S&P500 Stock - AmerisourceBergen Corporation (NYSE: ABC)

Its the retail story- But caution advised

This industry comprises establishments known as pharmacies and drug stores engaged in retailing prescription or non-prescription drugs and medicines. The Pharmacy and Drug Store industry in the US retails a range of prescription and over the counter (OTC) medicines, apothecaries, health and beauty items such as vitamin supplements, cosmetics and toiletries as well as offering photo processing services. Major industry supplies are sourced from the Drug and Druggist Sundries Wholesale industry, the Toilet Preparation Manufacturing industry, the Soap and Other Cleaning Compounds Manufacturing industry, and the Photographic Equipment and Supplies Wholesale industry.

AmerisourceBergen is in the drug retailing industry. National Association of Chain Drug Stores study reveals doctors give prescription to four out of every five patients they diagnose. Prescription drug sales were at a record $250 billion and this is expected to go up by another 75 percent in the next five years. Traditional drug stores, Mail order, Independent stores, Supermarket and mass merchants are the traditional avenues for drug retailing.

Sales Distribution

AmeriSource Health Corporation and Bergen Brunswig Corporation merged to form AmerisourceBergen Corporation. AmerisourceBergen Corporation is now the largest pharmaceutical services companies in the United States. It serves both pharmaceutical manufacturers and healthcare providers. The Company's drug distribution business model the aimed at reducing costs. It distributes generic pharmaceuticals, over-the-counter healthcare products, and home healthcare supplies and equipment. Acute care hospitals and health systems, independent and chain retail pharmacies, mail order facilities, physicians, clinics and other alternate site facilities, and skilled nursing and assisted living centers buy the drugs from AmerisourceBergen. Long-term care, workers' compensation and specialty drug patients benefit from the company's services. Growth of the pharmaceutical industry in the United States is mainly due to an aging population, introduction of New Pharmaceuticals, increased use of drug therapies, pharmaceutical supply channel changes, medicare and medicaid Legislative developments and expiration of patents for branded pharmaceuticals.

Pharmaceutical Distribution and PharMerica are its two operating models. The Pharmaceutical Distribution provides drug distribution and related services throughout the United States, Puerto Rico and Canada. The PharMerica segment is in the long-term care business and a workers' compensation-related business. Long-Term Care provides pharmacy products and services to patients in long-term care and alternate site settings like skilled nursing facilities, assisted living facilities and residential living communities throughout the United States. Long-Term Care's institutional pharmacy takes care of bulk quantities of prescription and nonprescription pharmaceuticals from Pharmaceutical Distribution segment, and the dispensing of those products to residents in long-term care and alternate site facilities.

Working with AmeriSourceBergen, drug retailers and institutional retailers can cut their cot of inventory as the company directly purchases from the manufacturers and supplies it on a just in time basis. This allows the retailers to focus on quality service.

R. David Yost is the President and Chief Executive Officer. He has been with AmerisourceBergen for a very long time serving under different capacities.

Michael D.  DiCandilo is the Executive Vice President and Chief Financial Officer. He was with  Ernst & Young for eight years before joining AmerisourceBergen.

Thomas H.  Murphy is the Senior Vice President and Chief Information Officer. He was with Royal Caribbean Cruises Ltd. before joining the company.

All the three key memebers have been with the company for a very long time to understand its business and operations.

McKesson,Cardinal Health, Omnicare, Henry Schein, Omnicell, Covance are its key competitors. But AmeriSourceBergen has been performing really well. The sales and profit has always shown a steady increase year on year. As always this company will declare slightly increased percentage sales at the end of the full financial year. Other smaller companies have emerged to take a small lead in terms of sales. A little caution is advised before buying the stocks.