Another CEO Interview – ABC

I think a lot of times when I quick say ABC company people think I just mean any “generic” type company (i.e., typical MBA case study speak), but in healthcare, we have AmerisourceBergen Corporation which some people (probably no one in their corporate marketing) refer to as ABC.  It competes with Cardinal Health and McKesson and is in many areas of healthcare especially in prescription drug distribution.  (They are a $57B company in a market where the 3 of these companies control 90% marketshare.)

SmartMoney had an interview with their CEO (David Yost) in February 2007 (which I am just reading over the holidays).  Since their margins are in the single-digits, the logical question was how do they grow.  He pointed out that generics and specialty drugs represent the big opportunities.  Interestingly on specialty drugs he talked how they can “tell the manufacturers where the patients are and how much insurance companies will probably reimburse on certain drugs.”  This doesn’t strike me as the role I would typically look to them for.

It was also an interesting discussion around Wal-Mart’s $4 generics.  I have been skeptical of the promotion, but he would have some visibility to data to understand the results.  Regardless, the effort of the pharmacies to lower the cash costs for prescriptions (for those without insurance) is an important effort.

“The pricing difference Wal-Mart is offering isn’t enough to cause them [patients] to change pharmacies.  Plus, a lot of people are going to Wal-Mart looking for $4 prescriptions and can’t find them.”