HEALTH INDUSTRY INSIGHTS™ PROJECTS MAJOR VALUE SHIFT FOR PHARMACEUTICAL DISTRIBUTORS

Framingham, MA – AUGUST 14, 2006 – In a recent report published by IDC's Health Industry Insights, Senior Research Analyst Eric Newmark reveals survey results that indicate the way pharmaceutical distributors produce revenue will dramatically shift over the next 5 to 10 years. According to the survey, logistics (54%) and inventory management (46%) are currently the most important supply chain services provided by pharmaceutical distributors. However, when asked to forecast distributors' top value proposition in 10 years, collecting demand signals for manufacturers (36%) jumps into first place from its last place (3%) ranking today.

"Over the next few years, we are going to see a major shift in the way distributors' operate. They're going to shift from the inventory focus that they have today, to being more focused on information. Logistics and inventory management services are becoming commodities, and distributors are evolving towards more of an information broker operating model," says Newmark. "Those distributors that are late to the table in creating demand visibility for manufacturers will watch helplessly as customers transfer business to their competitors."

Survey respondents, comprising 28 senior executives from leading pharmaceutical companies, also rate drug safety initiatives (with a score of 8, on a scale of 1 to 10) as a major catalyst in changing the role of distributors. In his analysis, Newmark goes on to take an in-depth look at how these increased drug safety concerns are changing the pharmaceutical supply chain process and, consequently, impacting how the industry generates revenue.

The report also covers topics such as: Opportunities for manufacturers to explore direct-to-consumer (DTC) distribution; Walmart and other consumer packaged goods (CPG) companies' becoming role models for the pharmaceutical industry regarding product data visibility; and the role of item-level trace-ability in the pharmaceutical supply chain evolution.

Newmark's report, entitled "Supply Chain Evolution: The Changing Role of Pharmaceutical Distributors" (Doc # HI202392), is also the topic of a web conference. Both are available for download at http://www.healthindustry-insights.com.

About Health Industry Insights, an IDC company

Health Industry Insights, an IDC company, provides health industry executives with research-based advisory and consulting services that enable healthcare and life science executives to maximize the business value of their technology investments minimize technology risk through accurate planning; benchmark themselves against industry peers; adopt industry best practices for business/technology alignment; make more informed technology decisions; and drive technology-enabled business innovation. Health Industry Insights provides full coverage of the health industry value chain and closely follows the payer, provider and life science segments, with special emphasis on developing and employing strategies that leverage IT investments to maximize organizational performance. Staffed by senior analysts with significant technology experience in the health care industry, Health Industry Insights provides a portfolio of offerings that are relevant to both IT and business needs. Visit www.healthindustry-insights.com for more information.

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