AmerisourceBergen NYSE: ABC is a Chesterbrook, PA based Drug Wholesale company that was formed by the merger of Bergen Brunswig and AmeriSource in 2001. They provide drug distribution and related services designed to reduce costs and improve patient outcomes, distribute a line of brand name and generic pharmaceuticals, over-the-counter (OTC) health care products and home health care supplies and equipment to a wide variety of health care providers located throughout the United States, including acute care hospitals and health systems, independent and chain retail pharmacies, mail-order facilities, physicians, clinics and other alternate site facilities, as well as skilled nursing and assisted living centers. They also provide pharmaceuticals and pharmacy services to long-term care, workers' compensation and specialty drug patients. It is a market leader in pharmaceutical distribution and ranked 24th on the Fortune 500 list for 2010 with over $71 Billion in revenue.
AmerisourceBergen Corporation (AmerisourceBergen) is a pharmaceutical services company, with operations primarily in the United States and Canada. Servicing both healthcare providers and pharmaceutical manufacturers in the pharmaceutical supply channel, the Company provides drug distribution and related services. It distributes a offering of brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to a variety of healthcare providers primarily located in the United States and Canada, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical and dialysis clinics, physicians and physician group practices, long-term care and other alternate site pharmacies, and other customers. The Company also provides pharmacy services to certain specialty drug patients. Additionally, it furnishes healthcare providers and pharmaceutical manufacturers with an assortment of related services, including pharmaceutical packaging, pharmacy automation, inventory management, reimbursement and pharmaceutical consulting services, logistics services, and pharmacy management.
The Pharmaceutical Distribution segment is comprised of three operating segments, which include the operations of AmerisourceBergen Drug Corporation (ABDC), AmerisourceBergen Specialty Group (ABSG or Specialty Group), and AmerisourceBergen Packaging Group (ABPG or Packaging Group). Servicing both healthcare providers and pharmaceutical manufacturers in the pharmaceutical supply channel, the Pharmaceutical Distribution segment’s operations provide drug distribution and related services.
ABDC distributes a offering of brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to a wide variety of healthcare providers, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and other alternate site pharmacies, and other customers. ABDC also provides pharmacy management, staffing and other consulting services; scalable automated pharmacy dispensing equipment; medication and supply dispensing cabinets; and supply management software to a variety of retail and institutional healthcare providers.
ABSG, through a number of individual operating businesses, provides pharmaceutical distribution and other services primarily to physicians who specialize in a variety of disease states, especially oncology, and to other healthcare providers, including dialysis clinics. ABSG also distributes plasma and other blood products, injectible pharmaceuticals and vaccines. In addition, through its specialty service businesses, ABSG provides drug commercialization services, third party logistics, reimbursement consulting, data analytics, outcomes research, and other services for biotech and other pharmaceutical manufacturers, as well as practice management, and group purchasing services for physician practices.
ABPG consists of American Health Packaging, Anderson Packaging (Anderson), and Brecon Pharmaceuticals Limited (Brecon). American Health Packaging delivers unit dose, punch card, unit-of-use, and other packaging solutions to institutional and retail healthcare providers. Anderson is a provider of contract packaging services for pharmaceutical manufacturers. Brecon is a provider of contract packaging and clinical trials materials services for pharmaceutical manufacturers.
The Company competes with Cardinal Health, Inc., McKesson Corporation, US Oncology, Inc., Cardinal, FFF Enterprises, Henry Schein, Inc., Express Scripts, Inc., Covance Inc., and UPS Logistics.
In the early 1990s, Bergen Brunswig, like many pharmaceutical and health care wholesalers, was caught in a margin squeeze, as the public outcry over soaring health care costs kept drug prices from increasing. In fact, according to industry statistics, gross profit margins declined every year since 1989 because the drug wholesaling industry continued to be very competitive on pricing, and there had been reductions in the rate of drug price inflation over recent years. During this time, Bergen Brunswig went through some restructuring, including staff reductions, a move to more efficient warehouse facilities, and the elimination of duplicate operating systems resulting from mergers. The company indicated that it saved in excess of $20 million annually from its restructuring. In spite of industry trends, Bergen Brunswig was the only company in the drug wholesaling industry to post an increase in gross profit margins in the December 1994 quarter.
Analysts attributed Bergen Brunswig's success during this critical time to careful management decisions and smart acquisition moves. In 1992, Bergen acquired pharmaceutical distributor Durr-Fillauer Medical Inc. for $484 million. Durr-Fillauer was a national supplier of medical surgical products to hospitals, clinics, and alternate site health care facilities. In addition, the company acquired Southeastern Hospital Supply Company and Professional Medical Supply Company. In July 1995, Bergen signed an agreement to acquire Colonial Healthcare Supply Co., one of the ten largest full-line distributors of medical and surgical products in the country. Each of these acquisitions complemented the Durr Medical operations and expanded their presence nationally in this area. Durr Medical became the fourth largest medical-surgical distributor in the United States.
Joint ventures and agreements during the early and mid-1990s made Bergen Brunswig a more visible force in the worldwide pharmaceutical industry. In December 1994, Bergen Brunswig signed a five-year, sole source pharmaceutical distribution agreement with Columbia/HCA Healthcare Corporation, the nation's largest healthcare services provider, operating 195 hospitals and 125 outpatient centers in 34 states, England, and Switzerland. The total contract was expected to generate $2 billion in revenues for Bergen Brunswig over the life of the agreement. In addition, the company signed a five-year agreement with Safeway Stores Inc. to be its primary supplier of pharmaceuticals, pharmacy-related items, and selected over-the-counter products. The contract was expected to generate over $1 billion in revenue for Bergen over five years. Safeway operated 1,068 stores in the United States and Canada at the time and was the third largest retail grocery chain in North America.
Also known as a technology leader in the distribution industry, Bergen Brunswig focused on offering value-added services to its customers. In July 1994, the company introduced AccuSource, a multimedia communication, product information, and electronic ordering system for retail pharmacy customers. Developed in conjunction with Apple Computer, the program allowed pharmacies to look up items by category, list substitutions available for products, see special pricing, or communicate with a local Bergen Brunswig division through email. The service also provided personalized information so pharmacies could view statistics such as their own net sales, prescription volume, or product mix. In just four months, Bergen received over 2,000 signed contracts for AccuSource, and it represented Apple's largest multimedia project for a single company. Other state-of-the-art services included OnCall*EDI, a fully-integrated on-line ordering system for the institutional pharmacy, and QuikNet, a fully functional electronic system for ordering, managing, and tracking compliance of medical and surgical products for clinics and hospitals. Moreover, the Bergen Brunswig Drug Company, a wholly owned subsidiary of the Bergen Brunswig Corporation, had converted to paperless billing several years before and was constantly refining its funds transfer and information management systems.
The latter half of the 1990s proved to be more challenging for Bergen Brunswig. A planned merger with generic drug manufacturer IVAX fell through in 1997. Cardinal Health then made a $2.6 billion play for the company. Its plans were thwarted however when the FTC ruled against the merger. Throughout 1998 and 1999, Bergen Brunswig made several expensive purchases, including Stadlander Operating Co. and PharMerica Inc. The acquisitions led to a host of lawsuits. Shareholders filed suit against Bergen Brunswig, claiming the company used false information in order to inflate its stock price. The company then filed its own claim against Stadlander's former parent company, alleging the firm overstated profits to close the deal. In 2000, Bergen Brunswig sold off its medical supplies distribution firm and the Stadlander Pharmacy subsidiary. It also set plans in motion to settle the class action suit brought against the company.
The AmerisourceBergen Merger
Both AmeriSource and Bergen Brunswig entered the new century as two of the largest drug wholesalers in the nation. With competition biting at their heels, the two companies agreed to pair up in a multi-billion dollar union in 2001. The deal cleared regulatory hurdles and was completed in August. The newly merged company adopted the name AmerisourceBergen Corp. and took the leading position in its industry with nearly $36 billion in annual revenues. By 2003, revenues had climbed to $49.6 billion. As the largest purchaser of generic drugs in the United States, AmerisourceBergen operated as a supplier to over 25,000 chain and independent pharmacies and thousands of hospital, nursing homes, and mail-order pharmacies.
In a December 2001 Drug Store News article, CEO R. David Yost stated, "When [Bergen chairman] Bob Martini and I sat down to put this thing together, it was never about being the biggest; it was always about being the best. And sometimes bigger can help you be the best." He went on to claim, "We're excited about our position because, first, it gives us much larger scale than we ever had before, and we think this scale will translate into our ability to develop new programs and services for our customers." In addition, he added, "We're bringing together two companies that have a large array of value-added services for the retail trade."
Indeed, by 2003 revenues and profits had climbed substantially, and the company was well on its way to achieving the $150 million in cost savings as a result of the merger. During that year, the company acquired Anderson Packaging Inc., Bridge Medical Inc., and U.S. Bioservices Corp. It faced a minor setback when it lost the Department of Veterans Affairs contract worth $3 billion in operating revenue. Undeterred, AmerisourceBergen forged ahead, anticipating nothing but success in the years to come. A new Medicare drug benefit, expected to lead to an increase in drug use, promised to be quite lucrative for the company in the future. AmerisourceBergen appeared to be well positioned for growth in the years to come as it operated in a $200 billion industry that was expected to grow at a steady clip over the next decade.
Principal Subsidiaries: AmerisourceBergen Drug Corporation; Amerisource Health Services Corporation; Amerisource Receivables Financial Corporation; AmerisourceBergen Services Corporation; Amerisource Heritage Corporation; Anderson Packaging, Inc.; ASD Specialty Healthcare, Inc.; AutoMed Technologies, Inc.; 0Bergen Capital Trust I; Bridge Medical, Inc.; Brownstone Pharmacy, Inc.; Capstone Pharmacy of Delaware, Inc.; Compuscript, Inc.; Computran Systems, Inc.; Dunnington Rx Services of Rhode Island, Inc.; Family Center Pharmacy, Inc.; Goot Nursing Home Pharmacy, Inc.; Health Services Capital Corporation; Insta-Care Pharmacy Services Corporation; ION, L.L.C.; J.M. Blanco, Inc.; Pharmacy Corporation of America; PharMerica, Inc.; PharMerica Drug Systems, Inc.; US Bioservices Corporation.
Principal Competitors: Cardinal Health Inc.; McKesson Corp.; Owens & Minor Inc.
OVERALL
Beta: 0.71
Market Cap (Mil.): $11,139.20
Shares Outstanding (Mil.): 274.09
Annual Dividend: 0.40
Yield (%): 0.98
FINANCIALS
ABC.N Industry Sector
P/E (TTM): 16.90 48.64 38.20
EPS (TTM): 19.88 -- --
ROI: 14.89 0.48 1.91
ROE: 22.78 0.64 2.51
Key Dates:
1907: Lucien Brunswig buys out his partner and renames his business Brunswig Drug Company.
1947: Emil P. Martini creates the Bergen Drug Company.
1969: Martini successfully negotiates the purchase of Brunswig Drug Corporation; the merged company is named the Bergen Brunswig Corporation.
1977: Alco Standard Corporation purchases The Drug House.
1985: Alco Health Services Corporation is incorporated.
1988: AHSC Holdings Corporation acquires Alco in a management-led buyout.
1994: Alco Health changes its name to AmeriSource Health Corporation.
1999: The company purchases C.D. Smith Healthcare and a substantial share of ADDS Telepharmacy Solutions, Inc.
2001: AmeriSource acquires Bergen Brunswig and renames itself AmerisourceBergen.
Statistics:
Public Company
Incorporated: 1985 as Alco Health Services Corp.; 1969 as Bergen Brunswig Corp.
Employees: 14,800
Sales: $49.6 billion (2003)
Stock Exchanges: New York
Ticker Symbol: ABC
NAIC: 422210 Drugs and Druggists' and Sundries Wholesalers
Address:
P.O. Box 959
Valley Forge, Pennsylvania 19482
U.S.A.
AmerisourceBergen Corporation (AmerisourceBergen) is a pharmaceutical services company, with operations primarily in the United States and Canada. Servicing both healthcare providers and pharmaceutical manufacturers in the pharmaceutical supply channel, the Company provides drug distribution and related services. It distributes a offering of brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to a variety of healthcare providers primarily located in the United States and Canada, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical and dialysis clinics, physicians and physician group practices, long-term care and other alternate site pharmacies, and other customers. The Company also provides pharmacy services to certain specialty drug patients. Additionally, it furnishes healthcare providers and pharmaceutical manufacturers with an assortment of related services, including pharmaceutical packaging, pharmacy automation, inventory management, reimbursement and pharmaceutical consulting services, logistics services, and pharmacy management.
The Pharmaceutical Distribution segment is comprised of three operating segments, which include the operations of AmerisourceBergen Drug Corporation (ABDC), AmerisourceBergen Specialty Group (ABSG or Specialty Group), and AmerisourceBergen Packaging Group (ABPG or Packaging Group). Servicing both healthcare providers and pharmaceutical manufacturers in the pharmaceutical supply channel, the Pharmaceutical Distribution segment’s operations provide drug distribution and related services.
ABDC distributes a offering of brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to a wide variety of healthcare providers, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and other alternate site pharmacies, and other customers. ABDC also provides pharmacy management, staffing and other consulting services; scalable automated pharmacy dispensing equipment; medication and supply dispensing cabinets; and supply management software to a variety of retail and institutional healthcare providers.
ABSG, through a number of individual operating businesses, provides pharmaceutical distribution and other services primarily to physicians who specialize in a variety of disease states, especially oncology, and to other healthcare providers, including dialysis clinics. ABSG also distributes plasma and other blood products, injectible pharmaceuticals and vaccines. In addition, through its specialty service businesses, ABSG provides drug commercialization services, third party logistics, reimbursement consulting, data analytics, outcomes research, and other services for biotech and other pharmaceutical manufacturers, as well as practice management, and group purchasing services for physician practices.
ABPG consists of American Health Packaging, Anderson Packaging (Anderson), and Brecon Pharmaceuticals Limited (Brecon). American Health Packaging delivers unit dose, punch card, unit-of-use, and other packaging solutions to institutional and retail healthcare providers. Anderson is a provider of contract packaging services for pharmaceutical manufacturers. Brecon is a provider of contract packaging and clinical trials materials services for pharmaceutical manufacturers.
The Company competes with Cardinal Health, Inc., McKesson Corporation, US Oncology, Inc., Cardinal, FFF Enterprises, Henry Schein, Inc., Express Scripts, Inc., Covance Inc., and UPS Logistics.
In the early 1990s, Bergen Brunswig, like many pharmaceutical and health care wholesalers, was caught in a margin squeeze, as the public outcry over soaring health care costs kept drug prices from increasing. In fact, according to industry statistics, gross profit margins declined every year since 1989 because the drug wholesaling industry continued to be very competitive on pricing, and there had been reductions in the rate of drug price inflation over recent years. During this time, Bergen Brunswig went through some restructuring, including staff reductions, a move to more efficient warehouse facilities, and the elimination of duplicate operating systems resulting from mergers. The company indicated that it saved in excess of $20 million annually from its restructuring. In spite of industry trends, Bergen Brunswig was the only company in the drug wholesaling industry to post an increase in gross profit margins in the December 1994 quarter.
Analysts attributed Bergen Brunswig's success during this critical time to careful management decisions and smart acquisition moves. In 1992, Bergen acquired pharmaceutical distributor Durr-Fillauer Medical Inc. for $484 million. Durr-Fillauer was a national supplier of medical surgical products to hospitals, clinics, and alternate site health care facilities. In addition, the company acquired Southeastern Hospital Supply Company and Professional Medical Supply Company. In July 1995, Bergen signed an agreement to acquire Colonial Healthcare Supply Co., one of the ten largest full-line distributors of medical and surgical products in the country. Each of these acquisitions complemented the Durr Medical operations and expanded their presence nationally in this area. Durr Medical became the fourth largest medical-surgical distributor in the United States.
Joint ventures and agreements during the early and mid-1990s made Bergen Brunswig a more visible force in the worldwide pharmaceutical industry. In December 1994, Bergen Brunswig signed a five-year, sole source pharmaceutical distribution agreement with Columbia/HCA Healthcare Corporation, the nation's largest healthcare services provider, operating 195 hospitals and 125 outpatient centers in 34 states, England, and Switzerland. The total contract was expected to generate $2 billion in revenues for Bergen Brunswig over the life of the agreement. In addition, the company signed a five-year agreement with Safeway Stores Inc. to be its primary supplier of pharmaceuticals, pharmacy-related items, and selected over-the-counter products. The contract was expected to generate over $1 billion in revenue for Bergen over five years. Safeway operated 1,068 stores in the United States and Canada at the time and was the third largest retail grocery chain in North America.
Also known as a technology leader in the distribution industry, Bergen Brunswig focused on offering value-added services to its customers. In July 1994, the company introduced AccuSource, a multimedia communication, product information, and electronic ordering system for retail pharmacy customers. Developed in conjunction with Apple Computer, the program allowed pharmacies to look up items by category, list substitutions available for products, see special pricing, or communicate with a local Bergen Brunswig division through email. The service also provided personalized information so pharmacies could view statistics such as their own net sales, prescription volume, or product mix. In just four months, Bergen received over 2,000 signed contracts for AccuSource, and it represented Apple's largest multimedia project for a single company. Other state-of-the-art services included OnCall*EDI, a fully-integrated on-line ordering system for the institutional pharmacy, and QuikNet, a fully functional electronic system for ordering, managing, and tracking compliance of medical and surgical products for clinics and hospitals. Moreover, the Bergen Brunswig Drug Company, a wholly owned subsidiary of the Bergen Brunswig Corporation, had converted to paperless billing several years before and was constantly refining its funds transfer and information management systems.
The latter half of the 1990s proved to be more challenging for Bergen Brunswig. A planned merger with generic drug manufacturer IVAX fell through in 1997. Cardinal Health then made a $2.6 billion play for the company. Its plans were thwarted however when the FTC ruled against the merger. Throughout 1998 and 1999, Bergen Brunswig made several expensive purchases, including Stadlander Operating Co. and PharMerica Inc. The acquisitions led to a host of lawsuits. Shareholders filed suit against Bergen Brunswig, claiming the company used false information in order to inflate its stock price. The company then filed its own claim against Stadlander's former parent company, alleging the firm overstated profits to close the deal. In 2000, Bergen Brunswig sold off its medical supplies distribution firm and the Stadlander Pharmacy subsidiary. It also set plans in motion to settle the class action suit brought against the company.
The AmerisourceBergen Merger
Both AmeriSource and Bergen Brunswig entered the new century as two of the largest drug wholesalers in the nation. With competition biting at their heels, the two companies agreed to pair up in a multi-billion dollar union in 2001. The deal cleared regulatory hurdles and was completed in August. The newly merged company adopted the name AmerisourceBergen Corp. and took the leading position in its industry with nearly $36 billion in annual revenues. By 2003, revenues had climbed to $49.6 billion. As the largest purchaser of generic drugs in the United States, AmerisourceBergen operated as a supplier to over 25,000 chain and independent pharmacies and thousands of hospital, nursing homes, and mail-order pharmacies.
In a December 2001 Drug Store News article, CEO R. David Yost stated, "When [Bergen chairman] Bob Martini and I sat down to put this thing together, it was never about being the biggest; it was always about being the best. And sometimes bigger can help you be the best." He went on to claim, "We're excited about our position because, first, it gives us much larger scale than we ever had before, and we think this scale will translate into our ability to develop new programs and services for our customers." In addition, he added, "We're bringing together two companies that have a large array of value-added services for the retail trade."
Indeed, by 2003 revenues and profits had climbed substantially, and the company was well on its way to achieving the $150 million in cost savings as a result of the merger. During that year, the company acquired Anderson Packaging Inc., Bridge Medical Inc., and U.S. Bioservices Corp. It faced a minor setback when it lost the Department of Veterans Affairs contract worth $3 billion in operating revenue. Undeterred, AmerisourceBergen forged ahead, anticipating nothing but success in the years to come. A new Medicare drug benefit, expected to lead to an increase in drug use, promised to be quite lucrative for the company in the future. AmerisourceBergen appeared to be well positioned for growth in the years to come as it operated in a $200 billion industry that was expected to grow at a steady clip over the next decade.
Principal Subsidiaries: AmerisourceBergen Drug Corporation; Amerisource Health Services Corporation; Amerisource Receivables Financial Corporation; AmerisourceBergen Services Corporation; Amerisource Heritage Corporation; Anderson Packaging, Inc.; ASD Specialty Healthcare, Inc.; AutoMed Technologies, Inc.; 0Bergen Capital Trust I; Bridge Medical, Inc.; Brownstone Pharmacy, Inc.; Capstone Pharmacy of Delaware, Inc.; Compuscript, Inc.; Computran Systems, Inc.; Dunnington Rx Services of Rhode Island, Inc.; Family Center Pharmacy, Inc.; Goot Nursing Home Pharmacy, Inc.; Health Services Capital Corporation; Insta-Care Pharmacy Services Corporation; ION, L.L.C.; J.M. Blanco, Inc.; Pharmacy Corporation of America; PharMerica, Inc.; PharMerica Drug Systems, Inc.; US Bioservices Corporation.
Principal Competitors: Cardinal Health Inc.; McKesson Corp.; Owens & Minor Inc.
OVERALL
Beta: 0.71
Market Cap (Mil.): $11,139.20
Shares Outstanding (Mil.): 274.09
Annual Dividend: 0.40
Yield (%): 0.98
FINANCIALS
ABC.N Industry Sector
P/E (TTM): 16.90 48.64 38.20
EPS (TTM): 19.88 -- --
ROI: 14.89 0.48 1.91
ROE: 22.78 0.64 2.51
Key Dates:
1907: Lucien Brunswig buys out his partner and renames his business Brunswig Drug Company.
1947: Emil P. Martini creates the Bergen Drug Company.
1969: Martini successfully negotiates the purchase of Brunswig Drug Corporation; the merged company is named the Bergen Brunswig Corporation.
1977: Alco Standard Corporation purchases The Drug House.
1985: Alco Health Services Corporation is incorporated.
1988: AHSC Holdings Corporation acquires Alco in a management-led buyout.
1994: Alco Health changes its name to AmeriSource Health Corporation.
1999: The company purchases C.D. Smith Healthcare and a substantial share of ADDS Telepharmacy Solutions, Inc.
2001: AmeriSource acquires Bergen Brunswig and renames itself AmerisourceBergen.
Statistics:
Public Company
Incorporated: 1985 as Alco Health Services Corp.; 1969 as Bergen Brunswig Corp.
Employees: 14,800
Sales: $49.6 billion (2003)
Stock Exchanges: New York
Ticker Symbol: ABC
NAIC: 422210 Drugs and Druggists' and Sundries Wholesalers
Address:
P.O. Box 959
Valley Forge, Pennsylvania 19482
U.S.A.