Tomorrow also marks the kick-off of a five year period when $80+ billion of branded revenues will face generic competition, as shown in Medco’s Latest Update on the Generic Wave.
What will this mean for the big three pharmaceutical wholesalers—AmerisourceBergen (NYSE:ABC), Cardinal Health (NYSE:CAH), and McKesson (NYSE:MCK)? My take:
- The substitution of brand-name drugs for generic drugs will reduce drug wholesalers’ revenue growth.
- Wholesalers, however, will benefit significantly from this wave since a majority of their profits come from generic drugs.
So, the next time a wholesale executive whines about “low profit margins,” you can whip out this article for a more fact-based discussion.