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Leaders from American Pharmacies and our wholesale partner, AmerisourceBergen, meet each quarter to review the relationship between the two partners, analyze key performance indicators under our sole-source contract, and address issues/challenges that affect our 700 member pharmacies. The meetings are a critical forum for discussing and resolving problems, driving the continued growth and success of APRx and strengthening our bond with AmerisourceBergen. This is the first in an ongoing series of reports on these Quarterly Business Reviews.
By all relevant measures, the Quarterly Business Review (QBR) conducted August 17 at the APRx headquarters in Corpus Christi showed that American Pharmacies is hitting on all cylinders and that our relationship with AmerisourceBergen is a major contributor to our success. Though the meeting focused a great deal on addressing and resolving problems that affect our members, it also strengthened our relationship with ABC through the sharing of ideas and solutions and identification of shared business goals that are vital to both organizations.
Highlights of the Meeting
Here are some of the key deliverables from the August 17 meeting:
Contract Amendment Completed
During the Aug. 17 meeting, American Pharmacies and AmerisourceBergen wrapped up a few final issues on an amendment to our sole-source contract with ABC. The contract amendment, which makes improvements in several areas and brings increased value to American Pharmacies member, was subsequently signed and executed.
Business is BOOMING
Total Retail Volume (TRV) across all APRx accounts is up 24% year-to-date. And with new monthly results just in, we are proud to report that August 2022 was a record-breaking month for our company, representing a 33% increase in TRV over August 2021.
APRx Has a Growing National Reach
We now have member stores in 36 states, a far cry from the four states we operated in just six years ago. We have brought aboard members from four new states this year – Alabama, Minnesota, Montana & Hawaii. We have captured new business from eight different wholesalers across the U.S. The vast majority of those represent former McKesson & Cardinal customers.
Texas Still Leads the Way, But Volume in Other States is Surging
Our top five states by TRV are Texas, Michigan, California, Florida and New York. Of those five, California is experiencing the most rapid growth.
Pharmacy Closings & Sales Have Stabilized
We have experienced far fewer store closures this year compared to 2021. Like all independent pharmacy purchasing groups, we were adversely affected by the COVID pandemic in 2021 in the form of store closures and sales to Walgreens and CVS. This was largely the result of greatly decreased store traffic and OTC sales, staffing issues, product and supply shortages, and other factors driven by the pandemic. Please note that American Pharmacies continued to grow in 2021 despite these challenges.
Growing & Promoting ABC's SmartSource Solution
SmartSource is AmerisourceBergen's second-source solution formed by the merger of Bellco Generics, Valley Wholesale Drug and HD Smith’s SmartSource Distribution. SmartSource stocks 11,000+ Rx, OTC and hard-to-find products for next day delivery when ordered by 7 pm local time. Members can order online, via Electronic Data Interchange or by phone.
SmartSource is a great solution for items that may be temporarily unavailable from ABC's primary division, as well as deep discounts on multiple short-dated generic products. ABC and APRx leaders discussed ways to increase SmartSource's visibility to APRx members through communications, training and other means.
Warehouse/Delivery Performance
We discussed with ABC some issues and challenges related to order fulfillment and deliveries. American Pharmacies understands the massive logistical challenges inherent in operating multiple huge warehouses and deliveries nationwide and we discussed improvements that will better meet our customers' needs. Rest assured that we recognize the critical importance of accurate orders and dependable courier deliveries, and we work constantly with ABC throughout the year to address these issues immediately as they arise.
Increased Field Visits & Responsiveness for ABC Sales Execs
To improve ABC support of our members, it was agreed that AmerisourceBergen sales executives should increase their time in the field and their responsiveness when issues arise.
Reviewed Purchase Trends of PRxO Generic Products
APRx has proactively adjusted invoice pricing to improve reimbursement at POS and cash flow. Brennan Brown and Jeff Jacobs on the APRx team work closely with ABC’s pricing and inside sales team to monitor market pricing and make sure our members are optimizing generic purchases through ABC.
Laird Leavoy's Take on the QBR's Success & Our Relationship With ABC
APRx President Laird Leavoy says the QBRs are critical to keeping American Pharmacies and AmerisourceBergen aligned in their objectives and actions for supporting the success of independent pharmacies.
"No relationship is ever perfect and we will always have to address operational challenges that affect our members," Leavoy said. "That said, the commitment and support exhibited by AmerisourceBergen improves the response to our members' problems while helping drive our national success."
"We have a strong partnership that is built on mutual respect and a shared belief that cooperation beats confrontation in helping us both reach our goals. We had a lot to address on August 17 and I want to thank the ABC team for their role in a very successful meeting. The outcomes of this meeting and our surging performance continue to prove that the American Pharmacies-AmerisourceBergen value proposition is the greatest in the industry and the best hope for the success of independent pharmacies across our great nation."
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