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AmerisourceBergen: Investing in the Future

The company is leaning even more into specialty drugs, with a new distribution center in California, and innovating to meet the changing needs of customers.

Not too long ago, most Americans, and even most health care leaders, spent little time worrying about the supply chain.

The COVID-19 pandemic has altered that way of thinking. Hospitals, pharmaceutical companies, and all types of health care organizations have gained a deeper appreciation for managing and distributing essential supplies.

Heather Zenk, president of U.S. Supply Chain at AmerisourceBergen, doesn’t want customers to stress over essential medications. She said the goal is to deliver products for patients in such a regular cadence that “we're really just almost forgotten by our customer base.”

AmerisourceBergen, one of the world’s largest distributors of pharmaceuticals, is working to ensure that its clients are confident that critical medications will arrive on time and securely, no matter the circumstances. As a pharmacist, Zenk knows better than most how much it means for drugs to arrive on time.

“We want to be there,” Zenk said. “We’re always aiming to be smart, lean and reliable.”

AmerisourceBergen has been expanding its capabilities to serve its customers better, particularly in the growing market of specialty drugs. The company, based just outside Philadelphia, has opened its third distribution center for specialty drugs in Montclair, California, and the industry’s first specialty focused pharmaceutical distribution center on the West Coast.

The new Montclair facility offers the opportunity to provide better service for clients on that side of the country, but it also enhances the company’s business continuity strategy. In the event of a major storm or other unexpected disruptions, such as a global pandemic, AmerisourceBergen now has a third distribution center to ensure robust capacity and continue shipment of key specialty drugs wherever they may be needed.

With the new distribution center, AmerisourceBergen also is demonstrating its commitment to think strategically and to innovate.

“We're very committed to using our national network, and our global footprint, and using all of the tools we have for business continuity, to keep our supply chain flexible, reliable, resilient,” Zenk said. “Delivering life-saving medications, nationwide, to all sites of care in the marketplace is a role we take extremely seriously. It’s an honor and a privilege.”

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The Surge of Specialty Drugs

When looking at what AmerisourceBergen does each day, the numbers are eye-popping. The company distributes more than 4 million products each day—that includes pharmaceutical products that flow through its wholesale, specialty, and animal health networks. AmerisourceBergen ships to large and small retail pharmacies in virtually every community across the nation, as well as specialty physician practices from urology to oncology, retina and ophthalmology and gastroenterology. The company also ships products to 100% of the nation’s health systems.

AmerisourceBergen has been distributing specialty drugs for decades. Specialty drugs, medications that are administered to treat complex illnesses, often require special handling and temperature-controlled distribution. The company ships 138,000 specialty products every day.

Specialty drugs are becoming an even bigger part of healthcare. Specialty medications now account for 55% of pharmaceutical spending in the United States, up from 28% in 2011, according to IQVIA.1 Immunology specialty drugs have seen the largest five-year growth of all specialty drug classes.

The global personalized medicine market, valued at $493.1 billion in 2020, is expected to expand at a compound annual growth rate of 6.2% through 2028, according to Grand View Research.2 The surging global market for cold chain products is expected to continue its rapid growth in the coming years, driven by ongoing research investments. Sales of cold chain products are expected to increase from $366 billion in 2021 to $480 billion in 2027, according to Research & Markets.3

With the specialty drug market soaring, AmerisourceBergen aims to work in partnership with companies in that space – whether those are mature manufacturers or emerging biotech companies. “We know that's where manufacturers are investing,” Zenk said. “And we know that treatments are getting more precise and tailored to specific patient populations.”

Due to the nature of many specialty products requiring temperature-controlled distribution, some customers require just-in-time ordering, which can lead to tight deadlines. “We have managed to marry state of the art distribution centers that are throughout the United States, and it also allows us to really support manufacturers,” Zenk added. “They're so wonderful at bringing products to market. They shouldn't have to worry about how to move them inside the United States market,” she added. “That’s what we’re here for, to take that pressure off of the manufacturing community, and then the caregivers who can continue to care for patients.”

AmerisourceBergen views the addition of another specialty drug distribution center in California as another way to meet the needs of clients. In addition to offering expanded capacity and resilience, the Montclair distribution center is the site of a new warehouse management system that is “unparalleled,” according to Zenk. The enhanced technology will help manage inventory at the highest accuracy for customers, and provide superior service, she added.

Consistency in the Pandemic

As AmerisourceBergen expands its capabilities in distributing specialty drugs, the company takes many of the lessons from the COVID-19 pandemic. AmerisourceBergen worked with government partners to distribute therapies across America and around the globe.

“We have supported all of the therapies that have been distributed in the United States market to care for patients that unfortunately have tested positive for COVID,” Zenk said. AmerisourceBergen has worked with government entities including the Federal Emergency Management Agency and the FDA to distribute pandemic treatments. “We really have enjoyed this partnership with the manufacturers that are bringing innovative things to market,” Zenk said. “And we're really proud of how we've engaged with our government partners in this space, too.”

AmerisourceBergen’s success in delivering medication and other key supplies stems from the dedication of the team members who have continually shown up throughout the pandemic.

“They really understood what it meant to be a purpose-driven organization,” Zenk explained. “They were caring for their communities. Our team members knew they were getting products to patients that were in a hospital setting, that may be in a dire state during the height of the pandemic. So, we have been really proud of how we've been able to maintain the consistency and integrity of the supply chain.”

Even with that dedication, AmerisourceBergen has faced challenges in the pandemic. And that’s where investing in business continuity programs has paid dividends.

If some team members were ill at one distribution location, the company shifted orders to other sites. “That has really been important for us to have that flexibility to be agile and to be responsive to the needs of the customers that did change throughout the pandemic,” Zenk said. “We really were trying to stay a few steps ahead of the bumps that were coming in order to really keep the supply chain moving, and I think it was nothing short of miraculous and nothing short of heroic what our team members did.”

AmerisourceBergen’s agility proved to be invaluable in delivering drugs to Florida communities reeling from the catastrophic damage of Hurricane Ian. The company worked with FEMA, the National Guard, and other entities to ensure trucks with pharmaceuticals could get through, even in areas with debris covering the roads. AmerisourceBergen managed to transport drugs to Florida providers even as other mass delivery companies were still trying to figure out how to get into those communities. “That's really a testament to us being connected at all levels of government, having connections locally, and also showing the criticality of what we do,” Zenk said.

Beyond simply trying to navigate the hurricane-ravaged routes, AmerisourceBergen team members talked with providers to gauge their needs and capabilities. In addition to finding out how much medication was needed, they needed to ensure providers were able to store drugs that needed to be maintained at certain temperatures.

Facing a pandemic, hurricane, or snowstorms, AmerisourceBergen is continually refining its response and distribution efforts to ensure essential medications get to patients.

“We really have put a lot of effort and investment into our continuous improvement programs, and also into our business continuity programs,” Zenk said.

“Change is Inevitable”

AmerisourceBergen has proven to be nimble since the arrival of COVID-19. Zenk knows the company will need to evolve along with its customers. “I think if the last few years taught us anything, it’s change is inevitable and change is fast,” Zenk explained.

AmerisourceBergen will continue to invest in its warehouse management and business continuity strategies. The company will also look to improve its ability to predict demand. “We will continue to lean in and look at how we use inventory in a more effective way and make sure we have the right inventory in the right location at the right time,” said Zenk. In addition, the company will look at ways to ensure consistency of inventory management, particularly in the specialty space.

AmerisourceBergen is devising novel ways to meet client needs. Its SmartSource business, which carries over 11,000 generic and over-the-counter drugs, can offer products from different manufacturers or locations if constraints arise. AmerisourceBergen has also partnered with nuVizz, a transportation technology company that allows customers to see when orders will arrive, in real time. “We're strategically adapting to emerging trends and investing in the future,” Zenk said. “What we're doing today will probably not be the same services that our customer base wants, nor that we want to provide, in the next 2 to 5 years.”

Supporting Retail Pharmacies

AmerisourceBergen’s investments in supply chain operations are paying dividends for retail pharmacies, allowing the company to efficiently and securely deliver the products their patients need—on time and in the right condition, said Rich Tremonte, president, U.S. pharmaceutical and animal health.

Maintaining the consistency and integrity of the supply chain becomes more critical when dealing with specialty products, which often come with unique handling and storage requirements. “Our ongoing supply chain investments solidify us as a partner that retail pharmacies can trust to fill their orders efficiently and accurately, so they can focus on what matters most—caring for their patients,” Tremonte explained.

AmerisourceBergen is also devising new ways to support retail pharmacies, which are playing a broader role in patient care beyond dispensing drugs, added George Rafferty, president of corporate partnerships.

Throughout the pandemic, pharmacies emerged as trusted health care destinations. As of early October, pharmacies have administered nearly 271 million doses of COVID-19 vaccines through the Federal Retail Pharmacy Program. Consumers are increasingly turning to pharmacists for clinical services such as point-of-care testing and vaccinations, especially in rural areas where other providers may be few and far between. “We continue to see pharmacies step up and alleviate pressure on other parts of the healthcare system—whether that’s through the administration of COVID-19 oral antivirals or, more recently, vaccinating at-risk populations against the monkeypox virus,” Rafferty said.

AmerisourceBergen can help retail pharmacy customers connect more meaningfully with their patients to support positive health outcomes, Tremonte said. “We have long-standing experience in helping national and regional retailers initiate programs and services, backed by data, to increase their value and enhance patient care—whether that’s developing a diabetes care center or adding an immunization program,” he added.

And AmerisourceBergen is keenly focused on helping customers adapt to the consumer trends impacting their business. “Patients are increasingly expecting their pharmacy interactions to mirror that of other retail experiences: digital-first and on their terms,” Tremonte explained. “As such, we’re supporting pharmacies along their digital transformation journeys to ensure they can deliver the convenience and flexibility patients desire, while also creating operational efficiencies that save them time.”

“As the model of pharmacy continues to evolve, AmerisourceBergen is committed to helping retail pharmacies fulfill their expanding roles and deliver an enhanced patient experience now and in the future,” Tremonte added.

As a result of the COVID-19 pandemic, patient demand for convenience and accessibility has increased exponentially, requiring retail pharmacies to accelerate their digital transformation journeys to meet new demands. Pharmacies transitioned to digital platforms and mobile apps for prescription refills and stood up hassle-free delivery services—offerings that patients value and expect to continue.

However, Rafferty noted it’s important to recognize that accessibility isn’t limited to physical access. It can also mean helping patients understand their benefits and gain financial access to treatment, particularly if they need expensive specialty products. “At AmerisourceBergen, we’re focusing on developing strategic solutions that not only address patient convenience and access, but also free up pharmacists’ time to focus on clinical services and patient care.”

As pharmacies expand their clinical offerings, they need data and technology solutions to help them understand the demographics, unique needs, and barriers to care facing their patient populations. AmerisourceBergen’s Corporate Partnerships team works collaboratively with retail pharmacy customers to design and implement tools that uncover opportunities to reach more patients and help close gaps in care.

The Corporate Partnerships team prioritizes the development of collaborative, strategic relationships to drive value and growth for customers. The team takes the time to understand customers’ unique needs and business goals in order to provide innovative, scalable solutions that are aligned to those objectives.

“Our customers most value our ability to be proactive and co-design solutions tailored to their business and individual patients,” said Rafferty. “We’re not trying to convince customers to implement a pre-existing solution or strategy, but rather collaborating alongside them to innovate and meet their specific needs.”

AmerisourceBergen is working on creating additional customer touchpoints. “We want to understand the moments that matter along the customer journey in order to identify and eliminate potential friction points,” Rafferty said. “Being a reliable partner that’s easy to work with enables our pharmacy customers to operate as efficiently as possible.”

Rafferty recently met with a customer who said, “I don’t even think about you.” And he knew that was positive feedback, echoing Zenk’s desire to deliver so reliably that customers aren’t spending time wondering when they will get the products they need.

“She meant that our team meets and exceeds her essential needs so consistently that she can focus completely on helping patients,” Rafferty said. “We’re incredibly proud that pharmacists can do their jobs and not have to worry about products being on time and in stock—and we’ll continue to be that consistent partner while also helping pharmacies prepare for what’s next as the industry evolves.”

References

  1. The use of medicines in the U.S. 2022. IQVIA. Published April 21, 2022. Accessed October 28, 2022. https://www.iqvia.com/insights/the-iqvia-institute/reports/the-use-of-medicines-in-the-us-2022
  2. Personalized medicine market size, share & trends analysis report by product (personalized medical care, personalized nutrition & wellness, DTC diagnostics, telemedicine, complimentary medicine), and segment forecasts, 2021-2028. Grand View Research. Accessed October 28, 2022. https://www.grandviewresearch.com/industry-analysis/personalized-medicine-market
  3. Global healthcare cold chain logistics market & report forecast (2022-2027). Research and Markets. Published April 2022. Accessed October 28, 2022. https://www.researchandmarkets.com/reports/5577930/global-healthcare-cold-chain-logistics-market

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