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 healthcare 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 healthcare 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 says 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 says. “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, Calif., 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 says. “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.”
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. 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.
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.
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 says. “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 says.
“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,” Zenk says. “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,” Zenk says. The enhanced technology will help manage inventory at the highest accuracy for customers, and provide superior service, she adds.
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 says.
AmerisourceBergen has worked with government entities including the Federal Emergency Management Agency and the Food and Drug Administration to distribute pandemic treatments. “We really have enjoyed this partnership with the manufacturers that are bringing innovative things to market,” Zenk says. “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 says.
“They were caring for their communities,” she adds. “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 says.
“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,” Zenk says. “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 says.
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 says.
‘Change is inevitable’
AmerisourceBergen has proven to be nimble since the arrival of COVID-19. Zenk says she 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 says.
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, Zenk says.
“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,” she says.
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 says. “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 two to five years.”
Supporting health systems
AmerisourceBergen has constantly adapted to serve health systems during the COVID-19 pandemic, said Matt Glucksmann, senior vice president & president, U.S. health systems & government services.
In early 2020, the company held virtual town halls with health systems and manufacturers to communicate product availability and gauge frontline needs. AmerisourceBergen worked with federal and state health departments to distribute COVID-19 treatments quickly, while remaining flexible to respond to evolving demands and hot zones.
“It sounds basic, but what we learned is that we can’t underestimate the power of consistent and reliable communication,” Glucksmann said. “Increasing the level of collaboration and information-sharing between manufacturers, distributors, and providers is essential in effectively managing current and future supply chain challenges.”
The COVID-19 pandemic has accelerated demand for home-based care, particularly as therapeutic advancements broaden the range of applicable treatments. Health systems are increasingly interested in offering infusions in patients’ homes.
“Since home infusion service lines can be complex to manage, health systems are turning to partners like AB to help launch a new program or optimize an existing one,” Glucksmann said.
In light of the changes health systems have faced in recent years, hospitals and health systems are looking holistically at their supply chains and seeking opportunities to streamline their operations and be as efficient as possible, Glucksmann said.
“They’re looking to us for tools to help increase visibility into their shipments and deliveries, pinpoint efficiencies, and free up more time for patient care,” he said.
AmerisourceBergen is committed to devising innovative solutions to address product access and availability challenges, he added. Those solutions could entail developing opt-in assurance programs that allow health systems to invest in reliable supplies of critical products or leveraging AmerisourceBergen’s e-commerce channel to better market short-dated products and cycle them to customers for immediate use.
The company will continue to build on partnerships with the public and private sectors to support pharmaceutical care that promotes patient health.
“Strengthening the connectivity between federal agencies, state departments of health, manufacturers, distributors, and providers enables greater transparency around product availability and patient needs, more efficient distribution processes, and, ultimately, a more agile and responsive supply chain,” Glucksmann said.
Rich Tremonte, AmerisourceBergen president, U.S. pharmaceutical and animal health, said the company’s investments in supply chain operations for specialty drugs have enabled the company to serve hospitals effectively, as seen throughout the pandemic.
“Our customers rely on us in order to treat and care for their patients, which means it is paramount that our operations and network enable us to fill our customers’ orders accurately, efficiently and without disruption,” Tremonte says.
Now, the new Montclair facility will offer additional benefits for hospitals and health systems, especially on the West Coast.
“The Montclair distribution center fortifies our specialty network and strengthens our business continuity so that specialty practices can trust in their partnership with our team,” Tremonte says. “These investments matter on a large scale but are equally important for a customer that doesn’t have to worry about a disruption or closure happening on the east coast.”
Beyond distributing critical drugs, AmerisourceBergen offers a wide range of solutions to improve business performance, safety, and the patient experience. The company’s storage and tracking solutions, health system pharmacy expertise, and specialty offerings help improve customers’ operational and financial performance, Tremonte says.
“AmerisourceBergen helps health systems succeed in today's rapidly evolving healthcare environment,” Tremonte says.