weekly 17% 17%

Monthly 0% 0%

As Received 0% 0%

Other 17% 17% Source: HDA Research Foundation



26 Chargebacks Denied: 2014-2015 2014

Average 2015

Average 2015

Middle Range Median Weighted Average Percent of chargebacks denied after initial submission 1.4% 0.5% 1.5% 0.5% - 1.9% 0.8%


27 Sales per Distributor: 2014-2015 2014 2015

Average Average Middle Range Median

Sales per square foot of warehouse $16,552 $15,290 $5,781 - $24,847 $15,322

Sales per invoice line $248 $239 $159 - $304 $254


28 Distributor Inventory Levels—Number of SKUs: 2014-2015

Number of SKUs Lines Picked

2014 Avg. 2015 Avg. 2015 Median 2014 Avg. 2015 Avg. 2015

Median Company Inventory

Prescription drugs—brand name 5,902 6,383 6,107 23% 21% 21%

Prescription drugs—brand name, specialty 1,070 1,050 592 2% 1% 1%

Prescription drugs—generic 13,924 15,975 18,711 45% 48% 51%

Non-prescription drugs 12,691 13,272 14,022 20% 18% 20%

Health & personal care 5,958 5,878 3,638 2% 2% 1%

General merchandise 1,737 1,820 670 1% 1% 1%

Durable medical equipment & home healthcare 5,581 7,406 5,650 7% 8% 3%

Prescription drugs (total) 20,896 23,407 25,934 70% 71% 73%

Non-Rx health products (total) 26,128 28,659 27,961 30% 29% 27%

Overall Number of SKUs 47,024 52,066 53,895 100% 100% 100% NOTE: Rounding differences may result in slight calculation variations. Source: HDA Research Foundation

29 Distributor Company Customer Ordering Practices: 2013-2015

Percent of orders received via: 2013 2014 2015

Average Median Average Median Average Median Phone 5% 4% 5% 5% 5% 3%

Fax 1% 1% 1% 1% 1% 0%

Order entry systems & Online 92% 88% 91% 95% 92% 96%

Other 1% 1% 3% 0% 2% 0% NOTE: Multiple responses allowed. Source: HDA Research Foundation



30 Distributor Personnel Productivity: 2014-2015 2014 2015

Weighted Average

Weighted Average Average Middle Range Median

Compensation as a percent of gross profit (%) 14.7% 13.7% 16.5% 9.3% - 15.5% 13.9%

Gross profit per employee ($000) $599 $636 $612 $485 - $714 $646

Compensation per employee ($000) $88 $87 $99 $74 - $95 $89

Contribution per employee ($000) $511 $549 $513 $398 - $644 $564

Sales per employee ($000) $19,882 $21,046 $17,152 $6,518 - $24,924 $13,819

Number of employees (#) 977 890 2,424 501 – 3,358 1,928 NOTE: The weighted average takes into account the proportional relevance of company size. Source: HDA Research Foundation

HDA Factbook Information Systems


Information Systems

Section Overview The Information Systems section includes metrics on the use and adoption of Electronic Data Interchange (EDI), barcoding, scanning profile, product serialization and electronic commerce (e-commerce). Note the following clarifications: Reported data (unless otherwise stated) reflect the industry profile. As in previous Factbook editions, data are reported when appropriate for companies with less than $1 billion in revenue and are used to highlight this segment’s behavior (e.g., tables showing distributors’ EDI and barcoding use). Barcoding 87.5 percent of distributors with more than $1 billion in sales scan barcode labels when receiving product inbound from suppliers.

• All distributors scan the NDC number when receiving product inbound from suppliers (Table 31); and,

• All distributors scan barcodes received from manufacturers at the case level and item level (Table 32).

In 2015, all distributors reported the following reasons for capturing data through barcodes:

• Cycle counting; • Order checking; • Returned goods processing; • Stock movement (secondary to primary locations); • Stock put-away; and, • Verifying product receipt (Table 33).

All distributors reported tracking distribution of product by lot numbers. The majority cited federal regulatory/legislation requirements and contractual obligations as reasons for tracking by lot numbers (Table 38).

EDI All distributors reported the use of EDI transaction sets to transmit information to their trading partners. All distributors with sales less than $1 billion reported using the following transaction sets:

• 810 Invoice; and, • 844 Chargeback (Table 40).



All distributors with sales of more than $1 billion reported using the following EDI transaction sets in 2015:

• 810 Invoice; • 844 Chargeback; • 845 Bid Award/Change Notification; • 849 Chargeback/Reconciliation; • 850 Purchase Order; • 852 Product Activity Data; • 856 Advance Ship Notice; • 867 Product Transfer; and, • 997 Functional Acknowledgements (Table 41).

Electronic Commerce (e-Commerce) Most distributors reported using Internet EDI to assist in trading partner relationships. Distributors reported the most frequent reason for using EDI was for the processes of electronic contact administration and returned goods processing (both 100 percent), followed by distributor service agreements/fee for service agreements, at 83.3 percent (Table 43).



Electronic Data Interchange (EDI)

31 Distributor's Scanning Profile Under $1 Billion in Sales Over $1 Billion in Sales When receiving product inbound from suppliers, do you receive the shipment by scanning barcode labels?

50.0% 87.5%

Barcoded information scanned when receiving product inbound from suppliers:

Quantity 25.0% 14.3%

NDC # 100.0% 100.0%

Serial # 0.0% 0.0%

Lot # 0.0% 28.6%

Expiration date 0.0% 28.6%

Barcode symbologies captured:

Linear 100.0% 100.0%

EAN/UCC-128 100.0% 85.7%

Interleaved 2 of 5 50.0% 85.7%

Reduced Space Symbology (RSS)/Data Bar 25.0% 28.6%

Two-dimensional symbology 25.0% 28.6%

Data Matrix 25.0% 28.6%

Other 0.0% 0.0% Source: HDA Research Foundation



32 Barcoded Product Packaging 2014 2015 Percent of product received from manufacturers barcoded at this packaging level

Pallet

Percent of pallets barcoded by manufacturers

Average * 63.7%

Median * 90.0% Percent of distributors that scan barcodes at pallet

level 33.3% 50.0%

Case

Percent of cases barcoded by manufacturers

Average 83.8% 75.3%

Median 89.0% 89.5% Percent of distributors that scan barcodes at case

level 100.0% 100.0%

Shelf Pack/Inner Pack Percent of shelf packs/inner packs barcoded by

manufacturers

Average 25.5% *

Median 1.0% * Percent of distributors that scan barcodes at shelf

pack/inner pack level 83.3% 66.7%

Item Level (saleable unit) Percent of saleable units barcoded by

manufacturers

Average 100.0% 56.0%

Median 99.0% 70.0% Percent of distributors that scan barcodes at item

level 100.0% 100.0%

NOTE: *Insufficient data Source: HDA Research Foundation



33 Distributor Purposes for Data Capture Through Barcoding

2014 2015

Purposes for capturing data through barcodes:

Checking expiration dates 50.0% 33.3%

Checking lot numbers 33.3% 33.3%

Complying with customer demand 16.7% 50.0%

Complying with FDA regulations 66.7% 66.7%

Cycle counting 66.7% 100.0%

Establishing package quantity 33.3% 66.7%

Generating advanced shipment notices (ASN) 16.7% 16.7%

Order checking 100.0% 100.0%

Picking 100.0% 83.3%

Product Pedigree (history/tracking) 33.3% 66.7%

Recalls 66.7% 83.3%

Returned goods processing 100.0% 100.0%

Stock movement (secondary to primary locations) 100.0% 100.0%

Stock put-away 100.0% 100.0%

Verifying product receipt 100.0% 100.0%

Verifying shipment 83.3% 83.3%


34 Unreadable Barcodes 2014 2015 Percent of barcodes received inbound from manufacturers' shipping cases that are unreadable on first scan

Average 4.7% 3.5%

Median 1.5% 5.0% Source: HDA Research Foundation



35 Distributor Serialization Activity 2014 2015 Scan serialized product received from manufacturers?

2D Barcodes Yes – Pilot program 33.3% 33.3% Yes – Production 16.7% 16.7% No - Receive but don't use serialization 50.0% 33.3% No - Not applicable 16.7% 16.7%

If "no" or "not applicable" is company planning to scan 2D barcodes on serialized product in the future?

Yes, within 6 months 33.3% 66.7% Yes, within 12 months 33.3% 0.0% Yes, within 18 months 33.3% 33.3% No current plans 0.0% 0.0%


36 Distributor Serialization Profile 2014 2015 Number of SKUs received inbound from manufacturers with 2D barcodes: 216 216

Percent of SKUs received inbound from manufacturers with 2D barcodes: 1.8% 2.6%

Packaging level used to scan 2D barcodes:

Pallet 0.0% 0.0%

Case Level 50.0% 0.0%

Shelf Pack/Inner Pack 25.0% 16.7%

Item Level 50.0% 0.0% Source: HDA Research Foundation

37 Lot Number Tracking: 2015 Majority of Sales From

Generic Products Full Line Distributors

Sales Under $1 Billion Sales Over $1 Billion Does your company track any distribution of product by lot numbers?

Yes 100.0% 100.0% 100.0%

No 0.0% 0.0% 0.0% Source: HDA Research Foundation



38 Lot Number Tracking

2015

Does your company track any distribution of product by lot numbers? Yes 100.0%

No 0.0% For each functional area, select if your company records lot number and/or serialized identifiers.

Receiving

Track by Lot # 100.0%

Track by unique serialized identifiers 0.0%

Picking

Track by Lot # *

Track by unique serialized identifiers *

Shipping to customer



Returns to customer



Returns to manufacturers

Track by Lot # *

Track by unique serialized identifiers * For what reason(s) does your company record/track by lot numbers? (multiple responses allowed)

Federal regulatory/legislation requirements 80.0%

State regulatory requirements 20.0%

Company directed regulatory requirements 20.0%

Supply forecasting 0.0%

Demand forecasting 0.0%

Operational effectiveness 40.0%

Contractual obligations 60.0% NOTE: *Insufficient data Source: HDA Research Foundation

39 Distributors’ Electronic Data Interchange (EDI) Profile: 2015 Sales Under $1 Billion Sales Over $1 Billion Use of EDI transaction sets for distributor/supplier/ group purchasing organization trading links Currently using EDI transaction sets 100.0% 100.0%

Use the Internet for EDI:

Yes, currently 100.0% 87.5%

No 0.0% 12.5%

No, but plan to in the next 12 months 0.0% 0.0% Source: HDA Research Foundation



40 Distributor Electronic Data Interchange Transaction Set Use (Sales Under $1 Billion): 2015

Of those using the EDI set, percentage using with each trading partner

Of those not using the EDI set, plan to use in the future

EDI transaction set Use this set

Use with Manufacturers

Use with Customers

Use with 3rd Party

Processors

Do not currently use but plan to use in the next

12 months

No current plans to

use

180 Return Merchandise Authorization Notification 11.1% * * * 12.5% 87.5%

810 Invoice 100.0% 88.9% 77.8% 22.2% * *

812 Credit/Debit Adjustment 11.1% * * * 25.0% 75.0%

816 Organizational Relationships 0.0% * * * 22.2% 77.8% 820 Payment Order/Remittance Advice 33.3% 100.0% 66.7% 0.0% 16.7% 83.3%

832 Catalog 66.7% 16.7% 100.0% 16.7% 0.0% 100.0%

836 Procurement Notices 0.0% * * * 11.1% 88.9%

840 Request for Quotation 0.0% * * * 11.1% 88.9%

843 Response to Request for Quotation 0.0% * * * 11.1% 88.9%

844 Chargeback 100.0% 100.0% 0.0% 0.0% * *

845 Bid Award/Change Notification 66.7% 83.3% 0.0% 0.0% 66.7% 33.3%

846 Inventory Inquiry/Advice 22.2% * * * 14.3% 85.7%

849 Chargeback/Reconciliation 66.7% 100.0% 0.0% 0.0% 66.7% 33.3%

850 Purchase Order 88.9% 100.0% 87.5% 12.5% * *

852 Product Activity Data 66.7% 83.3% 16.7% 0.0% 0.0% 100.0% 855 Purchase Order Acknowledgement 66.7% 66.7% 83.3% 16.7% 0.0% 100.0%

856 Advance Ship Notice 88.9% 100.0% 75.0% 25.0% * *

857 Shipment Billing Notice 0.0% * * * 11.1% 88.9% 861 Receiving Advice/Acceptance Certificate 0.0% * * * 11.1% 88.9%

867 Product Transfer 44.4% 100.0% 0.0% 0.0% 0.0% 100.0%

889 Promotion Announcement 0.0% * * * 11.1% 88.9% 943 Warehouse Stock Transfer Shipment Advice 0.0% * * * 11.1% 88.9%

997 Functional Acknowledgement 66.7% 100.0% 66.7% 33.3% 0.0% 100.0% NOTE: *Insufficient data Source: HDA Research Foundation



41 Distributor Electronic Data Interchange Transaction Set Use (Sales Over $1 Billion): 2015

Of those using the EDI set, percentage using with each trading partner

Of those not using the EDI set, plan to use in the future

EDI transaction set Use this set

Use with Manufacturers

Use with Customers

Use with 3rd Party

Processors

Do not currently use but plan to use in the next

12 months

No current plans to

use

180 Return Merchandise Authorization Notification 37.5% 0.0% 33.3% 66.7% 40.0% 60.0%

810 Invoice 100.0% 75.0% 75.0% 37.5% * *

812 Credit/Debit Adjustment 50.0% 50.0% 25.0% 0.0% 0.0% 100.0%

816 Organizational Relationships 25.0% * * * 16.7% 83.3% 820 Payment Order/Remittance Advice 87.5% 42.9% 42.9% 42.9% * *

832 Catalog 87.5% 0.0% 71.4% 28.6% * *

836 Procurement Notices 0.0% * * * 25.0% 75.0%

840 Request for Quotation 0.0% * * * 25.0% 75.0% 843 Response to Request for Quotation 0.0% * * * 25.0% 75.0%

844 Chargeback 100.0% 62.5% 12.5% 25.0% * *

845 Bid Award/Change Notification 100.0% 75.0% 12.5% 37.5% * *

846 Inventory Inquiry/Advice 25.0% * * * 33.3% 66.7%

849 Chargeback/Reconciliation 100.0% 75.0% 12.5% 25.0% * *

850 Purchase Order 100.0% 75.0% 75.0% 25.0% * *

852 Product Activity Data 100.0% 75.0% 0.0% 25.0% * * 855 Purchase Order Acknowledgement 87.5% 42.9% 71.4% 28.6% * *

856 Advance Ship Notice 100.0% 75.0% 62.5% 37.5% * *

857 Shipment Billing Notice 25.0% * * * 33.3% 66.7% 861 Receiving Advice/Acceptance Certificate 25.0% * * * 16.7% 83.3%

867 Product Transfer 100.0% 62.5% 12.5% 25.0% * *

889 Promotion Announcement 0.0% * * * 25.0% 75.0% 943 Warehouse Stock Transfer Shipment Advice 12.5% * * * 14.3% 85.7%

997 Functional Acknowledgement 100.0% 75.0% 50.0% 37.5% * * NOTE: *Insufficient data Source: HDA Research Foundation



42 Distributor EDI Use in Support of DEA Controlled Substances Ordering System (CSOS)

2014 2015 Does this company use EDI transaction sets to support DEA's Controlled Substances Ordering System (CSOS)?

Yes, with vendors only 0.0% 0.0%

Yes, with customers only 0.0% 0.0%

Yes, with vendors and customers 100.0% 100.0% No, do not use EDI transaction sets to support CSOS 0.0% 0.0%

If this company is using EDI transaction sets to support the DEA Controlled Substances Ordering System or CSOS, statement that best describes company's adoption of the DEA CSOS Voluntary Guidelines:

Full adoption of the HDA CSOS Voluntary Guidelines 33.3% 50.0%

Partial adoption of the HDA CSOS Voluntary Guidelines 33.3% 33.3%

Do not use the HDA CSOS Voluntary Guidelines (use own/other guidelines) 33.3% 16.7%

Do not currently use any CSOS Guidelines 0.0% 0.0% Source: HDA Research Foundation

43 Distributor Status of Electronic Commerce Initiatives Currently Using

2014 2015 Technology

Internet EDI 100.0% 83.3%

Media Conversion Services 33.3% 33.3%

Online Catalogs & Databases 66.7% 66.7%

Processes Distributor Service Agreements/Fee for Service Agreements 83.3% 83.3%

Electronic contact administration 100.0% 100.0%

Returned goods processing 66.7% 100.0%

Scorecarding 50.0% 50.0%

Vendor Managed Inventory (VMI) 33.3% 33.3%

Inventory Management Agreements (IMA) 50.0% 66.7% Collaborative Planning Forecasting & Replenishment (CPFR) 33.3% 33.3%




44 Product Identification Numbers: 2015 Types of Product Identification Numbers in Use, by Transaction Set 810 Invoice 850 Purchase Order

855 Purchase Order Acknowledgement

856 Advance Ship Notice/Manifest

GTIN 0.0% 0.0% 0.0% 0.0%

NDC 100.0% 100.0% 83.3% 100.0%

Catalog Number 83.3% 83.3% 83.3% 83.3%

Other 33.3% 33.3% 33.3% 33.3% Source: HDA Research Foundation

45 DSCSA Compliance: 2015 Types of transaction exchanges with trading partners to support DSCSA compliance

EDI/ASN (Advance Ship Notice) EPCIS

Customized Software Solution Paper

Exchange with upstream supplier 100.0% 33.3% 16.7% 50.0%

Exchange with downstream customer 83.3% 0.0% 66.7% 33.3% Source: HDA Research Foundation

HDA Factbook Operations


Operations

Section Overview The Operations section includes information on supply chain management agreements, product picking, order value, order fulfillment, employee productivity, special handling conditions, distributor returns volume, recalls and expenses. Please note: data are reported at the corporate level. Returns Total annual costs associated with the returns process averaged $3.3 million per company in 2015, an increase from $2.9 million in 2014. 93 percent of returned products from customers to distributors were reported as saleable in 2015, remaining fairly stable over the last three years (Table 49). The top three reasons why goods were returned from customers to distributors are as follows:

• Products were overstocked (88.9 percent); • Products were damaged (3.5 percent); and, • Products were outdated (2.2 percent) (Table 51).

All participating distributors accept returns of saleable controlled-temperature products from customers. 100 percent used third-party processors/reverse distributors to process returns required by manufacturer policy and law; and 83.3 percent used third-party processors/reverse distributors for their company’s own returns and recalls (Table 50). Products Requiring Special Handling All distributors reported handling and stocking prescription SKUs that require special handling, including those that are temperature sensitive, controlled substances or hazardous products. About 1,625 SKUs required special handling, up from 1,516 SKUs in 2014; of that 48.8 percent were controlled substances; and 41.9 percent were generic products (Table 55). All companies stock cold chain SKUs. On average 6.3 percent of prescription SKUs required cold chain handling (Table 56). On average, distributors stocked 17,142 non-prescription drug SKUs in 2015, (Table 58); 8,720 health and personal care SKUs, (Table 60); 4,852 durable medical equipment (DME) SKUs, (Table 61); and, 2,431 general merchandise SKUs (Table 62). Distributor Order Characteristics The average number of units picked per day per distribution center was 100,699 in 2015, increasing from 91,125 daily units picked in 2014. Distribution centers handled an average of 5,789 orders per day, with an average of seven lines per order and 66.7 percent of distributors used automated picking methods (Table 65).



Table 68 highlights distributor product delivery methods. In 2015, distributors reported that deliveries were made by the following:

• Contract couriers/carriers (91.2 percent); • Company-operated vehicles (5.0 percent); • Common air carriers (UPS Air, FedEx, etc.) (2.7 percent); and, • Common surface carriers (UPS, U.S. Postal Service, etc.) (1.0 percent).



46 Distributor Supply Chain Management Agreements 2013 2014 2015 Suppliers (%)

Collaborative Planning Forecasting & Replenishment (frequent product replenishment based on actual/forecasted demand) 66.7% 66.7% 66.7%

Inventory Management Agreements (IMAs) 100.0% 100.0% 100.0%

Distributor Service Agreements (if separate from IMAs) 100.0% 100.0% 100.0% Vendor Managed Inventory (VMI) (i.e., replenishment managed by supplier based on agreement with trading partner) 66.7% 33.3% 16.7%

Consignment—(i.e., inventory owned by supplier to point of final customer sale) 0.0% 0.0% 0.0%

Other 0.0% 0.0% 0.0%

None 0.0% 0.0% 0.0%

Customers (%) Collaborative Planning Forecasting & Replenishment (frequent product replenishment based on actual/forecasted demand) 66.7% 83.3% 83.3%

Consignment 0.0% 16.7% 16.7% Vendor Managed Inventory (VMI) (i.e., replenishment managed by supplier based on agreement with trading partner) 50.0% 50.0% 50.0%

Other 0.0% 0.0% 0.0%

None 33.3% 16.7% 16.7% Source: HDA Research Foundation

47 Distributor Software Applications 2013 2014 2015 Warehouse Management Systems (WMS)

Non-proprietary 50% 50% 50%

Proprietary 83% 67% 67%

Do Not Use 0% 0% 0%

Inventory Management Systems (IMS)



Do Not Use 0% 0% 0%

Transportation Management Systems (TMS)



Do Not Use 50% 33% 33%

Supply Chain Event Management (SCEM)



Do Not Use 50% 33% 33% Source: HDA Research Foundation



48 Returns 2013 2014 2015 Total dollar value of returns per employee associated with the returns process

Average $11,956,847 $13,816,493 $19,953,129

Median $12,191,236 $9,438,378 $21,028,362

Total annual costs associated with the returns process

Average $3,481,677 $2,917,623 $3,273,982

Median $2,811,648 $1,287,480 $1,325,000

Number of personnel (FTEs) associated with the returns process

Average 51.2 37.5 37.8

Median 37.0 18.5 20.9

Number of personnel associated with returns process as % of total FTEs

Average 3% 2% 2%

Median 3% 2% 2%

What is the recover rate on unsalable returns?

Average 88.4% 87.1% 85.8%

Median 91.2% 88.5% 85.0%

What is the percentage of salable returns to gross sales?

Average 1.6% 1.6% 2.1%

Median 1.5% 1.4% 2.0% Source: HDA Research Foundation

49 Returns from Customers to Distributors 2013 2014 2015 Percent of returned product that is salable

Average 94% 94% 93%

Median 94% 94% 93%

Cost of processing returned goods as a percent of total dollar value of returns

Average 0.8% 0.7% 0.6%

Median 0.5% 0.5% 0.4%

Percent of returned goods pieces that were controlled substances

Average 2.5% 2.7% 2.3%




50 Returned Goods Practices for Distributors 2013 2014 2015 Accepts returns of salable controlled temperature products from customers 100.0% 83.3% 100.0%

Accepts returns of repacks from customers 16.7% 33.3% 16.7%

Accepts partial returns for credit (even conditionally) 66.7% 66.7% 50.0% Use a 3rd party processor/reverse distributor to process (receive, sort, check policy, etc.) returned goods for:

Company's own returns 66.7% 80.0% 83.3%

Recalls 66.7% 80.0% 83.3%

Returns required by manufacturer policy 83.3% 100.0% 100.0%

Returns required by law 83.3% 100.0% 100.0%

Other 0.0% * * NOTE: *Insufficient data Source: HDA Research Foundation

51 Reasons Goods are Returned to Distributors Reasons goods are returned by customers: 2013 2014 2015 Overstocked 80.1% 77.6% 88.9%

Outdated 6.5% 2.9% 2.2%

Short Dated 2.5% 9.0% 1.7%

Damaged 2.3% 2.3% 3.5%

Mis-shipped 1.4% 2.0% 1.4%

Recalls 0.8% 2.0% 1.6%

Repackaged 0.3% 0.8% 0.0%

Discontinued 0.1% 1.8% 1.0%

Promotional 0.0% 1.1% 1.1%

Partials 0.0% 0.8% 0.2%

Other 6.2% 0.0% 0.0% Source: HDA Research Foundation

52 Recalled/Withdrawn Prescription Products Handled by Distributors 2013 2014 2015 Number of recall events processed

Average 258 374 426

Median 280 385 314

Total dollar value of returned products as % of total sales

Average 2.5% 2.3% 2.6%




53 Number of Manufacturers/Suppliers Number of manufacturers/suppliers you purchase from 2013 2014 2015 Median 1,300 1,300 1,246

Average 1,377 1,474 1,216

75th Percentile 1,575 1,550 1,303

25th Percentile 1,100 1,025 1,049 Source: HDA Research Foundation

54 Distributor Human Resources

Full-Line Distributors

Sales Under $1 Billion Sales Over $1 Billion Number of work shifts typically used in warehouse facilities 2.4 2.2

Employee turnover rate:

Day shift 16.8 9.9

Night shift 16.2 17.5 Weighted Average

Pay incentives offered to non-exempt, full-time warehouse employees:

Yearly bonus 58.1%

Paid for performance 86.3%

Shift differential 89.7%

Other 12.0%

Do not offer 0.9% Source: HDA Research Foundation

55 Companies Handling Temperature-Sensitive, Controlled Substances and Hazardous Prescription SKUs

Weighted Average 2014 2015 Companies that stock Rx SKUs requiring special handling 100.0% 100.0%

Percent of all Rx SKUs requiring special handling 10.5% 11.1%

Number of Rx SKUs that require specialty handling 1,516 1,625

Percent of special handling Rx SKUs that are controlled substances (%) 33.4% 48.8%

Percent of special handling Rx SKUs that are generic products (%) 31.2% 41.9% Source: HDA Research Foundation



56 Cold Chain Distribution 2014 2015 Companies that stock cold chain SKUs: (%) 100.0% 100.0%

Percent of Rx SKUs that require cold chain handling (%)

Average 7.8% 6.3%

Median 5.0% 5.0%

Company monitors the temperature of cold chain products in transit 50.0% 33.3%

Company records the temperature of cold chain products in transit 50.0% 33.3%

Number of full-time employees (FTEs) associated with cold chain distribution (#)

Average 2.9 3.0

Median 2.6 2.5 Source: HDA Research Foundation

57 Special Handling Rx SKUs: Branded & Generic Weighted Average 2014 2015 Branded Special Handling Rx SKUs (%)

Controlled substances - DEA schedule II 1.5% 2.0%

Controlled substances - DEA schedule III, IV and V 1.7% 2.0%

Temperature-sensitive products - Rx 3.2% 7.3%

Hazardous products - Rx 0.7% 1.0%

Specialty products (not listed elsewhere) 0.7% 0.0%

Other 0.0% 0.0%

Total Rx SKUs comprised of these products 7.7% 12.3%

Generic Special Handling Rx SKUs (%)

Controlled substances - DEA schedule II 3.2% 3.7%

Controlled substances - DEA schedule III, IV and V 3.8% 4.3%

Temperature-sensitive products - Rx 3.1% 4.9%

Hazardous products - Rx 0.9% 0.9%

Specialty products (not listed elsewhere) 0.1% 0.0%

Other 0.0% 0.0%

Total Rx SKUs comprised of these products 11.2% 13.8% Source: HDA Research Foundation



58 Over-the-Counter (OTC) Medicines 2015 Non-prescription drug SKUs

Average 17,141.7

Median 13,712.5

What approximate percent of all your OTC SKUs goes to an inpatient setting?

Average 12.7%

Median 0.5% Source: HDA Research Foundation

59 Distributor Handling Temperature-Sensitive, Controlled Substances and Hazardous Over-the-Counter (OTC) SKUs

2014 2015 Companies that stock OTC SKUs requiring special handling (%) 100% 100%

Special Handling OTC SKUs:

Hazardous products

Average 346 291

Median 283 132

DEA listed chemicals

Average 164 159

Median 110 112

Temperature-sensitive products

Average 114 31

Median 38 37

Other

Average 0 64

Median 0 0

Total OTC SKUs comprised of these products

Average 625 544

Median 435 435 Source: HDA Research Foundation

60 Health & Personal Care (HPC) Items 2015 Number of HPC SKUs

Average 8,720

Median 9,154

Companies that stock HPC SKUs requiring special handling (%) 50%

Percent of HPC SKUs that require special handling

Average 6.4%




61 Durable Medical Equipment (DME) and Home Healthcare 2015 Number of DME SKUs

Average 4,852

Median 5,132

Companies that stock DME SKUs requiring special handling (%) 50%

Percent of DME SKUs that require special handling

Average 1.1%

Median 0.7%

Number of DME SKUs that require special handling

Average 19

Median 27 Source: HDA Research Foundation

62 General Merchandise (GM) 2015 Number of GM SKUs

Average 2,431

Median 1,681

Companies that stock GM SKUs requiring special handling (%) 50%

Percent of GM SKUs that require special handling

Average 3.7%

Median 2.9%

Number of GM SKUs that require special handling

Average 89

Median 102 Source: HDA Research Foundation

63 Distributor Specialty Products 2015 Company stocks Rx specialty product SKUs (%) 83.3%

Percent of all company's Rx SKUs that are considered specialty products

Average 4.3%


64 Distributor Other Product Categories 2015 Veterinary products 33.3%

Sales volume % from veterinarian products *

Dental products 33.3% NOTE: *Insufficient data Source: HDA Research Foundation



65 Distributor Order Characteristics

2014

Weighted Average 2015

Weighted Average Number of units picked per day per distribution centerA 91,125 100,699

Number of orders per day (#) per distribution centerA 4,322 5,789

Number of lines per order (#)A 9 7

Invoice lines picked per day per distribution centerA 37,464 41,244

Handling cost per invoice lineA $4.52 $4.09

Number of units picked per invoice lineA 2.4 2

Percent of companies using automated picking methods: (%) 66.0% 66.7%

Of those using automation, percent of invoice lines picked by automated methods 39.4% 41.8% NOTES: A2014 figures were calculated in a slightly different manner, due to wording changes in the questionnaire. In addition, business days equal 252 to 254 days/year (non-holiday, non-weekend), depending on year. Source: HDA Research Foundation

66 Order Fulfillment 2015 Average "raw order" fill rate (% of Invoice Lines) 94.9%

Reason for inability to ship (as % of Invoice Lines):

Manufacturer unable to ship 84.1%

Distributor out of stock 15.9%

Average fill rate (% of sales) 96.0%

Reason for inability to ship (as % of sales):

Manufacturer unable to ship 81.3%

Distributor out of stock 18.7% Source: HDA Research Foundation

67 Customer Accounts and Shipping Points Serviced by Company 2015 Number of active customer accounts served by company per distribution center

Average 1,637.0

Median 1,071.6

Customer shipping points serviced by company per distribution center

Average 1,296.1

Median 809.1 Source: HDA Research Foundation



68 Distributor Product Delivery Methods Percent of deliveries made by: 2014 2015 Company operated vehicles 5.8% 5.0%

Contract couriers/carriers 91.6% 91.2%

Common surface carriers (UPS, U.S. Postal Service, etc.) 0.5% 1.0%

Common air carriers (UPS Air, FedEx, etc.) 2.0% 2.7%


69 Deliveries per Week of Prescription Products Deliveries per week: 2015 1 day/week 6.0%

2 days/week 1.2%

3 days/week 0.9%

4 days/week 0.9%

5 days/week 77.0%

6 days/week 11.0%

7 days/week 0.0%

More than 7 days/week 3.0% Source: HDA Research Foundation

HDA Factbook Healthcare Products


Healthcare Products

Section Overview The Healthcare Products section includes information on therapeutic, branded and generic pharmaceutical products’ market share, sales, prescriptions, price and growth. This section also includes information on brand patent expirations and drug approvals. In addition, sales information is available for over-the-counter (OTC) and supplement healthcare products. In 2015, pharmaceutical sales for the top 20 therapeutic classes increased to 13.4 percent, accounting for $336.7 billion of the total market. The diabetes therapy class moved into first place, growing by 30.1 percent with sales of $43.9 billion in 2015, up from $33.7 billion in 2014. Oncology products were second and grew by 18 percent, with sales of $39.1 billion (Table 70). The top 20 therapeutic classes ranked by prescriptions accounted for 87.5 percent of the total market in 2015. The top three therapeutic classes by prescriptions remained the same in 2015, with the highest number of prescriptions, 706 million, written for antihypertensive medications; followed by 547 million for mental health medications; and, 470 million for pain medications (Table 71). In 2015, the market share of U.S. pharmaceuticals by prescription volume was again dominated by unbranded generic drugs, which made up 83.4 percent of prescriptions. The percent of prescriptions for branded generics and brands slightly fell in 2015, accounting for 5.3 percent and 11.3 percent, respectively (Table 72). The top 20 biologic products by U.S. sales reached $71.5 billion in 2015. Of those products, Humira®, a tumor necrosis factor (TNF) blocker, grew by 36.7 percent, with sales of $10.6 billion.

• Enbrel® remained second with $6.6 billion in sales; followed by, • Lantus® SoloSTAR®, with $5.8 billion in sales, in third (Table 75).

Non-Prescription Products The top-ranked OTC category in 2015 was upper respiratory products, with sales of $8 billion, followed by internal analgesics, with sales of $4.1 billion (Table 78). New Medications The Pharmaceutical Research Manufacturers of America (PhRMA) report that of the 7,302 medicines in development: 1919 are for cancer, 1,308 are for neurological disorders, 1,261 are for infectious diseases, 1,123 are for immunological disorders, 563 are for cardiovascular diseases, 510 are for mental health disorders, 410 are for diabetes and 208 are for HIV/AIDS (Table 81).

In 2015, the FDA approved 45 novel drugs. For the past three years, the number of novel drug approvals has been trending upward (Table 82).



70 Top 20 Therapeutic Classes by Non-Discounted Spending: 2015

Rank Therapy Class 2014 ($bil)

2015 ($bil) Market Share Growth

1 Diabetes $33.7 $43.9 10.3% 30.1%

2 Oncology $33.1 $39.1 9.2% 18.0%

3 Autoimmune $23.5 $30.2 7.1% 28.7%

4 Respiratory $21.4 $23.8 5.6% 11.0%

5 Mental Health $22.8 $21.2 5.0% -7.2%

6 Pain $21.0 $20.4 4.8% -2.9%

7 Viral Hepatitis $12.2 $18.8 4.4% 54.0%

8 Multiple Sclerosis $15.0 $17.7 4.2% 17.6%

9 HIV Antivirals $14.0 $16.2 3.8% 15.7%

10 Lipid Regulators $13.5 $13.3 3.1% -1.6%

11 Nervous System Disorders $9.6 $11.2 2.6% 17.0%

12 ADHD $10.5 $11.2 2.6% 6.4%

13 Dermatologicals $9.4 $10.6 2.5% 12.8%

14 Antihypertensives $12.0 $10.3 2.4% -14.0%

15 Anticoagulants $8.5 $9.9 2.3% 17.5%

16 Vaccines (Excluding Flu) $6.9 $8.5 2.0% 24.0%

17 Antibacterials $8.6 $8.1 1.9% -5.9%

18 Anti-Ulcerants $9.1 $7.9 1.9% -12.7%

19 Other Cardiovasculars $6.4 $7.4 1.7% 15.8%

20 GI Products $5.7 $7.0 1.6% 22.9%

Total Top 20 $296.9 $336.7 13.4% 79.3%

Total Market $378.6 $424.8 100.0% 12.2% Source: IMS Health, National Sales Perspectives, Jan 2016



71 Top 20 Therapeutic Classes by Prescriptions: 2015

Rank Therapy Class 2014

Prescriptions (#mil)

2014 Market Share

2015 Prescriptions

(#mil)

2015 Market Share Growth

1 Antihypertensives 705 16.3% 706 16.2% 0.2%

2 Mental Health 537 12.4% 547 12.5% 1.7%

3 Pain 483 11.2% 470 10.8% -2.7%

4 Antibacterials 267 6.2% 270 6.2% 1.3%

5 Lipid Regulators 263 6.1% 260 6.0% -1.2%

6 Antidiabetes 201 4.7% 211 4.8% 4.9%

7 Nervous System Disorders 179 4.1% 188 4.3% 5.2%

8 Respiratory 169 3.9% 176 4.0% 4.1%

9 Anti-Ulcerants 170 3.9% 173 4.0% 1.6%

10 Antithyroid 131 3.0% 133 3.0% 1.2%

11 Dermatologicals 109 2.5% 109 2.5% 0.1%

12 Hormonal Contraceptives 97 2.2% 96 2.2% -0.4%

13 ADHD 83 1.9% 87 2.0% 4.7%

14 Anticoagulants 78 1.8% 78 1.8% -0.4%

15 Corticosteroids 65 1.5% 68 1.6% 5.4%

16 GI Products 61 1.4% 63 1.4% 3.5%

17 Nasal Preps Topical 56 1.3% 52 1.2% -7.7%

18 Other Cardiovasculars 49 1.1% 48 1.1% -2.0%

19 Ophthalmology 44 1.0% 46 1.1% 3.8%

20 Benign Prostate Hyperplasia 40 0.9% 41 0.9% 4.5%

Top 20 3,789 87.6% 3,824 87.5% 0.9%

Total Market 4,325 100.0% 4,368 100.0% 1.0% Source: IMS Health, National Prescription Audit, Dec 2015

72 Prescriptions and Spending by Product Type: 2011-2015 Prescriptions Spending

Year Unbranded Generics

Branded Generics Brands Unbranded

Generics Branded Generics Brands

2015 83.4% 5.3% 11.3% 16.1% 10.7% 73.3%

2014 82.1% 5.6% 12.3% 16.9% 11.0% 72.1%

2013 80.5% 6.0% 13.6% 16.9% 12.1% 71.0%

2012 77.7% 6.3% 15.9% 16.1% 12.2% 71.7%

2011 72.7% 7.1% 20.2% 13.6% 11.9% 74.5% Source: IMS Health, National Prescription Audit, Dec 2015, National Sales Perspectives, Jan 2016



73 Top 20 Medicines by Non-Discounted Spending: 2015

Rank Product Company 2014 Sales ($bil)

2015 Sales ($bil) Growth

1 Harvoni Gilead Sciences $1.6 $14.3 818.5%

2 Humira AbbVie $7.8 $10.6 36.7%

3 Enbrel Amgen $5.9 $6.6 13.0%

4 Crestor AstraZeneca $5.7 $6.3 9.0%

5 Lantus Solostar Sanofi Aventis $4.8 $5.8 20.5%

6 Remicade Johnson & Johnson $4.5 $5.0 10.7%

7 Advair Diskus GlaxoSmithKline $4.7 $4.7 0.5%

8 Abilify Otsuka $7.6 $4.4 -41.6%

9 Copaxone Teva $4.0 $4.4 9.3%

10 Januvia Merck & Co $3.5 $4.2 19.4%

11 Neulasta Amgen $3.8 $4.1 7.3%

12 Lyrica Pfizer $3.1 $3.8 23.2%

13 Lantus Sanofi Aventis $3.5 $3.8 7.7%

14 Rituxan Genentech $3.5 $3.6 4.9%

15 Nexium AstraZeneca $5.8 $3.5 -39.9%

16 Tecfidera Biogen $2.9 $3.5 19.7%

17 Spiriva Handihaler Boehringer Ingelheim $3.3 $3.4 1.9%

18 Avastin Genentech $2.9 $3.1 8.8%

19 Sovaldi Gilead Sciences $7.8 $3.0 -61.9%

20 Atripla Gilead Sciences $2.9 $2.9 -0.9% Source: IMS Health, National Sales Perspectives, Jan 2016



74 Top 20 Generic Medicines by Prescriptions: 2015

Rank Product 2014 Prescriptions (#mil)

2015 Prescriptions (#mil) Growth

1 lisinopril 104 106 2.0%

2 levothyroxine 98 100 1.9%

3 acetaminophen/hydrocodone 119 97 -18.3%

4 atorvastatin 80 92 15.7%

5 metoprolol 82 84 1.5%

6 amlodipine 78 81 4.2%

7 metformin 77 80 4.5%

8 omeprazole 75 77 2.3%

9 simvastatin 73 66 -9.7%

10 gabapentin 51 57 12.6%

11 amoxicillin 54 56 2.2%

12 hydrochlorothiazide 49 49 -0.6%

13 alprazolam 49 48 -1.5%

14 azithromycin 47 47 1.2%

15 albuterol 45 47 3.9%

16 furosemide 46 46 -0.8%

17 sertraline 44 46 4.2%

18 losartan 39 44 11.4%

19 tramadol 44 43 -3.0%

20 ibuprofen 40 42 6.1%

Top 20 1,294 1,308 1.0%

Total Generics Market 3,793 3,871 2.0% Source: IMS Health, National Prescription Audit, Dec 2015



75 Top 20 Biologic Medicines by U.S. Spending: 2015

Rank Product Company 2014 U.S. Sales ($bil)

2014 Market Share

2015 Sales ($bil)

2015 Market Share

Growth

1 Humira AbbVie $7.8 7.2% $10.6 8.3% 36.7%

2 Enbrel Amgen $5.9 5.4% $6.6 5.1% 13.0%

3 Lantus Solostar Sanofi $4.8 4.4% $5.8 4.5% 20.5%

4 Remicade Johnson & Johnson $4.5 4.1% $5.0 3.9% 10.7%

5 Copaxone Teva $4.0 3.7% $4.4 3.4% 9.3%

6 Neulasta Amgen $3.8 3.5% $4.1 3.2% 7.3%

7 Lantus Sanofi $3.5 3.2% $3.8 2.9% 7.7%

8 Rituxan Roche $3.5 3.2% $3.6 2.8% 4.9%

9 Avastin Roche $2.9 2.6% $3.1 2.4% 8.8%

10 Levemir Flextouch Novo Nordisk $0.6 0.6% $2.8 2.1% 352.6%

11 Prevnar 13 Pfizer $1.1 1.0% $2.6 2.0% 135.7%

12 Novolog Flexpen Novo Nordisk $1.9 1.8% $2.5 2.0% 31.4%

13 Herceptin Roche $2.2 2.0% $2.5 2.0% 15.2%

14 Epogen Amgen $2.4 2.2% $2.2 1.7% -10.1%

15 Humalog Lilly $1.7 1.6% $2.1 1.6% 21.3%

16 Stelara Johnson & Johnson $1.6 1.4% $2.0 1.6% 31.5%

17 Victoza 3-Pak Novo Nordisk $1.5 1.4% $2.0 1.5% 30.0%

18 Novolog Novo Nordisk $1.6 1.4% $2.0 1.5% 25.4%

19 Humalog Kwikpen Lilly $1.5 1.4% $1.9 1.5% 27.9%

20 Tysabri Biogen $1.5 1.3% $1.8 1.4% 25.1%

Top 20 Biologic Products $58.2 53.5% $71.5 55.6% 22.8%

Total Biologic Market $108.9 100.0% $128.7 100.0% 18.2% Source: IMS Health, National Sales Perspectives, Jan 2016

76 Small Molecule Patent Expirations: 2017-2019 2017

Brand Manufacturer Expiry Date Advair Diskus GlaxoSmithKline Jan 2017 Ampyra Acorda Therapeutic Jan 2017 Lotemax Valeant Pharma Jan 2017 Alrex Valeant Pharma Jan 2017 Azilect Teva Feb 2017 Vimpat UCB Mar 2017 Zetia Merck & Co Apr 2017 Vytorin Merck & Co Apr 2017 Effient Lilly Apr 2017 Strattera Lilly May 2017 Velcade Takeda May 2017 Reyataz Bristol-Myers Squibb Jun 2017 Tamiflu Roche Jun 2017 Emsam Mylan Jun 2017 Arranon Novartis Jun 2017 Viread Gilead Sciences Jul 2017 Treximet Pernix Aug 2017



76 Small Molecule Patent Expirations: 2017-2019 (continued) 2017

Brand Manufacturer Expiry Date Aubagio Sanofi Sep 2017 Cancidas Merck & Co Sep 2017 Alvesco Sumitomo Dainippon Oct 2017 Omnaris Sumitomo Dainippon Oct 2017 Zetonna Sumitomo Dainippon Oct 2017 Cialis Lilly Nov 2017 Seroquel XR AstraZeneca Nov 2017 Invega Sustenna Johnson & Johnson Nov 2017 Prezista Johnson & Johnson Nov 2017 Advair HFA GlaxoSmithKline Nov 2017 Adcirca Lilly Nov 2017 Relistor Valeant Pharma Nov 2017 Invega Trinza Johnson & Johnson Nov 2017 Viagra Pfizer Dec 2017 Zioptan Akorn Dec 2017 Ethyol RT AstraZeneca Dec 2017

2018 Brand Manufacturer Expiry Date

Spiriva HandiHaler Boehringer Ingelheim Jan 2018 Atripla Gilead Sciences Jan 2018 Truvada Gilead Sciences Jan 2018 Symbicort AstraZeneca Jan 2018 Premarin Pfizer Jan 2018 Premarin Vaginal Pfizer Jan 2018 Spiriva Respimat Boehringer Ingelheim Jan 2018 Prempro Low Dose Pfizer Jan 2018 Prempro Pfizer Jan 2018 Emtriva Gilead Sciences Jan 2018 Pradaxa Boehringer Ingelheim Feb 2018 Sensipar Amgen Mar 2018 Bosulif Pfizer Mar 2018 Advicor AbbVie Mar 2018 Nasonex Merck & Co Apr 2018 Nuvaring Merck & Co Apr 2018 Asmanex HFA Merck & Co Apr 2018 Ketek Pak Sanofi Apr 2018 Norvir AbbVie May 2018 Kaletra AbbVie May 2018 Lexiva GlaxoSmithKline Jun 2018 Istodax Celgene Jun 2018 Latuda Sumitomo Dainippon Jul 2018 Ilevro Novartis Jul 2018 Tekturna Novartis Jul 2018 Clolar Sanofi Jul 2018 Nevanac Novartis Jul 2018 Emend Trifold Pack Merck & Co Jul 2018 Tekturna HCT Novartis Jul 2018 Letairis Gilead Sciences Jul 2018 Asmanex TwistHaler Merck & Co Sep 2018 Zyprexa Relprevv Lilly Sep 2018 Myrbetriq Astellas Pharma Oct 2018 Aloxi Eisai Oct 2018 Levitra GlaxoSmithKline Oct 2018 Tikosyn Pfizer Oct 2018 Staxyn GlaxoSmithKline Oct 2018 Vesicare Astellas Pharma Nov 2018



76 Small Molecule Patent Expirations: 2017-2019 (continued) 2018

Brand Manufacturer Expiry Date Tarceva Roche Nov 2018 Aptiom Sumitomo Dainippon Nov 2018 Luzu Valeant Pharma Nov 2018 Lyrica Pfizer Dec 2018 Rapaflo Allergan Dec 2018 Teflaro Allergan Dec 2018 Mozobil Sanofi Dec 2018

2019 Brand Manufacturer Expiry Date

Gilenya Novartis Feb 2019 Uloric Takeda Mar 2019 Emend Merck & Co Mar 2019 Mycamine Astellas Pharma Mar 2019 Exjade Novartis Apr 2019 Jadenu Novartis Apr 2019 Toviaz Pfizer May 2019 Durezol Novartis May 2019 Duavee Pfizer May 2019 Ranexa Gilead Sciences Jun 2019 Lexiscan Astellas Pharma Jun 2019 Halaven Eisai Jun 2019 Noxafil Merck & Co Jul 2019 Rozerem Takeda Jul 2019 Xifaxan Valeant Pharma Aug 2019 Torisel Pfizer Aug 2019 Rifaximin Attix Pharma Aug 2019 Bepreve Valeant Pharma Sep 2019 Tecfidera Biogen Oct 2019 Ritalin La Novartis Nov 2019 Ortho-Tri-Cy Lo 28 Johnson & Johnson Dec 2019 Brilinta AstraZeneca Dec 2019

NOTE: List includes small molecule brands with more than $10M in 2015 sales. Source: IMS Institute for Healthcare Informatics, Dec 2015



Non-Prescription Products

77 Rx-to-OTC Switch List: 2009-2015

Drug Name NDA Purpose Approval

Date

Prevacid 24 HR NDA 22-3272 Acid reducer/PPI 5/18/2009

Zegerid OTC NDA 22-2812 Acid reducer/PPI 12/1/2009

Allegra D 12 hr NDA 20-786/S-027 Antihistamine 1/24/2011

Allegra 24 hr NDA 21-704/S-008 Antihistamine 1/24/2011

Allegra NDA 20872/S-023 NDA 201-373 NDA 21-909/S-003 Antihistamine 1/25/2011

Oxytrol for Women NDA 202211 Overactive bladder 1/25/2013

Nasacort Allergy 24HR (nasal spray) NDA 020468/S-035 Allergic rhinitis 10/11/2013

Nexium 24 HR (esomeprazole magnesium) NDA 204655 Frequent heartburn 3/28/2014

Flonase Allergy Relief (fluticasone proprionate) NDA 205434 Allergic rhinitis 7/23/2014

Rhinocort Allergy Spray NDA 20476/S-032 Allergic rhinitis 3/23/2015 Source: U.S. Food and Drug Administration http://www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/ucm106378.htm

78 Top 20 Over-the-Counter (OTC) Product Categories by Sales: 2015 Rank OTC Category Dollar Sales ($mil)

1 Upper Respiratory $7,968

2 Analgesics, Internal (includes other pain products) $4,052

3 Anitperspirants $2,871

4 Heartburn $2,646

5 Toothpaste $2,645

6 First Aid $2,134

7 Oral Antiseptics and Rinses $1,455

8 Laxatives $1,307

9 Suncare $1,193

10 Lip Remedies $1,090

11 Anti-Smoking Products $934

12 Eye Care $845

13 Analgesics, External $647

14 Foot Care $492

15 Sleeping Aid $427

16 Female Contraceptive $305

17 Feminine Itch & Yeast Treatment $305

18 Antidiarrheals $238

19 Hair Growth Product $131

20 Homeopathic Remedies $110 Source: The Nielsen Company - total U.S. all outlets (food, drug, mass, select club and dollar store retailers, convenience, and military stores) Sales are in millions of U.S. dollars. A few categories include a combination of OTC medicines as well as health-related products which are not classified as medicines by the Food and Drug Administration.



New Medications

79 Number of Active Drug Shortages: 2010-2015

Year New Shortages by Year Reported Ongoing Shortages (began in prior years)

2010 201 127

2011 257 257

2012 193 193

2013 135 135

2014 179 179

2015 136 291 Source: University of Utah Drug Information Service NOTE: Additional drug shortage data available on ASHP’s website at http://www.ashp.org/doclibrary/policy/drugshortages/opa-national-drug-shortages.pdf

80 The Drug Development Pipeline: 2010-2015 Clinical Phase 2010 2011 2012 2013 2014 2015

Phase I 1,218 1,225 1,109 1,085 1,083 1,206

Phase II 1,410 1,450 1,453 1,428 1,434 1,541

Phase III 432 470 465 449 480 551

Pre-registered/registered 159 160 174 177 198 228 NOTE: Drugs in the clinical stage of development are included in Phase I. Technology, diagnostic agents and other non-therapeutic agents are excluded. Source: IMS Health, Lifecycle R&D Focus, Dec 2015

81 Number of New Medicines in Development by Disease

NOTE: New Medicines are defined as single products that are counted exactly once regardless of the number of indications pursued Source: The Pharmaceutical Research and Manufacturers of America (PhRMA) Industry Profile 2016 http://phrma.org/sites/default/files/pdf/biopharmaceutical-industry-profile.pdf

1919

1308

1261

1123

563

510

410

208

Cancers

Neurological Disorders

Infectious Diseases

Immunological Disorders

Cardiovascular Diseases

Mental Health Disorders

Diabetes

HIV/AIDS

http://www.ashp.org/doclibrary/policy/drugshortages/opa-national-drug-shortages.pdf



82 New Molecular Entity and Novel Approvals: 2015 Drug Name Active Ingredient Approval Date

Zurampic lesinurad 12/22/2015 Uptravi selexipag 12/22/2015 Bridion sugammadex 12/15/2015 Alecensa alectinib 12/11/2015 Kanuma sebelipase alfa 12/8/2015 Empliciti elotuzumab 11/30/2015 Portrazza necitumumab 11/24/2015 Ninlaro ixazomib 11/20/2015 Darzalex daratumumab 11/16/2015 Tagrisso osimertinib 11/13/2015 Cotellic cobimetinib 11/10/2015

Genvoya a fixed-dose combination tablet containing elvitegravir, cobicistat, emtricitabine, and tenofovir alafenamide 11/5/2015

Nucala mepolizumab 11/4/2015 Strensiq asfotase alfa 10/23/2015 Yondelis trabectedin 10/23/2015 Veltassa patiromer for oral suspension 10/21/2015 Praxbind idarucizumab 10/16/2015 Aristada aripiprazole lauroxil 10/6/2015 Tresiba insulin degludec injection 9/25/2015 Lonsurf trifluridine and tipiracil 9/22/2015 Vraylar cariprazine 9/17/2015 Xuriden uridine triacetate 9/4/2015 Varubi rolapitant 9/2/2015 Repatha evolocumab 8/27/2015 Addyi flibanserin 8/18/2015 Daklinza daclatasvir 7/24/2015 Odomzo sonidegib 7/24/2015 Praluent alirocumab 7/24/2015 Rexulti brexpiprazole 7/10/2015 Entresto sacubitril/valsartan 7/7/2015 Orkambi lumacaftor 200 mg/ivacaftor 125 mg 7/2/2015 Kengreal canegrelor 6/22/2015 Viberzi eluxadoline 5/27/2015 Kybella deoxycholic acid 4/29/2015 Corlanor ivabradine 4/15/2015 Cholbam cholic acid 3/17/2015 Unituxin dinutuximab 3/10/2015 Cresemba-Capsule and injection isavuconazonium sulfate 3/6/2015

Avycaz ceftazidime-avibactam 2/25/2015 Farydak panobinostat 2/23/2015 Lenvima lenvatinib 2/13/2015 Ibrance palbociclib 2/3/2015 Natpara parathyroid horomone 1/23/2015 Cosentyx secukinumab 1/21/2015 Savaysa edoxaban 1/8/2015

Source: U.S. Food and Drug Administration http://www.fda.gov/Drugs/DevelopmentApprovalProcess/DrugInnovation/ucm430302.htm



83 Novel Drug Approvals Per Year: 2005-2015

Source: The Center for Drug Evaluation and Research, Novel New Drugs 2015: Summary, January 2016, (Washington, D.C., The U.S. Food and Drug Administration) http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/DrugInnovation/UCM485053.pdf

84 First-Time Generic Drug Approvals: 2015 Generic Drug name Generic Manufacturer Brand Name Approval Date

1 RITONAVIR TABLETS, USP 100 MG ROXANE LABORATORIES, INC. NORVIR TABLETS, 100 MG 1/15/2015

2 ESOMEPRAZOLE MAGNESIUM DELAYED-RELEASE CAPSULES, USP 20 MG 40 MG

IVAX PHARMACEUTICALS, INC.

NEXIUM DELAYED-RELEASE CAPSULES 1/26/2015

3 SCOPOLAMINE TRANSDERMAL THERAPEUTIC SYSTEM 1 MG/3 DAYS PERRIGO R&D COMPANY TRANSDERM SCOP, 1 MG/ 3

DAYS

4 NAPROXEN SODIUM CAPSULES, 220 MG (OTC)

CATALENT PHARMA SOLUTIONS, LLC

NAPROXEN SODIUM CAPSULES, 220 MG 2/13/2015

5 MIGLITOL TABELTS, 25 MG 50 MG 100 MG ORIENT PHARMA CO., LTD. GLYSET TABLETS 2/24/2015

6 METHYLPHENIDATE HYDROCHLORIDE CHEWABLE TABLETS, 2.5 MG 5 MG 10 MG

NOVEL LABORATORIES, INC.

METHYLIN CHEWABLE TABLETS 2/25/2015

7 METAXALONE TABLETS, 400 MG COREPHARMA, LLC SKELAXIN TABLETS, 400 MG 2/27/2015

8 LEVOLEUCOVORIN CALCIUM INJECTION, 10 MG (BASE)/ML SANDOZ, INC. FUSILEV INJECTION 3/9/2015

9 DARIFENACIN HYDROBROMIDE EXTENDED-RELEASE TABLETS, 7.5 MG (BASE) 15 MG (BASE)

ANCHEN PHARMACEUTICALS, INC.

ENABLEX EXTENDED-RELEASE TABLETS 3/13/2015

10 TENOFOVIR DISOPROXIL FUMARATE TABLETS 300 MG

TEVA PHARMACEUTICALS USA VIREAD TABLETS, 300 MG 3/18/2015

11 TOLCAPONE TABLETS USP, 100 MG PAR PHARMACEUTICAL, INC. TASMAR TABLETS, 100 MG 3/26/2015

12 SILDENAFIL INJECTION, 10 MG/12.5 ML (0.8 MG/ML)

AUROBINDO PHARMA LTD. REVATIO INJECTION 4/1/2015

13 TRIAMCINOLONE ACETONIDE TOPICAL AEROSOL USP, 0.147 MG/G PERRIGO UK FINCO LTD. KENALOG SPRAY 4/13/2015

14 NEBIVOLOL TABLETS, 2.5 MG 5 MG 10 MG 20 MG

AMERIGEN PHARMACEUTICALS, LTD. BYSTOLIC TABLETS 4/16/2015

15 GLATIRAMER ACETATE INJECTION, 20 MG/ML; PACKAGED 1 ML PREFILLED SYRINGE

SANDOZ, INC. COPAXONE INJECTION, 20 MG/ML 4/16/2015

16 FLUOROURACIL CREAM USP, 0.5% SPEAR PHARMACEUTICALS CARAC CREAM 4/20/2015

38

26

35 34 36

23

41 41

36

41 45

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015



84 First-Time Generic Drug Approvals: 2015 (continued) Generic Drug name Generic Manufacturer Brand Name Approval Date

17 VARDENAFIL HYDROCHLORIDE ORALLY DISINTEGRATING TABLETS 10 MG (BASE)

WATSON LABORATORIES, INC.

STAXYN ORALLY DISINTEGRATING TABLETS, 10 MG

4/22/2015

18 ARIPIPRAZOLE TABLETS 2 MG 5 MG 10 MG 15 MG 20 MG 30 MG TORRENT PHARMA, INC. ABILIFY TABLETS 4/28/2015

19 ARIPIPRAZOLE TABLETS, 2 MG 5 MG 10 MG 15 MG 20 MG 30 MG

ALEMBIC PHARMACEUTICALS, LTD ABILIFY TABLETS 4/28/2015

20 ARIPIPRAZOLE TABLETS, 2 MG 5 MG 10 MG 15 MG 20 MG 30 MG HETERO LABS LTD ABILIFY TABLETS 4/28/2015

21 ARIPIPRAZOLE TABLETS, 10 MG TEVA PHARMACEUTICALS USA ABILIFY TABLETS 4/28/2015

22 ARIPIPRAZOLE TABLETS, 2 MG 5 MG TEVA PHARMACEUTICALS USA ABILIFY TABLETS 4/28/2015

23 ARIPIPRAZOLE TABLETS, 15 MG 20 MG 30 MG

TEVA PHARMACEUTICALS USA ABILIFY TABLETS 4/28/2015

24 ARIPIPRAZOLE TABLETS, 2 MG 5 MG 10 MG 15 MG 20 MG 30 MG TORRENT PHARMA, INC. ABILIFY TABLETS 4/28/2015

25 ALOSETRON HCL 0.5 MG 1 MG ROXANE LABORATORIES INC. LOTRONEX 5/4/2015

26 LINEZOLID TABLETS, 600 MG TEVA PHARMACEUTICALS USA ZYVOX TABLETS 5/18/2015

27 RISEDRONATE SODIUM DELAYED-RELEASE TABLETS, 35 MG

TEVA PHARMACEUTICALS USA

ATELVIA DELAYED-RELEASE TABLETS 5/18/2015

28 TEGECYCLINE FOR INJECTION, 50 MG/VIAL SANDOZ, INC. TYGACIL INJECTION 5/27/2015

29 MOXIFLOXACIN OPHTHALMIC SOLUTION USP, 0.5% (TWICE DAILY) LUPIN LIMITED MOXEZA OPHTHALMIC

SOLUTION 5/28/2015

30 ESTRADIOL VAGINAL INSERTS USP, 10 MCG AMNEAL PHARMACEUTICALS VAGIFEM TABLETS 5/29/2015

31 LINEZOLID FOR ORAL SUSPENSION 100 MG/5 ML

ROXANE LABORATORIES, INC.

ZYVOX FOR ORAL SUSPENSION 6/3/2015

32 ZOLPIDEM TARTRATE SUBLINGUAL TABLETS, 1.75 MG 3.5 MG


INTERMEZZO SUBLINGUAL TABLETS 6/3/2015

33 EPTIFIBATIDE INJECTION 7.5 MG/100 ML TEVA PHARMACEUTICALS INC. INTEGRILIN 6/5/2015

34 CLINDAMYCIN PHASPHATE AND TRETINOIN GEL, 1.2%/0.025%

ACTAVIS MID ATLANTIC LLC ZIANA TOPICAL GEL 6/12/2015

35 EPTIFIBATIDE INJECTION, 2 MG/ML TEVA PHARMACEUTICALS USA INTEGRILIN INJECTION 6/12/2015

36 GEMIFLOXACIN MESYLATE TABLETS, 320 MG ORCHID HEALTHCARE FACTIVE TABLETS 6/15/2015

37 CLINDAMYCIN PHOSPHATE AND BENZYL PEROXIDE GEL, 1.2%/2.5%

ACTAVIS LABORATORIES UT, INC. ACANYA GEL 6/19/2015

38 EZETIMIBE TABLETS, 10 MG GLENMARK PHARMACEUTICALS LTD. ZETIA TABLETS 6/26/2015

39 DESVENLAFAXINE SUCCINATE EXTENDED-RELEASE TABLETS, 50 MG 100 MG

ALEMBIC PHARMACEUTICALS LTD. PRISTIQ 6/29/2015


LUPIN PHARMACEUTICALS INC. PRISTIQ 6/29/2015

41 DESVENLAFAXINE SUCCINATE EXTENDED-RELEASE TABLETS, 50 MG 100 MG SANDOZ INC. PRISTIQ 6/29/2015


MYLAN PHARMACEUTICALS INC. PRISTIQ 6/29/2015

43 ALMOTRIPTAN MALATE TABLETS, 6.25 MG (BASE) 12.5 MG (BASE) TEVA PHARMACEUTICALS AXERT TABLETS 7/7/2015

44 TRAVOPROST OPTHALMIC SOLUTION USP (IONIC BUFFERED SOLUTION) 0.004% APOTEX INC. TRAVATAN Z 7/10/2015

45 OLOPATADINE HYDROCHLORIDE OPHTHALMIC SOLUTION USP, 0.2% BARR LABORATORIES, INC. PATADAY OPHTHALMIC

SOLUTION 7/13/2015

46 BIVALIRUDIN FOR INJECTION, 250 MG/VIAL (SINGLE USE) HOSPIRA, INC. ANGIOMAX INJECTION 7/14/2015




47 BAVALIRUDIN FOR INJECTION, 250 MG/VIAL; PACKAGED IN ADD-VANTAGE VIA HOSPIRA, INC. ANGIOMAX INJECTION 7/14/2015

48 REPAGLINIDE AND METFORMIN HYDROCHLORIDE TABLETS, 1 MG/500 MG 2 MG/500 MG

LUPIN LIMITED PRANDIMET TABLETS 7/15/2015

49 LINEZOLID INJECTION, 200 MG/100 ML 600 MG/300 ML SANDOZ, INC. ZYVOX INJECTION 7/16/2015

50 ETHACRYNATE SODIUM FOR INJECTION USP, 50 MG/VIAL PAR STERILE PRODUCTS LL SODIUM EDECRIN 7/29/2015

51 OMEPRAZOLE MAGNESIUM DELAYED RELEASE TABLETS (OTC) 20.6 MG (20 MG BASE)

PERRIGO R&D COMPANY PRILOSEC OTC DELAYED-RELEASE TABLETS, 20 MG 7/30/2015

52 PALIPERIDONE EXTENDED-RELEASE TABLETS, 1.5 MG 3 MG 6 MG 9 MG

ACTAVIS LABORATORIES FL, INC.

INVEGA EXTENDED-RELEASE TABLETS 8/3/2015

53 TESTOSTERONE TOPICAL GEL 1.62% PERRIGO ISRAEL PHARMACEUTICALS LTD ANDROGEL 8/4/2015

54 TESTOSTERONE TOPICAL GEL 10 MG PER PUMP ACTUATION

ACTAVIS LABORATORIES UT, INC. FORTESTA GEL 8/5/2015

55 TRETINOIN GEL USP, 0.05% SPEAR PHARMACEUTICALS ATRALIN GEL 8/13/2015 56 TETRABENAZINE TABLETS, 12.5 MG 25 MG SUN PHARMA GLOBAL FZE XENAZINE TABLETS 8/17/2015

57 HYDROXYPROGESTERONE CAPROATE INJECTION USP 250 MG/ML (1.25 G/5 ML VIALS)

MCGUFF PHARMACEUTICALS, INC. DELALUTIN INJECTION 8/24/2015

58 GUAIFENESIN AND DEXTROMETHORPHAN HYDROBROMIDE EXT RLS 600 MG/30 MG 1200 MG/60 MG

ACTIVIS LABORATORIES FL. INC. MUCINEX DM 8/31/215

59 RIVASTIGMINE TRANSDERMAL SYSTEM, 13.3 MG/24

ALVOGEN PINE BROOK, INC. EXELON TDS 8/31/2015

60 RIVASTIGMINE TRANSDERMAL SYSTEM, 9.5 MG/24 HR 4.6 MG/24 HR

ALVOGEN PINE BROOK, INC.

EXELON TRANSDERMAL SYSTEM 9/3/2015

61 GUAIFENESIN EXTENDED-RELEASE TABLETS 1200 MG

ACTIVIS LABORATORIES FL, INC. MUCINEX 9/3/2015

62 RIVASTIGMINE TRANSDERMAL SYSTEM, 9.5 MG/24 HR 4.6 MG/24 HR

ALVOGEN PINE BROOK, INC.

EXELON TRANSDERMAL SYSTEM 9/3/2015

63 GUAIFENESIN EXTENDED-RELEASE TABLETS 1200 MG

ACTIVIS LABORATORIES FL, INC. MUCINEX 9/3/2015

64 BALSALAZIDE DISODIUM TABLETS 1.1 G PAR PHARMACEUTICAL INC GIAZO 9/8/2015

65 FLUVASATIN SODIUM EXTENDED RELEASE TABLETS 80 MG

MYLAN PHARMACEUTICALS LESCOL XL 9/10/2015

66 CLOZAPINE ORALLY DISINTEGRATING TABLETS 25 MG 100 MG

MYLAN PHARMACEUTICALS FAZACLO ODT 9/15/2015

67 PIMOZIDE TABLETS USP, 1 MG 2 MG PAR PHARMACEUTICAL, INC. ORAP TABLETS 9/28/2015

68 ADAPALENE AND BEZOYL PEROXIDE GEL, 0.1%/2.5%

ACTAVIS MID ATLANTIC, LLC EPIDUO TOPICAL GEL 9/30/2015

69 PALONOSETRON HYDROCHLORIDE INJECTION 0.25 MG/5 ML 0.075 MG/1.5 ML

TEVA PHARMACEUTICALS USA ALOXI INJECTION 10/13/2015

70 PALONOSETRON HYDROCHLORIDE INJECTION 0.25 MG/5 ML SANDOZ INC. ALOXI INJECTION 10/13/2015

71 MEMANTINE HYDROCHLORIDE ORAL SOLUTION, 2 MG/ML

MACLEODS PHARMACEUTICALS, LLC NAMENDA ORAL SOLUTION 10/13/2015

72 MEMANTINE HYDROCHLORIDE ORAL SOLUTION, 2 MG/ML

SILARX PHARMACEUTICALS, INC. NAMENDA ORAL SOLUTION 10/13/2015

73 CHOLINE C11 INJECTION, 4 mCi/Ml - 33.1 mCi/Ml

UNIVERSITY OF TEXAS MD ANDERSON CANCER CHOLINE C11 INJECTION 10/29/2015

74 ITRACONAZOLE ORAL SOLUTION, 10 MG/ML

AMNEAL PHARMACEUTICALS

SPORANOX ORAL SOLUTION 10/30/2015

75 MORPHINE SULFATE ORAL SOLUTION, 20 MG/5 ML (4 MG/ML)

VINTAGE PHARMACEUTICALS

MORPHINE SULFATE ORAL SOLUTION 10/30/2015




76 NEVIRAPINE EXTENDED-RELEASE TABLETS, 100 MG

ALVOGEN MALTA OPERATIONS LTD. VIRAMUNE XR TABLETS 11/9/2015

77 NEVIRAPINE EXTENDED-RELEASE TABLETS, 100 MG

MYLAN PHARMACEUTICALS VIRAMUNE XR TABLETS 11/9/2015

78 CEFOXITIN FOR INJECTION USP, 100 G/BAG PBP SMARTPAK

SAMSON MEDICAL TECHNOLOPGIES, INC.

MEFOXITIN INJECTION ON SP 11/16/2015

79 MESALAMINE RECTAL SUPPOSITORY 1000 MG

MYLAN PHARMACEUTICALS INC CANASA 11/24/2015

80 CLOZAPINE ORALLY DISINTEGRATING TABLETS 150 MG 200 MG BARR LABORATORIES INC FAZACLO 11/25/2015

81 IMATINIB MESYLATE TABLETS (TABLETS), 100 MG 400 MG SUN PHARMA GLOBAL FZE GLEEVEC TABLETS 12/3/2015

82 OLOPATADINE HYDROCHLORIDE OPHTHALMIC SOLUTION USP, 0.1%

USV NORTH AMERICA, INC.

PATANOL OPHTHALMIC SOLUTION 12/7/2015

83 OLOPATADINE HYDROCHLORIDE OPHTHALMIC SOLUTION USP, 0.1% APOTEX, INC. PATANOL OPHTHALMIC

SOLUTION 12/7/2015

84 OLOPATADINE HYDROCHLORIDE OPHTHALMIC SOLUTION USP, 0.1%


PATANOL OPHTHALMIC SOLUTION 12/7/2015

85 OLOPATADINE HYDROCHLORIDE OPHTHALMIC SOLUTION USP, 0.1% ZACH SYSTEM S.P.A. PATANOL OPHTHALMIC

SOLUTION 12/7/2015

86 AMIKACIN SULFATE INJECTION USP, 250 MG/ML FRESENIUS KABI USA, LLC AMIKACIN SULFATE

INJECTION USP 12/9/2015

87 FESOTERODINE FUMARATE EXTENDED-RELEASE TABLETS, 4 MG 8 MG

ALKEM LABORATORIES LIMITED

TOVIAZ EXTENDED-RELEASE TABLETS 12/10/2015

88 LEVETIRACETAM TABLETS, 250 MG 750 MG 1000 MG

SECAN PHARMACEUTICALS, INC. KEPPRA 12/16/2015

89 BUSULFAN INJECTION, 6 MG/ML (10 ML SDV) PHARMAFORCE, INC. BISULFEX INJECTION 12/22/2015

90 NEOSTIGMINE METHYLSULFATE INJECTION, USP 5 MG/10 ML 10 MG/10 ML

EUROHEALTH INTERNATIONAL SARL BLOXIVERZ 12/28/2015

Sources: U.S. Food and Drug Administration http://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/DrugandBiologicApprovalReports/ANDAGenericDrugApprovals/ucm482213.htm

HDA Factbook Customers


Customers

Section Overview The Customers section includes pharmaceutical sales and market share by customer categories, including chain stores, clinics and independent pharmacies, top drug chains by pharmacy sales and drug store markets. As reported by QuintilesIMS in 2015, U.S. pharmaceutical spending by channel grew to $424.8 billion, with 12.2 percent growth from 2014. Retail customer categories accounted for 72 percent of pharmaceutical market share, with sales of $305.9 billion, 28 percent or $118.9 billion attributed to non-retail (institutional) categories.

• Chain stores accounted for 30.8 percent of the customer market with sales of $130.7 billion; and,

• Mail service increased to 22.9 percent in 2015 to $97.4 billion (Table 85).

Retail Drug Stores Tables 86 and 87 highlight the top drug chains by dollar volume and top drug chains by store count in 2015, respectively. Walgreens was the top drug chain by sales with $80.97 billion and second in store count with 8,173 stores.

• CVS ranked second in sales with $72.01 billion and first in store count with 9,655 stores; and • Rite Aid ranked third in sales with $26.87 billion and has 4,561 stores.

Mergers and Acquisitions A significant number of mergers and acquisitions occurred in the pharmaceutical industry in 2015. Albertson’s LLC acquired Safeway. CVS Health acquired Target Pharmacy and Omnicare. Rite Aid acquired EnvisionRx, and Diplomat Pharmacy acquired Burman’s Specialty Pharmacy (Table 88).



85 Non-Discounted Spending by Channel: 2014-2015

2014 2015

Sales ($bil) Market Share Sales

($bil) Market Share Growth

Retail $272.7 72.0% $305.9 72.0% 12.2%

Chain Stores $121.8 32.2% $130.7 30.8% 7.3%

Mail Service $82.3 21.7% $97.4 22.9% 18.5%

Independent $42.2 11.1% $48.0 11.3% 14.0%

Food Stores $26.4 7.0% $29.7 7.0% 12.4%

Non-Retail $105.9 28.0% $118.9 28.0% 12.3%

Clinics $48.4 12.8% $56.2 13.2% 16.2%

Non-Federal Hospitals $30.2 8.0% $33.4 7.9% 10.6%

Long-Term Care $16.2 4.3% $16.7 3.9% 2.5%

HMO $3.9 1.0% $4.9 1.1% 25.6%

Home Health Care $3.4 0.9% $3.9 0.9% 13.8%

Federal Facilities $2.7 0.7% $2.7 0.6% -1.7%

Miscellaneous $1.0 0.3% $1.1 0.3% 14.9%

Total U.S. Market $378.6 100.0% $424.8 100.0% 12.2% Source: IMS Health, National Sales Perspectives, Jan 2016

86 Top 10 Drug Chains by Dollar Volume: 2015

Rank Store 2015 Sales ($bil)

1 Walgreens $80.97

2 CVS Health1 $72.01

3 Rite Aid2 $26.87

4 Health Mart3 $10.3

5 Shoppers Drug Mart4 $9.03

6 Diplomat Specialty Pharm. $3.37

7 Jean Coutu5 $3.19

8 London Drugs6 $2.02

9 McKesson Canada6 $1.98

10 Rexall $1.94 1 Reflects retail sales only. The combined sales for CVS Health are $139.37 billion (+9.9%). Last year’s combined sales were $126.76 billion. 2 Retail Pharmacy segment sales. Rite Aid’s total fiscal 2016 revenue was $30.74 billion (+15.9%) and included $4.1 billion in sales for its Pharmacy Services

segment. 3 CDR estimate. 4 Translated from Canadian to U.S. dollars at the rate of 0.765. The rate a year earlier was 0.790. 5 Systemwide retail sales. Translated from Canadian to U.S. dollars at the rate of 0.765. 6 CDR estimate. Translated from Canadian to U.S. dollars at the rate of 0.765. Source: Racher Press research, Chain Drug Review/April 18, 2016



87 Top 10 Drug Chains by Store Count: 2015 Rank Store Count

1 CVS Health 9,655

2 Walgreens 8,173

3 Health Mart 4,610

4 Rite Aid 4,561

5 McKesson Canada 2,000

6 Shoppers Drug Mart 1,313

7 Pharmasave 555

8 Medicine Shoppe 523

9 Rexall 476

10 Jean Coutu 416 Source: Racher Press research. Chain Drug Review/April 18, 2016

88 Pharmacies: 2015 Mergers and Acquisitions Acquirer Target Company Closing Date

CVS Health Target Pharmacy 12/16/2015

CVS Health Omnicare 8/18/2015

Rite Aid EnvisionRx 6/24/2015

Diplomat Pharmacy Burman's Specialty Pharmacy 6/19/2015

Albertson's LLC Safeway 1/30/2015 Source: HDA research Foundation

HDA Factbook Market Characteristics


Market Characteristics

Section Overview The Market Characteristics section includes information on national healthcare expenditures, sources of health insurance, prescription spending by payer, prescription use and top pharmaceutical manufacturing companies. According to Centers for Medicare & Medicaid Services, Office of the Actuary, U.S. health expenditures increased by 5.5 percent in 2015, reaching $3,197 billion, up from $3,031 billion the year before. In 2015, per capita U.S. healthcare spending as a percent of Gross Domestic Product grew from 17.5 to 17.8 percent (Tables 89 and 90). In 2016, hospital care spending growth was projected to reach 4.7 percent of the U.S. Gross Domestic Product, with spending of $1,067.3 billion (Table 91). Projections of prescription drug spending by payer are broken into four categories:

• Private health insurance, 41.8 percent; • Out-of-pocket payments, 14.4 percent; • Medicaid, 10 percent; and, • Medicare, 30 percent in 2015 (Table 94).

As reported by QuintilesIMS, 51.9 percent of prescriptions dispensed by payers are from commercial third-parties; followed by Medicare Part D 26.3 percent; Medicaid 14.8 percent; and, cash 7.1 percent (Table 95). Prescriptions As reported by QuintilesIMS, total prescriptions dispensed by all channels were as follows:

• 57.7 percent chain stores and mass merchandisers, up from 57.2 percent in 2014; • 16.9 percent independent pharmacy, down from 17.1 percent in 2014; • 11.9 percent food stores, unchanged from 2014; • 8.7 percent long-term care, down from 8.9 percent in 2014; and, • 4.7 percent mail services, down from 4.9 percent in 2014 (Table 97).

Pharmaceutical Companies Table 101 notes Gilead Sciences replaced Novartis as the number one ranked manufacturer with sales of $27.7 billion in 2015.

• Pfizer ranked second, with sales of $21.8 billion; • Johnson & Johnson, third, with sales of $21.5 billion; and, • Merck & Co. ranked fourth, with sales of $20.7 billion in 2015.



Comparing the Top 20 manufacturers by prescriptions dispensed: • Teva remained in first place, with the highest number of prescriptions dispensed — 514

million. Mylan was second, with 347 million prescriptions (Table 102). • For unbranded generic prescriptions, Teva again held the top spot with 445 million

prescriptions dispensed, capturing a 12.2 percent share of the generic market (Table 103). • AbbVie manufactured the top-ranked prescription product, Synthroid®, with 20.7 million

prescriptions dispensed in 2015. AstraZeneca was second with Crestor®, which had 20.3 million prescriptions dispensed (Table 104).

The Top 10 biologic manufacturers by revenue accounted for $102.5 billion, of the $128.7 billion total biologic market in 2015.

• Amgen ranked first with sales of $17.2 billion; followed by, • Genentech with sales of $15.7 billion (Table 107).



89 U.S. Healthcare Expenditures: 2010-2016

NOTES: 1. Research and development expenditures of drug companies and other manufacturers and providers of medical equipment and supplies are excluded from

research expenditures. These research expenditures are implicitly included in the expenditure class in which the product falls, in that they are covered by the payment received for that product.

2. Numbers may not add to totals because of rounding. Source: Centers for Medicare & Medicaid Services, Office of the Actuary.

90 Spending per Capita as a Percent of Gross Domestic Product (GDP): 2010-2016

NOTES: 1. These projections incorporate estimates of GDP from the U.S. Bureau of Economic Analysis as of May 2016. 2. Estimates reflect the U.S. Bureau of Census definition for resident-based population (which includes all persons who usually reside in one of the fifty states or the District of Columbia, but excludes (i) residents living in Puerto Rico and areas under U.S. sovereignty, and (ii) U.S. Armed Forces overseas and U.S. citizens whose usual place of residence is outside of the United States) plus a small (typically less than 0.2% of population) adjustment to reflect Census undercounts. Projected estimates reflect the area population growth assumptions found in the Medicare Trustees Report. 3. Numbers and percents may not add to totals because of rounding. Source: Centers for Medicare & Medicaid Services, Office of the Actuary.

$2,5

95.7

$2,6

96.6

$2,7

99.0

$2,8

79.9

$3,0

31.3

$3,1

97.2

$3,3

50.7

4.0% 3.9% 3.8%

2.9%

5.3% 5.5%

4.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2010 2011 2012 2013 2014 2015 2016

Spending ($bil) Change (%)

$8,4

02

$8,6

66

$8,9

27

$9,1

15

$9,5

23

$9,9

60

$10,

345

17.3% 17.4% 17.3% 17.3%

17.5%

17.8%

18.1%

16.8%

17.0%

17.2%

17.4%

17.6%

17.8%

18.0%

18.2%

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2010 2011 2012 2013 2014 2015 2016

Spending Per Capita Gross Domestic Product



91 Projected U.S. Healthcare Expenditures by Selected Types of Services: 2016-2017

2016 2017

Type of Service Spending ($bil) Percent Spending

($bil) Percent

Hospital Care $1067.3 4.7 $1122.1 5.1

Professional Care $881.8 4.5 $924.3 4.8

Nursing care facilities and continuing care retirement communities $169.5 4.9 $178.3 5.2

Prescription drugs $342.1 6.3 $362.7 6.0

Net cost of private health insurance $220.4 5.1 $231.3 5.0

Government public health activities $87.4 4.9 $92.0 5.2

Total of the Selected Services $2768.5 $2910.7

Total National Health Expenditure $3350.7 $3521.6 NOTE: Numbers may not add to totals because of rounding Source: Centers for Medicare & Medicaid Services, Office of the Actuary http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html

92 Projected U.S. Healthcare Expenditures: 2014-2016 2014 ($bil) 2015 ($bil) 2016 ($bil) Out-of-Pocket-Payments $329.8 $338.4 $350.1

Private Health Insurance1 $991.0 $1,042.0 $1,092.7

Medicaid1 $495.8 $548.8 $577.7

Medicare1 $618.7 $647.3 $681.3

Other Third Party Payers3 $484.6 $505.0 $526.9 1 Includes Private Health Insurance (Employer Sponsored Insurance and other private insurance, which includes Marketplace plans), Medicare, Medicaid, Children's Health Insurance Program (Titles XIX and XXI), Department of Defense, and Department of Veterans' Affairs. 3 Includes worksite health care, other private revenues, Indian Health Service, workers' compensation, general assistance, maternal and child health, vocational rehabilitation, other federal programs, Substance Abuse and Mental Health Services Administration, other state and local programs, and school health. NOTES: Projections include effects of the Affordable Care Act and an alternative to the sustainable growth rate. Source: Center for Medicare & Medicaid Services, Office of the Actuary http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProject



Prescription Use

93 Projected Growth of Medicare and Medicaid Spending: 2015-2025

Source: US Congressional budget Office NOTE: Shows Gross spending, excluding the effects of Medicare premiums and other offsetting receipts. https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/49892-Outlook2015.pdf

94 Projected Prescription Drug Spending by Payer: 2015-2018 Payer 2015 2016 2017 2018

Private Health Insurance 41.8% 41.5% 41.5% 41.5%

Out-of-Pocket Payment 14.4% 14.1% 13.9% 13.8%

Medicaid 10.0% 9.9% 9.6% 9.5%

Medicare 30.0% 30.8% 31.3% 31.7% NOTE: Projections include effects of the Affordable Care Act and an alternative to the sustainable growth rate. Source: Centers for Medicare & Medicaid Services, Office of the Actuary. http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html

95 Retail Prescriptions by Payer: 2012-2015 2012 2013 2014 2015

Commercial Third-Party 56.1% 54.2% 52.7% 51.9%

Medicare Part D 23.1% 25.4% 26.0% 26.3%

Medicaid 12.1% 11.9% 13.5% 14.8%

Cash 8.7% 8.5% 7.8% 7.1% NOTE: Retail prescriptions only Source: IMS Health, National Prescription Audit, PayerTrak, Feb 2016

$622 $668 $681 $699 $772 $826

$886 $986 $1,021 $1,052

$1,175

$335 $360 $384 $405 $428 $452 $477 $503 $530 $558 $588

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Medicare ($ bil) Medicaid ($ bil)



96 Dispensed Prescriptions (Mil): 2006-2015

NOTE: Includes prescription products and insulins Source: IMS Health, National Prescription Audit, Dec 2015

97 Total Prescriptions Dispensed by Channel: 2014-2015

Channel Prescriptions Dispensed

(#mil) 2015 Growth (%)

Market Share (%)

2014 2015 2014 2015 Chain Stores 2,475 2,522 1.9% 57.2% 57.7%

Independents 738 739 0.1% 17.1% 16.9%

Food Stores 516 522 1.1% 11.9% 11.9%

Long-Term Care 384 378 -1.6% 8.9% 8.7%

Mail Service 212 207 -2.3% 4.9% 4.7%

Total U.S. Market 4,325 4,368 1.0% 100.0% 100.0% Source: IMS Health, National Prescription Audit, Dec 2015

98 Dispensed Prescriptions by Channel: 2011-2015 2011 2012 2013 2014 2015

Chain Stores 2,206 2,303 2,386 2,475 2,522

Independent 739 738 736 738 739

Food Stores 481 521 516 516 522

Long-Term Care 329 330 366 384 378

Mail Service 260 262 233 212 207

Total U.S. Market 4,014 4,155 4,236 4,325 4,368 Source: IMS Health, National Prescription Audit, Dec 2015

3,684 3,801 3,846

3,943 3,987 4,014

4,155 4,236

4,325 4,368

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mill

ions



99 Growth in Prescription Sales and Dispensing (%): 2004-2015

Source: IMS Health, National Sales Perspectives, Jun 2016, National Prescription Audit, Jun 2016

100 Estimated Retail Prescription Revenue by Channel: 2014-2015

Average Dollar Value Received per Retail

Prescription Percent of Total Retail Prescription Cost

2014 2015 2014 2015 Manufacturer receives $67.51 $73.88 81.80% 79.49%

Distributor receives $2.38 $2.28 2.88% 2.45%

Retailer receives $12.64 $16.78 15.32% 18.05% Source: NACDS Economics Department

9.5%

5.6%

9.4%

3.8%

2.0%

5.4%

5.3%

3.9%

-3.2

%

4.5%

14.2

%

12.2

%

2.3%

3.2%

4.5%

3.2%

1.2%

2.6%

1.2%

0.8%

3.5%

2.4%

2.1%

0.9%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales Growth Perscription Growth



Pharmaceutical Companies

101 Top 20 U.S. Pharmaceutical Manufacturers by Sales: 2013-2015 Rank 2013 ($bil) 2014 ($bil) 2015 ($bil)

1 Novartis Consumer Health, Inc. $19.8 Novartis Consumer Health,

Inc. $20.9 Gilead Sciences, Inc. $27.7

2 Pfizer, Inc. $18.8 Pfizer, Inc. $20.2 Pfizer, Inc. $21.8

3 AstraZeneca Pharmaceuticals LP $18.3 AstraZeneca

Pharmaceuticals LP $19.9 Johnson & Johnson $21.5

4 Merck & Co., Inc. $17.0 Johnson & Johnson $19.4 Merck & Co., Inc. $20.7

5 Genentech, A Member of the Roche Group $16.6 Merck & Co., Inc. $18.7 Novartis Consumer Health, Inc. $20.5

6 Actavis, Inc. $16.5 Gilead Sciences, Inc. $18.2 AstraZeneca Pharmaceuticals LP $19.5

7 TEVA Pharmaceuticals USA $15.3 TEVA Pharmaceuticals USA $17.4 TEVA Pharmaceuticals USA $19.1

8 Amgen, Inc. $15.2 Genentech, A Member of the Roche Group $17.3 Amgen, Inc. $19.0

9 Lilly USA, LLC $14.6 Amgen, Inc. $17.2 Sanofi US $18.6

10 Johnson & Johnson $14.1 Actavis, Inc. $17.0 Genentech, A Member of the Roche Group $17.9

11 Sanofi US $12.9 Sanofi US $15.9 Actavis, Inc. $17.8

12 AbbVie US $12.4 AbbVie US $13.3 AbbVie US $16.6

13 GlaxoSmithKline $12.1 GlaxoSmithKline $11.4 Lilly USA, LLC $13.0

14 Novo Nordisk Inc. $8.0 Lilly USA, LLC $11.3 Novo Nordisk Inc. $12.9

15 Mylan Inc. $7.5 Novo Nordisk Inc. $10.2 GlaxoSmithKline $11.6

16 Gilead Sciences, Inc. $7.4 Mylan Inc. $8.3 Mylan Inc. $9.0

17 Otsuka America, Inc. $6.7 Otsuka America, Inc. $8.0 Biogen Idec Inc. $8.2

18 Boehringer Ingelheim Pharmaceuticals, Inc. $6.6 Boehringer Ingelheim

Pharmaceuticals, Inc. $7.0 Boehringer Ingelheim Pharmaceuticals, Inc. $8.0

19 Shire Pharmaceuticals $5.2 Biogen Idec Inc. $6.7 Valeant Pharmaceuticals International $7.7

20 Valeant Pharmaceuticals International $5.0 Shire Pharmaceuticals $6.3 Bristol-Myers Squibb Company US

Medicines Group $7.0

NOTE: Rankings Represent current corporate structure. Source: IMS Health, IMS National Sales Perspective, Jun 2016



102 Top 20 Manufacturers by Prescriptions Dispensed: 2015

Rank Company Total Prescriptions (#mil)

Market Share (%)

Growth (%)

1 TEVA Pharmaceuticals USA 514 11.7% -3.0%

2 Mylan Inc. 347 7.9% 3.8%

3 Actavis, Inc. 308 7.0% -2.6%

4 Novartis Consumer Health, Inc. 299 6.8% -1.5%

5 Lupin Pharmaceuticals, Inc. 204 4.6% 5.1%

6 Endo Pharmaceuticals 201 4.6% -16.7%

7 Amneal Pharmaceuticals LLC 145 3.3% -4.5%

8 Aurobindo Pharma USA, Inc. 130 3.0% 20.0%

9 Pfizer Inc. 119 2.7% -12.9%

10 Zydus Pharmaceuticals (USA) Inc. 117 2.7% -2.2%

11 Apotex Corp. 108 2.5% 12.1%

12 Dr. Reddy's Laboratories, Inc. 102 2.3% 3.2%

13 Hikma Pharmaceuticals PLC 97 2.2% 4.1%

14 Camber Pharmaceuticals Inc. 91 2.1% 10.3%

15 Sun Pharma USA 79 1.8% -31.0%

16 Glenmark Pharmaceuticals 62 1.4% 17.1%

17 Accord Healthcare 58 1.3% 88.8%

18 NorthStar Rx 55 1.2% 12.6%

19 Internatl Labs 54 1.2% -6.8%

20 Torrent Pharmaceuticals 54 1.2% 33.5%

Top 20 3,144 71.8% -0.2%

Total U.S. Market 4,380 100.0% 0.9% Source: IMS Health, National Prescription Audit, Jun 2016



103 Top 20 Manufacturers by Total Unbranded Generic Prescriptions Dispensed: 2015

Rank Company Total Prescriptions (#mil)

Share of Generic Market (%)

Growth (%)

1 TEVA Pharmaceuticals USA 445 12.2% -3.8%

2 Mylan Inc. 340 9.3% 3.4%

3 Novartis Consumer Health, Inc. 262 7.2% 4.4%

4 Actavis, Inc. 232 6.4% -1.8%

5 Lupin Pharmaceuticals, Inc. 202 5.5% 5.2%

6 Endo Pharmaceuticals 181 5.0% -17.4%

7 Amneal Pharmaceuticals LLC 144 4.0% -4.7%

8 Aurobindo Pharma USA, Inc. 130 3.6% 20.0%

9 Zydus Pharmaceuticals (USA) Inc. 117 3.2% -2.2%

10 Apotex Corp. 108 3.0% 11.9%

11 Dr. Reddy's Laboratories, Inc. 101 2.8% 3.2%

12 Hikma Pharmaceuticals PLC 97 2.7% 4.2%

13 Camber Pharmaceuticals Inc. 91 2.5% 10.3%

14 Sun Pharma USA 77 2.1% -31.5%

15 Pfizer Inc. 74 2.0% -11.2%

16 Glenmark Pharmaceuticals 60 1.6% 18.6%

17 Accord Healthcare 58 1.6% 88.8%

18 Internatl Labs 54 1.5% -6.8%

19 Torrent Pharmaceuticals 54 1.5% 33.5%

20 Mallinckrodt Pharmaceuticals 54 1.5% -11.8%

Top 20 2,882 79.2% 0.2%

Total U.S. Market 3,640 100.0% 2.6% Source: IMS Health, National Prescription Audit, Jun 2016



104 Top 20 Branded Products by U.S. Prescriptions: 2015

Rank Product Company Total Prescriptions (#mil) Market Share (%) Growth (%)

1 Synthroid AbbVie US 20.7 4.2% -5.6%

2 Crestor AstraZeneca Pharmaceuticals LP 20.3 4.1% -7.5%

3 Ventolin Hfa GlaxoSmithKline 19.6 4.0% 10.1%

4 Advair Diskus GlaxoSmithKline 13.1 2.6% -6.2%

5 Lantus Solostar Sanofi US 11.5 2.3% 7.3%

6 Vyvanse Shire Pharmaceuticals 11.1 2.2% 7.9%

7 Lyrica Pfizer Inc. 10.2 2.1% 3.0%

8 Nexium AstraZeneca Pharmaceuticals LP 9.6 1.9% -43.2%

9 Januvia Merck & Co., Inc. 9.3 1.9% 3.0%

10 Symbicort AstraZeneca Pharmaceuticals LP 9.1 1.8% 14.0%

11 Spiriva Handihaler Boehringer Ingelheim Pharmaceuticals, Inc. 9.0 1.8% -6.8%

12 Lantus Sanofi US 8.6 1.7% -7.3%

13 Cialis Lilly USA, LLC 7.4 1.5% -1.4%

14 Xarelto Johnson & Johnson 7.4 1.5% 17.1%

15 Suboxone Reckitt Benckiser 7.2 1.5% 3.3%

16 Zetia Merck & Co., Inc. 6.7 1.3% -5.8%

17 Viagra Pfizer Inc. 6.5 1.3% -10.7%

18 Bystolic Actavis, Inc. 6.0 1.2% -9.1%

19 Flovent Hfa GlaxoSmithKline 5.7 1.2% 0.8%

20 Voltaren Gel Endo Pharmaceuticals 5.4 1.1% 7.7%

Top 20 204.4 29.2% -3.5%

Total Branded Maket 495.9 100.0% -6.6% Source: IMS Health, National Prescription Audit, Jun 2016



105 Top 15 Manufacturers by Promotional Spending: 2015 Rank

Corporation 2015

Promotional Spending ($Mn)

Retail Value of Samples ($Mn)

Journals ($Mn)

Detailing ($Mn)

Promotional Spending

Growth (%) 2014 2015

2 1 Actavis, Inc. 2,357 1,509 3 453 -2.6%

1 2 Pfizer Inc. 2,149 601 5 332 -23.3%

4 3 Merck & Co., Inc. 1,872 1,075 4 377 -7.6%

3 4 AstraZeneca Pharmaceuticals LP 1,798 1,046 6 424 -20.3%

9 5 Boehringer Ingelheim Pharmaceuticals, Inc. 1,145 780 10 272 22.4%

5 6 Lilly USA, LLC 1,125 624 10 193 0.9%

6 7 Valeant Pharmaceuticals International

1,066 677 4 114 -2.2%

10 8 Johnson & Johnson 1,023 489 13 245 24.7%

13 9 Novartis Consumer Health, Inc. 973 752 5 169 46.6%

11 10 Sunovion Pharmaceuticals, Inc., 874 633 1 86 10.5%

7 11 GlaxoSmithKline 868 416 2 225 -13.3%

16 12 Bristol-Myers Squibb Company US Medicines Group

809 264 4 124 59.3%

12 13 Takeda Pharmaceuticals America, Inc.

737 446 2 277 2.8%

14 14 AbbVie US 624 131 4 98 -5.5%

15 15 Novo Nordisk Inc. 606 312 1 140 7.9% Source: IMS Health, Integrated Promotional Services, Jun 2016



106 Top 20 Generic Manufacturers by Revenue: 2015 Rank Company Sales ($mil) Share of Generic Market (%) Growth (%)

1 TEVA Pharmaceuticals USA $8,975 13.2% 11.2%

2 Mylan Inc. $6,756 9.9% 1.3%

3 Actavis, Inc. $5,741 8.4% 1.8%

4 Novartis Consumer Health, Inc. $5,269 7.7% -0.7%

5 Endo Pharmaceuticals $4,411 6.5% 5.0%

6 Pfizer Inc. $3,117 4.6% 13.2%

7 Dr. Reddy's Laboratories, Inc. $1,807 2.7% 6.9%

8 Lupin Pharmaceuticals, Inc. $1,656 2.4% -5.2%

9 Prasco Laboratories $1,610 2.4% 52.7%

10 Apotex Corp. $1,549 2.3% 10.3%

11 Mallinckrodt Pharmaceuticals $1,440 2.1% -4.9%

12 Taro Pharmaceuticals USA Inc. $1,423 2.1% 3.2%

13 Perrigo Israel Pharmaceuticals, Ltd. $1,383 2.0% 8.2%

14 Amneal Pharmaceuticals LLC $1,339 2.0% 2.3%

15 Impax Laboratories $1,333 2.0% -4.3%

16 Boehringer Ingelheim Pharmaceuticals, Inc. $1,172 1.7% -4.5%

17 Fresenius Kabi, (USA) (FK- USA) $1,170 1.7% 28.9%

18 Akorn Inc. $1,078 1.6% 68.7%

19 Sun Pharma USA $962 1.4% -38.4%

20 Zydus Pharmaceuticals (USA) Inc. $952 1.4% 26.3%

Top 20 Companies $53,140 78.0% 5.2%

Total Unbranded Generic Market $68,170 100.0% 6.8% NOTE: Ranking Based on Sales of unbranded generic products. Source: IMS Health, National Sales Perspectives, Jun 2016

107 Top 10 Biologic Manufacturers by Revenue: 2015 Rank Company Sales ($mil) Share of Biologic Market (%) Growth (%)

1 Amgen, Inc. $17,211 13.4% 8.7%

2 Genentech, A Member of the Roche Group $15,734 12.2% 7.8%

3 Sanofi US $13,212 10.3% 13.1%

4 Novo Nordisk Inc. $12,885 10.0% 25.3%

5 AbbVie US $11,419 8.9% 35.0%

6 Johnson & Johnson $9,264 7.2% 14.1%

7 Lilly USA, LLC $8,591 6.7% 25.9%

8 Merck & Co., Inc. $4,728 3.7% 10.2%

9 Biogen Idec Inc. $4,714 3.7% 23.4%

10 TEVA Pharmaceuticals USA $4,707 3.7% 13.1%

Top 10 $102,466 79.6% 16.4%

Total Biologics Market $128,711 100.0% 18.2% Source: IMS Health, National Sales Perspectives, Jun 2016

HDA Factbook International


International

Section Overview The International section includes information on global pharmaceutical sales, market share and growth, as well as Canadian drug store chains and prescription sales. This section also addresses emerging markets, such as India. In 2015, QuintilesIMS reported that the worldwide pharmaceutical market reached $1,069 billion. North America, (excluding Mexico and Central America), accounted for 42.4 percent of the global pharmaceutical market share, with sales of $452.9 billion. Europe accounted for 21.7 percent, with sales of $231.6 billion, followed by Asia/Africa/Australia with sales of $229.4 billion in 2015 (Table 108). The top 10 pharmaceutical markets in the world by dollar share accounted for $1,069 billion in 2015. The U.S. continued to lead by percent of global market share, with 40.2 percent or $430 billion in sales; followed by China, with 10.8% or $115.2 billion; and Japan, with 7.3% or $78.3 billion in sales (Table 109). Canadian Drug Sales The top 10 Canadian manufacturers by revenue in 2015 accounted for $10.1 billion of the $19.3 billion total market. Johnson & Johnson remained the leading manufacturer with sales of $2 billion, and accounted for 10.6 percent of the market.

• Novartis Consumer Health ranked second, with $1.7 billion; followed by, • Pfizer, with $884 million in sales (Table 112).

In 2015 the top 10 branded products by revenue accounted for $3.1 billion of the total Canadian market (15.9 percent of the total market). Remicade®, used to treat autoimmune disorders, held the top ranking in 2015 (Table 113). Pharmerging Nations According to QuintilesIMS, “pharmerging” nations by growth projections indicated that China’s total spending (including branded and generic drugs) will increase from $117.8 billion in 2015, to $172.2 billion in 2020 (Table 115). Table 116 reflects projected Indian pharmaceutical sales by customer categories that are broken down into four sectors: retail, hospital, dispensing doctors and unaudited market. The total market in 2015 accounted for $16.1 billion in pharmaceutical sales, and is expected to reach $28.2 billion by 2020.

• The retail sector is expected to reach $20.3 billion in revenue; • Hospitals, $2.7 billion; • Dispensing doctors, $1.5 billion; and, • The unaudited market, $3.7 billion by 2020.



India’s Pharmaceutical Market The top 20 pharmaceutical companies by revenue in India accounted for $8.6 billion of the total market, which was $13.6 billion in 2015. Sun Pharma USA was the top ranked pharmaceutical company with sales of $1,107 million, making up 8.2 percent of the market.

• Abbott ranked second with sales of $869 million, and 6.4 percent of the market share; and, • Cipla ranked third, with sales of $694 million, accounting for 5.1 percent of the market share

(Table 117). India’s total market of therapeutic classes by sales in 2015 accounted for $13.6 billion, with the top 20 classes making up 84.2 percent of the market share with sales of $11.4 billion. The top three therapy classes by sales were as follows:

• Antibacterial was the top ranked therapy class with sales of $1.8 billion; • Antidiabetics ranked second with sales of $1.1 billion; and, • Antihypertensive ranked third with sales of $975 million in 2015 (Table 118).



108 World Pharmaceutical Market by Market Share: 2015 Region Sales ($bil) Market Share (%) Growth (%) CAGR 2010-2015 (%)

North America $452.9 42.4% 11.2% 5.9%

Europe $231.6 21.7% 6.1% 3.3%

Asia/Africa/Australia $229.4 21.5% 7.4% 10.7%

Japan $78.3 7.3% 3.2% 2.6%

Latin America $76.7 7.2% 15.8% 11.0%

Total Global Sales $1,068.8 100.0% 8.9% 4.5% NOTE: Sales and market share are reported in U.S. Dollars with variable exchange rates. Growth rates are calculated using constant exchange rates. Source: IMS Health, Market Prognosis, Sep 2015

109 Top 10 Pharmaceutical Markets in the World by Dollar Sales: 2015 Rank Country Sales ($bil) Market Share (%) Growth (%)

1 United States $430.0 40.2% 11.4%

2 China $115.2 10.8% 7.0%

3 Japan $78.3 7.3% 3.2%

4 Germany $41.2 3.9% 5.4%

5 France $31.3 2.9% 1.3%

6 Brazil $28.1 2.6% 8.5%

7 UK $27.7 2.6% 13.7%

8 Italy $25.1 2.4% 8.0%

9 Canada $19.3 1.8% 6.6%

10 Spain $18.6 1.7% 8.6%

Total Top 10 $1,068.8 100.0% 8.9% NOTE: Sales and market share are reported in U.S. Dollars with variable exchange rates. Growth rates are calculated using constant exchange rates. Source: IMS Health, Market Prognosis, Sep 2015



110 Projected World Pharmaceutical Market by Market Share: 2020 Rank Country 2015 2020

1 United States 39.8% 41.1%

2 China 10.9% 12.3%

3 Japan 7.3% 5.9%

4 Germany 3.9% 3.6%

5 France 3.0% 2.2%

6 Brazil 2.6% 2.5%

7 UK 2.6% 3.2%

8 Italy 2.4% 2.2%

9 Canada 1.9% 1.8%

10 Spain 1.8% 1.5%

11 Venezuela 1.5% 0.8%

12 India 1.5% 2.1%

13 Korea 1.2% 1.3%

14 Russia 1.2% 1.1%

15 Australia 1.0% 0.9%

16 Mexico 1.0% 0.9%

17 Argentina 0.7% 0.5%

18 Turkey 0.7% 0.9%

19 Poland 0.6% 0.6%

20 Saudi Arabia 0.6% 0.7% NOTE: Rank is based on 2015 spending in U.S. Dollars with constant exchange rates. Source: IMS Health, Market Prognosis, Sep 2015

111 Canadian Prescription Drug Sales: 2010-2015 Year Generic Drugs ($C bil) Total ($C bil) 2010 $6.13 $22.29

2011 $5.88 $22.09

2012 $6.02 $21.98

2013 $5.88 $22.12

2014 $5.95 $23.17

2015 $6.16 $24.60 Source: IMS Health, MIDAS, Jun 2016



112 Top 10 Manufacturers in the Canadian Market by Revenue: 2015

Rank Company Sales ($mil) Market Share (%) Growth (%) CAGR (%)

2010-2014

1 Johnson & Johnson $2,030 10.6 7.9 8.8

2 Novartis Consumer Health, Inc. $1,661 8.7 5.8 6.8

3 Pfizer Inc. $884 4.6 -15.0 -12.6

4 Gilead Sciences, Inc. $852 4.4 133.8 44.1

5 Apotex Corp. $841 4.4 -3.4 -3.8

6 GlaxoSmithKline $827 4.3 6.8 0.3

7 Merck & Co., Inc. $819 4.3 -9.3 -0.8

8 TEVA Pharmaceuticals USA $779 4.1 -0.5 -9.8

9 Genentech, A Member of the Roche Group $724 3.8 0.9 3.0

10 AstraZeneca Pharmaceuticals LP $631 3.3 4.9 -12.4

Top 10 $10,136 52.6 5.7 -0.4

Total Others $9,118 47.4 6.7 5.1

Total Audited Market $19,254 100.0 6.2 2.0 NOTE: Includes both Rx and OTC. Source: IMS Health, MIDAS, Jun 2016

113 Top 10 Canadian Branded Products by Revenue: 2015

Rank Product Therapeutic Subclass 2015 Sales (US$mil)

Market Share (%)

Constant Dollar

Growth (%)

2010-2015 CAGR (%)

1 Remicade Autoimmune $691 3.6% 14.6% 16.0%

2 Harvoni Viral Hepatitis $463 2.4% 3217.6% 476.0%

3 Humira Autoimmune $440 2.3% 15.6% 18.7%

4 Lucentis Ocular Antineovascularisation $357 1.9% -2.4% 21.5%

5 Enbrel Autoimmune $263 1.4% 1.9% 4.9%

6 Cymbalta Mental Health $203 1.1% 12.1% 22.4%

7 Rituxan Oncology $180 0.9% 1.3% 6.2%

8 Coversyl Antihypertensives $160 0.8% 10.9% 13.7%

9 Symbicort Respiratory $152 0.8% 7.4% 7.8%

10 Spiriva Respiratory $146 0.8% -4.6% 2.8%

Top 10 Brands Top 10 Brands $3,054 15.9% 26.4% 17.2%

Other Brands Other Brands $8,359 43.4% 3.2% -0.2%

Total Branded Market Total Branded Market $11,413 59.3% 8.6% 3.0%

Total Audited Market Total Audited Market $19,254 100.0% 6.2% 2.0% Source: IMS Health, MIDAS, Jun 2016



114 Pharmerging Nations by Growth Projections: 2015 - 2020 Tier Growth (US$Bil)

1 China $157 - $187

2 India, Russia, Brazil $90 - $96

3 Other Pharmerging Markets $97 - $127 NOTE: Other pharmerging markets include Algeria, Argentina, Bangledesh, Chile, Columbia, Egypt, Indonesia, Kazakhstan, Mexico, Nigeria, Pakistan, Philippines, Poland, Saudi Arabia, South Africa, Thailand, Turkey, and Vietnam. Source: IMS Health, Market Prognosis, Sep 2015

115 Projected Pharmerging Market Growth: Brands and Generics 2020 2015 2020

Total Spending ($bil)

Brand Spending ($bil)

Generic Spending

($bil)

Total Spending ($bil)

Brand Spending ($bil)

Generic Spending

($bil)

China $117.8 $21.4 $18.8 $172.2 $40.4 $29.1

Brazil $27.9 $7.7 $6.0 $45.6 $8.6 $16.0

India $16.6 $0.8 $0.5 $29.5 $1.8 $0.8

Russia $13.1 $3.5 $1.3 $18.3 $4.5 $2.0 NOTE: Sales and values in US Dollars with constant exchange rates. Other sales including traditional medicines are included in total spending. Source: IMS Health, Market Prognosis, Sep 2015

116 Projected Indian Pharmaceutical Sales by Customer Categories: 2020 2015 Constant Dollar Sales (US$mil) 2020 Constant Dollar Sales (US$mil)

Retail Sector $11,860 $20,269

Hospital Sector $1,355 $2,711

Dispensing Doctors $882 $1,543

Unaudited Market $2,047 $3,712

Total Market $16,145 $28,236 Source: IMS Health, Market Prognosis, March 2016



117 Top 20 Pharmaceutical Companies by Sales in India: 2015

Rank Company 2014 Sales ($mil)

2015 Sales ($mil)

Market Share (%)

Growth (%)

1 Sun Pharma USA $1,034 $1,107 8.2% 12.7%

2 Abbott $802 $869 6.4% 14.0%

3 Cipla $627 $694 5.1% 16.5%

4 Mankind Pharma $426 $502 3.7% 24.1%

5 Zydus Pharmaceuticals (USA) Inc. $467 $476 3.5% 7.3%

6 Glaxosmithkline $448 $453 3.3% 6.5%

7 Lupin Pharmaceuticals, Inc. $402 $439 3.2% 14.9%

8 Macleods Pharma $392 $426 3.1% 14.2%

9 Alkem $386 $420 3.1% 14.7%

10 Pfizer Inc. $374 $392 2.9% 10.2%

11 Intas $338 $379 2.8% 18.0%

12 Torrent $295 $330 2.4% 17.7%

13 Dr. Reddy's Laboratories, Inc. $305 $329 2.4% 13.8%

14 Aristopharma $276 $316 2.3% 20.9%

15 Sanofi US $275 $297 2.2% 13.6%

16 Glenmark Pharm $242 $280 2.1% 21.5%

17 U S V $245 $278 2.0% 19.4%

18 Alembic $204 $224 1.6% 15.3%

19 Micro Labs $202 $217 1.6% 13.1%

20 Wockhardt $169 $208 1.5% 29.5%

Total Top 20 $7,910 $8,636 63.6% 14.9%

Total Market $12,419 $13,581 100.0% 15.1% NOTE: Sales and share are reported in U.S. Dollars with variable exchange rates. Growth rates are calculated using constant exchange rates. Source: IMS Health, MIDAS, Jun 2016



118 Top 20 Therapeutic Classes by Sales in India: 2015

Rank Therapy Class 2014 Sales ($mil)

2015 Sales ($mil)

Market Share (%)

Growth (%)

1 Antibacterials $1,763 $1,836 13.5% 9.7%

2 Antidiabetics $984 $1,143 8.4% 22.4%

3 Antihypertensives $893 $975 7.2% 14.9%

4 GI Products $840 $917 6.8% 15.1%

5 Pain $844 $916 6.7% 14.3%

6 Vitamins & Minerals $826 $882 6.5% 12.5%

7 Dermatologics $723 $800 5.9% 16.6%

8 Anti-Ulcerants $579 $642 4.7% 16.8%

9 Cough, Cold & Flu $498 $529 3.9% 11.8%

10 Nervous System Disorders $339 $377 2.8% 17.3%

11 Respiratory $314 $345 2.5% 15.5%

12 Lipid Regulators $303 $341 2.5% 18.7%

13 Anti-Anaemics $284 $298 2.2% 10.6%

14 Sex Hormones $241 $267 2.0% 16.6%

15 Other Cardiovasculars $220 $234 1.7% 11.7%

16 Other CNS $205 $218 1.6% 12.1%

17 Dietetics $158 $188 1.4% 25.1%

18 Anticoagulants $170 $186 1.4% 14.8%

19 Ophthalmology $164 $178 1.3% 13.8%

20 Mental Health $146 $164 1.2% 18.1%

Total Top 20 $10,493 $11,437 84.2% 14.8%

Total Market $12,419 $13,581 100.0% 15.1% NOTE: Sales and share are reported in U.S. Dollars with variable exchange rates. Growth rates are calculated using constant exchange rates. Source: IMS Health, MIDAS, Jun 2016

HDA Factbook Acknowledgements


Appendix

Acknowledgements The HDA Research Foundation would like to recognize and thank QuintilesIMS for its contribution to the 87th Edition HDA Factbook: The Facts, Figures & Trends in Healthcare (2016-2017). QuintilesIMS describes its services below. QuintilesIMS (NYSE:Q) is a leading integrated information and technology-enabled healthcare service provider worldwide, dedicated to helping its clients improve their clinical, scientific and commercial results. Formed through the merger of Quintiles and IMS Health, QuintilesIMS’ approximately 50,000 employees conduct operations in more than 100 countries. Companies seeking to improve real-world patient outcomes and enhanced clinical trial outsourcing through treatment innovations, care provision and access can leverage QuintilesIMS’ broad range of healthcare information, technology and service solutions to drive new insights and approaches. QuintilesIMS provides solutions that span clinical to commercial bringing clients a unique opportunity to realize the full potential of innovations and advance healthcare outcomes. As a global leader in protecting individual patient privacy, QuintilesIMS uses healthcare data to deliver critical, real-world disease and treatment insights. Through a wide variety of privacy-enhancing technologies and safeguards, QuintilesIMS protects individual privacy while managing information to drive healthcare forward. These insights and execution capabilities help biotech, medical device, and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders in the development and approval of new therapies, identify unmet treatment needs and understand the safety, effectiveness and value of pharmaceutical products in improving overall health outcomes. To learn more, visit www.QuintilesIMS.com.

QuintilesIMS 83 Wooster Heights Road

Danbury, CT 06810 +1 203 448-4600

http://www.quintilesims.com/



Industry Data Contributors We would like to thank these leading industry organizations that provided information for the 87th Edition HDA Factbook: The Facts, Figures & Trends in Healthcare (2016-2017). The HDA Research Foundation encourages you to contact the organizations listed below for further details and information in their areas of expertise.

Chain Drug Review 220 Fifth Avenue, 18th Floor New York, NY 10001 Ph: 212-213-6000 www.racherpress.com

U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 Ph: 800-923-8282 www.census.gov

Barclays 745 Seventh Avenue New York, NY 10019 Ph: 212 526 7000 www.investmentbank.barclays.com

U.S. Centers for Medicare and Medicaid Services 7500 Security Blvd Baltimore, MD 21244 Ph: 410-786-0727 www.cms.gov

QuintilesIMS Parsippany 11 Waterview Blvd. Parsippany, NJ 07054 Ph: 973-316-4000 www.imshealth.com

U.S. Congressional Budget Office D Street SW, #4 Washington, DC 20515 Ph: 202-226-2700 www.cbo.gov

National Association of Chain Drug Stores 1776 Wilson Blvd., Suite 200 Arlington, VA 22209 Ph: 703-549-3001 www.nacds.org

U.S. Food and Drug Administration 10903 New Hampshire Ave Silver Spring, MD 20993 Ph: 888-463-6332 www.fda.gov

Pharmaceutical Research and Manufacturers of America 950 F Street, NW Suite 300 Washington, DC 20004 Ph: 202-835-3400 www.phrma.org

American Society of Health-System Pharmacists 7272 Wisconsin Avenue Bethesda, Maryland 20814 Ph: 1-866-279-0681 www.ashp.org

http://www.racherpress.com/

http://www.census.gov/

http://www.census.gov/

tel:+1%20212%20526%207000

http://www.cms.gov/

http://www.imshealth.com/

http://www.cbo.gov/

http://www.nacds.org/

http://www.fda.gov/

http://www.phrma.org/



Industry Insights, Inc. The staff at Industry Insights, a leading and independent survey research firm, continues to provide invaluable research support through survey management, data preparation, and confidentiality protection services. We thank Scott Hackworth, CPA, Senior Vice President, Joshua Snare, Senior Programmer, and Marcy Dolnicek, Senior Project Director, for their dedication and excellent service. Survey Participants To all of the entities that participate in our annual survey program, we would like to express our deepest gratitude and thanks. We appreciate the time and effort you contribute to collect and report the data, and look forward to working with you again next year.

HDA Factbook Glossary


Glossary These terms are used in the pharmaceutical distribution industry and may be found in the text of the 87th Edition HDA Factbook: The Facts, Figures & Trends in Healthcare (2016-2017). Words or phrases defined uniquely by the cited source are listed as table notes.

ANDA Abbreviated New Drug Application

ASN Advance Ship Notice

AWP Average Wholesale Price

Chain Drug Stores

Drug stores with four or more stores primarily in the business of retail sales of pharmaceuticals and OTC products

Chargeback The amount a distributor bills back to a manufacturer when a product is sold to a customer at a contract price that is less than the distributor's cost

Cost of Goods Sold

[Beginning inventory + purchases (net of trade discounts & returns, freight, value of inventory shrinkage and sales or use taxes) - ending inventory]

CPFR Collaborative Planning Forecasting and Replenishment — frequent replenishment of product based on actual and forecasted demand

CRM Customer Relationship Marketing

CSOS Controlled Substances Ordering System

DC Distribution center

DEA Drug Enforcement Administration (U.S.)

DME Durable Medical Equipment

DTC Direct to Consumer — pharmaceutical advertising directed to the patient, rather than to the healthcare professional

DSCSA Drug Supply Chain Security Act

EC Electronic Commerce

EDI Electronic Data Interchange

Employee Turnover Rate

The average number of employees divided by the number of employees leaving in the past 12 months

FDA Food and Drug Administration (U.S.)

FIFO First In First Out — a method of valuing the cost of goods sold that uses the cost of the oldest items in inventory first

Fill rate Percent of both total sales invoice lines and total

FTE’s Full-Time Employees, where the proportion of full-time hours worked is reported for those who do not work full-time

GDP Gross Domestic Product

GLN Global Location Number

GM General Merchandise



GPO Group Purchasing Organization — negotiates buying contracts for healthcare products at discounted fees for hospitals and health plans

HBC Health and Beauty Care – products that do not treat a therapeutic class, (e.g., toiletries and cosmetics)

HHC Home Healthcare products

HMO Health Maintenance Organization — provides, offers or arranges coverage of health services for a fixed, pre-paid premium

HPC Health and Personal Care (used interchangably with HBC)

IMA Inventory Management Agreement

IMS Inventory Management Systems

Institutional Customers

Customers who purchase healthcare products without the primary intention of reselling them, including hospitals, nursing homes, prisons or institutions

Independent Drug Stores

Drug stores with no more than one to three locations, and are not part of a larger chain

Inside Sales Force

Sales staff that work customer accounts from an office where calls are received for products or services

ISD Insufficient Data

Line Extension Dollar amount of a single invoice line (quantity multiplied by price)

MAT Moving Annual Total

Media Conversion Services

Fax-to-EDI or Web-based solutions to electronically capture information from non-EDI-capable trading partners

NA Not Applicable

NDA New Drug Application

NDC National Drug Code

NME New Molecular Entity

NPA National Prescription Audit

NSP National Sales Perspectives

Non-Stock Sales

Products sold by a distributor, but not put into inventory – sold mainly to chain drug warehouses

Order Fill Rate The percent of both total sales invoice lines and total sales dollars ordered that are shipped without error or backorder

OTC Over-the-Counter

PBM Pharmacy Benefit Management

Q/M Quarterly/Monthly

R&D Research and Development



Radiographic Products

Drugs used for diagnostic tests, such as dyes, barium and drugs for nuclear diagnostics

Repackaging Removing product from the original package and dividing it into smaller quantity packages

Returns Products unsaleable at the retail level (damaged, outdated, overstocked, etc.) returned to a manufacturer or distributor for credit

RFID Radiofrequency Identification

RONW Return on Net Worth

Saleable Product that may be sold or re-sold and re-placed into inventory

SCEM Supply Chain Event Managment

SKU Stock Keeping Unit — code that identifies each unique product form

Scorecarding An evaluation that assesses the order fulfillment process between trading partners

Specialty Distribution

Handles specialty products that are generally defined as four or more of the following: typically high cost ($600 or more per month); require special handling, storage and delivery; generally biologically-derived products, available in injectable, infused and occasionally oral forms; dispensed to treat individuals with chronic or rare diseases; have complex treatment regimens that require ongoing clinical monitoring and patient education; frequently have limited or exclusive product availability and distribution; used to treat therapeutic categories such as oncology, autoimmune/immune, inflammatory, etc.

Specialty Pharmacy

Typically a pharmacy function that focuses on high cost, high maintenance products that treat chronic diseases, such as rheumatology or oncology. These products are nearly always injectable, biotech products. Many are associated with complex reimbursement issues, require specialized shipping and handling, and require disease state management tools to maximize therapeutic benefit and assure patient compliance

Stock Sales Sales of product that have been unpacked and placed in distributor inventory

TMS Transportation Management Systems

TRx Total Prescription

Unit Dose The package level for a single dose of therapy

Unit of Use The package level for one course of therapy

Unsaleable Healthcare products retuned to distributors or manufacturers which can not be sold, or re-placed into inventory and re-sold

VMI Vendor Managed Inventory — replenishment is managed by the supplier based on the trading partner agreement

WAC Wholesale Acquisition Cost

WMS Warehouse Management Systems

901 North Glebe Road, Suite 1000Arlington, VA 22203

(703) 787-0000 (703) 812-5282 (Fax)

www.hcsupplychainresearch.org

Documents

87th Edition HDA FACTBOOK - WDSrx€¦ · HDA RESEARCH FOUNDATION/2016-2017 HDA FACTBOOK | PAGE i. The HDA Research Foundation (formerly the Center for Healthcare Supply Chain Research)