This industry classification includes establishments engaged in the wholesale distribution of items such as prescription drugs, proprietary drugs, druggists' sundries, and toiletries. Products handled by industry participants include antiseptics, bandages, blood plasma, cosmetics, hair preparations, perfumes, pharmaceuticals, nonelectric razors and razor blades, toothbrushes, and vitamins. Establishments primarily involved in the wholesale distribution of surgical, dental, and hospital equipment are included in SIC 5047: Medical, Dental, and Hospital Equipment and Supplies.
422210 (Drugs, Drug Proprietaries, and Druggists' Sundries Wholesalers)
In 2003 the total number of establishments was 10,209. Combined, these companies posted combined sales of approximately $287.4 billion in 2003. The industry employed approximately 234,917 workers in 2001, with an annual payroll totaling slightly more than $13.7 million. The average sales per establishment was about $34.7 million. States with the highest establishments were California with 1,677, New York with 1,035, and Florida with 955.
Establishments within the industry were subdivided into two categories. The largest—specialty-line pharmaceuticals, cosmetics, and toiletries—was comprised of 69.8 percent of the industry's total number. Their sales, totaling $42.17 billion in the mid-1990s, accounted for 65.6 percent of the industry's sales. The other category—general-line drugs—was comprised of wholesalers who were distinguished from specialty-line sellers on the basis of their commodity-line mix.
According to U.S. government predictions, demand for pharmaceuticals was "insensitive" to the national economy, meaning that fluctuations in the country's overall business climate had little impact on demand for the industry's products. National concern over rapidly rising costs, however, was mounting and bringing change to traditional distribution patterns. Price increases, which marked the early to mid-1990s, were beginning to slow during the final years of the decade.
The total number of establishments in the drugs, proprietaries, and sundries industry steadily decreased throughout the decade, from approximately 5,200 in 1990 to more than 6,000 by 1996. In 1997 the number had reached 8,053. By 2000, the number of establishments had decreased to 7,418, and declined further to 7,189 in 2001.
The Federal Food and Drug Administration (FDA) mandated drug manufacturers to place bar codes on all drugs dispensed in hospitals as a means of reducing medication errors. The FDA required manufacturers to put bar codes on individual doses as early as 2006. The labels are expected to prevent 413,000 medication errors over the next twenty years.
Drug merchants maintain their own websites where they offer pharmaceutical and laboratory products, as well as health related information services. The U.S. Department of Commerce reported that drugs and sundries wholesalers' online sales rose 24 percent, or $19 billion and their overall sales rose 20 percent, or $33 billion. In fact, according to the U.S. Department of Commerce, more than half of the Internet sales generated are from drugs and sundries. Overall online sales for the industry were $14 billion versus their total sales of $32 billion.
One industry leader was McKesson HBOC, based in San Francisco and formed when McKesson, distributor of pharmaceuticals, bought HBO and Company, health-care information systems and technology. The company posted 2003 sales of $50.4 billion and 24,500 employees. That year, McKesson acquired Sky Pharmaceuticals Packaging Inc., a supplier of unit dose bar coded packaging to better meet the government's regulations on standard bar coding.
Other leaders were Cardinal Health, Inc., of Dublin, Ohio, with 2003 sales of $50.5 billion and 50,000 employees; Amerisource Bergen Corporation of Chesterbrook, Pennsylvania, with 2003 sales of $49.6 billion and 14,800 employees; and Owens and Minor, Inc., of Glen Allen, Virginia, with 2003 sales of $4.2 billion and 3,245 employees.
The majority of the establishments in this classification were small—employing fewer than five people. In 2001, 2,559 companies had fewer than five employees; 953 companies had between five and nine employees; 620 had between 10 and 19; 755 had between 20 and 99; 289 had between 100 and 499; and 1,424 had 500 or more employees. In 2003, the total number of employees increased to 155,928.
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U.S. Census Bureau. "Online Sales, Shipments Outperform Total Economic Activity in Most Industries Measured by Census Bureau," 19 March 2003. Available from http://www.gov/Press-Release/www/releases/archives/retail_industries/000817.html .
U.S. Census Bureau. Statistics of U.S. Businesses 2001. Available from http://www.census.gov/epcd/susb/2001/US421420.HTM .
U.S. Department of Commerce. Economics and Statistics Administration. 15 April 2004. Available from http://www.census.gov/estats .
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