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WASHINGTON — For nearly a century, the HDA Factbook has reported on the productivity behind the safe and effective delivery of millions of medicines and healthcare products nationwide. Published by the HDA Research Foundation, the latest Factbook reveals that approximately 95 percent of all pharmaceutical sales moved through the traditional distribution segment in 2023, among other key findings.
A recent LinkedIn Live discussion provided additional perspective into the trends shaping the pharmaceutical distribution industry amid an evolving business environment. HDA’s Perry Fri, executive vice president of Industry Relations, Membership & Education and Chief Operating Officer of the HDA Research Foundation, spoke with Scott Hackworth, President of Industry Insights Inc., who shared critical findings and observations from the 95th edition of the Factbook. (Industry Insights has been a longtime partner of the HDA Research Foundation, administering many of the surveys behind the organization’s benchmarking publications.)
Here are three key takeaways from the conversation:
Rx Distributors’ Operational Efficiency Is Unmatched
As the latest Factbook reports, distributor sales reached $758 billion in 2023, even as profit margins hit 1.7 percent (gross) and 0.3 percent (net) — some of the lowest in the publication's history. Hackworth explained how operating on the narrowest profit margins in healthcare requires distributors to innovate and find creative ways to drive efficiency. He emphasized that “the main takeaway of the industry overall is, one, its scale, and then how [distributors are] able to do so much with … such tight margins.”
“Because of the scale,” Hackworth continued, “Every little change makes a difference ... because of that, we have the best of the best in the industry, which is what makes it so fascinating, figuring out ways to make things more efficient and more productive throughout.”
Automation Is Reshaping the Industry
As logistics experts, distributors regularly deploy emerging technologies to achieve productivity in their operations. In their conversation, Fri and Hackworth discussed how advancements in automation and AI-driven technologies are transforming distribution centers, ultimately empowering the industry’s hardworking employees to reach more patients.
Hackworth explained, "We've been able to watch the amount of automation that's going on in the warehouses continue to creep up each year, and so, as that's happening, the productivity continues to increase." Compared to distributors in other industries, “the industry is outperforming the other industries that we study,” Hackworth noted. “Honestly, it's amazing. They're four or five times as efficient at turning their inventory as others."
The Distribution Workforce Is Unique — and Productive
Finally, the discussion touched on the broader trends affecting the industry’s workforce.
While discussing employee retention and turnover rates (the latter hitting a high point in 2022), Fri and Hackworth observed how the COVID-19 pandemic solidified a sense of mission within the industry, which was reflected in record-low turnover rates. Hackworth explained, “Being part of the healthcare chain, being part of the solution and being part of all of this … we saw a lot of pride in that.”
Today, Hackworth is most encouraged by the industry’s continued growth and employee productivity, which outpaces other industries studied by Industry Insights: “The sales per employee numbers, the employee productivity, which we often say is the most important characteristic of an industry’s success … [the] industry is 20 to 30 times what many of the other industries that we look at are.”
Hackworth also noted, “On average, the pay per employee has been on quite a sizeable increase, and that has outpaced many [other industries studied by Industry Insights], so that has certainly been something on the good side for the industry.”
Watch the full recording here. Additionally, view an executive summary of key HDA Factbook data here.
The 95th Edition HDA Factbook: The Facts, Figures and Trends in Healthcare (2024–2025) is available as a complimentary download from HDA.org. The publication was made possible through the support of gold sponsors Apotex Corp and Real Value Rx; silver sponsors IQVIA and R&S Northeast LLC; and bronze sponsors Ascend Laboratories, LLC; Pharmacy First; and Teva Pharmaceuticals.
