NWDA MEMBER NON-STOCK SALES IN 1990 WERE $ 3.2 BIL.
NWDA MEMBER NON-STOCK SALES IN 1990 WERE $ 3.2 BIL., or almost 11% of the total sales by those firms, according to a new breakout of sales data in the recently-released annual "Operating Survey" conducted by the National Wholesale Druggists' Association. The trade association asked its members to report brokered, dock-to- dock and drop shipment sales as a separate "non-stock" category for the first time in 1990. Adding in non-stock sales in 1990 created an aggregate industry total for 1990 of over $ 30 bil. and a gain of 19.9% from the aggregate total reported by NWDA for its members in 1989. The non-stock business, primarily to chain drug warehouses, apparently has developed into a substantial part of drug wholesaling. According to NWDA's most recent figures, wholesaler sales to chain warehouses together with non-stock sales exceeded $ 4 bil. in 1990. NWDA estimated that the gross profit margin on the non-stock sales is about 1.2% of sales compared to 7.35% for stock sales. Because of NWDA's attempt to track non-stock sales more carefully in its 1990 report, comparative figures to surveys from previous years are skewed slightly. The 19.9% growth rate in aggregate NWDA member sales from 1989 to 1990, for example, probably overstates the growth rate between the years, NWDA indicated. "Comparisons are distorted somewhat between 1990 and previous years," NWDA observed, "due to separate reporting of stock sales versus non-stock sales for 1990." The association said that the changes in sales reporting instituted in 1990 will provide "a more effective basis for comparison of data in years to come." The problems with comparisons to 1989 are highlighted by the 19.9% rate of growth in aggregate sales. That figure sets a difficult benchmark for some of the major companies in the field to match. Industry leader McKesson's health care distribution sales growth in its fiscal year 1991 was closer to 10%. To try to make the figures more useful for comparison, NWDA developed a "composite-average sales growth figure for 1990." That growth was also at an impressive rate, 18.1%. NWDA, however, expressed some reservations about that calculation as well. The association states in its survey that "the 18% composite-average increase in sales over the prior year does not represent the wholesale channel market increasing at that rate, but that companies in the wholesale channel are growing at that rate." In a recent letter to "The Pink Sheet," NWDA Director of Industry Analysis Janet Scheren commented on comparisons pointed out in a previous story on the "Operating Survey" ("The Pink Sheet" Sept. 9, p. 10). Commenting on the effect of reporting the nonstock sales separately in 1990 on the size of sales growth to specific customer groups, Scheren said "the 5.5% increase in prescription sales reported . . . is inaccurate. " Scheren pointed out that "if you were to add non-stock sales back in for 1990, the percent increase would be 21%." She noted, however, that that figure might be an overstatement of prescription drug sales growth "because not all non-stock sales were reported in 1989."
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