Bergen Web Site Auctions Medical Items
The next time a hospital official needs a few pints of AB-negative blood quickly or a doctor runs out of rubber gloves, he or she can bid for them on the medical supply version of EBay.
Bergen Brunswig Corp. in Orange, the nation’s largest distributor of pharmaceuticals and medical supplies, on Wednesday launched Pharmabid.com, the first auction Web site to sell such perishable items as blood and plasma.
Bergen said it expects the site to generate about $12 million in its first year--comparatively little for a company with $21 billion in annual revenue. But executives see it as a crucial step to staying competitive as e-commerce comes to all areas of health care.
Other Web sites already auction heavy-duty medical equipment and lab chemicals.
“If we don’t do it, it’s like a loaded AK-47 sitting on the coffee table,” said Neil Herson, vice president and general manager of ASD Specialty Healthcare Inc., the Bergen unit behind the site. “If we don’t pick it up, our competitors will.”
Analysts generally praised the idea, but some wonder if the site will attract enough new customers or simply draw existing ones who buy Bergen’s products the traditional way.
The site is designed to provide a more efficient channel to distribute perishable products that must be discarded if not sold in time.
“Bioproducts with expiration dates have been a problem,” said Eric Brown, a research director at Forrester Research Inc., a Cambridge, Mass., firm that tracks e-commerce trends.
Health-care providers typically buy medical supplies through group purchasing organizations, but sometimes contractors run low or manufacturers experience supply interruptions. That’s when prices can jump.
Bergen said its site could provide a way for hospitals and doctors to find scarce supplies and to comparison shop.
Hospitals at times have scrambled to find enough serum albumin or influenza and other vaccines in the last two years, said Janet Aiso, pharmacy director for the Los Angeles County Department of Health Services.
“When you have to go off contract, you pay what the market will bear,” Aiso said. “This could be a useful tool to see what’s available and what the going rate is. There certainly needs to be a mechanism for manufacturers who want to unload stuff at a discount.”
About 50 products, culled from ASD’s excess inventory, are listed on Pharmabid so far. They range from test strips and syringes to albumin and other plasma products. After establishing a starting bid for each item, ASD then opens up bidding to registered buyers, who must provide state licenses showing they are allowed to purchase such materials.
Those products nearing their expiration dates will be priced to sell, Herson said.
“The reality is, if people are not going to get cost savings, they’re not going to use the site,” he said.
No one would speculate on whether such savings would result in lower medical bills for patients.
Eventually, Pharmabid also will host “reverse auctions” in which hospitals or doctors can solicit bids for products they need, said Colin Kruger, co-chief executive of Online Transaction Technologies Inc. of Los Angeles, which designed the online site.
Analysts give Pharmabid a better-than-average chance at success because, as a business-to-business site, it relies on Bergen’s powerful existing relationships and reputation, rather than on the expensive brand-building efforts necessary to launch a consumer site.
In addition, pharmaceutical spending has grown more than 10% annually for several years, and the wholesale market has ballooned to about $70 billion annually, said Jim Kumpel, vice president of health-care research for Raymond James & Associates.
But other large drug distributors will be watching closely to see if Pharmabid expands Bergen’s roster of clients or merely takes from its existing one, Kumpel said.
“Still, their entry into this space is quite significant,” Brown said. “It shows the traditional players are reshaping their businesses. No one wants to get Amazon-ed.”
