EUR 850.00 For Business Accounts Only

Morningstar | Amerisource Will Remain a Dominant Force in the Pharmaceutical Supply Chain

AmerisourceBergen will play a critical role in the pharmaceutical supply chain for decades to come. From our perspective, the firm stands out as a premier player as we believe it possesses a wide economic moat thanks to its colossal scale. The firm is a key cog in the pharmaceutical industry, as many other supply-chain participants depend on its services for streamlined product distribution and procurement. We anticipate robust growth for the pharmaceutical industry over the long term, which should provide the firm with a solid platform for continued success.AmerisourceBergen is one of three large pharmaceutical distributors and is the main supplier to large pharmacy outlets Walgreens and Express Scripts' mail order pharmacy. The firm has a highly integrated strategic agreement with Walgreens where it supplies all of the retail pharmacy’s drug inventory, including generics. This last aspect is key--supplying higher-margin generic drugs to one of the biggest generic drug retailers outlets is a major positive for profits, capital efficiency, and invested capital returns. Over the course of fiscal 2018, the management team did an excellent job integrating approximately 1,900 Rite Aid stores into its distribution operations. We believe this reflects the strong scale, leverage, and efficiency that have been built through the last several years.Additionally, AmerisourceBergen will have the opportunity to procure its generic inventory from the already colossal Walgreens Boots Alliance development. This dynamic enables the drug distributor to obtain its generic inventory at lower cost levels. The firm is also a major specialty drug distributor in the U.S., which positions it favorably to benefit from the fastest-growing drug category in the pharmaceutical market.