Inside the sale of H.D. Smith

Founded in Springfield in 1954, the drug distribution company sells for $815 million


Most area residents may not realize that

H.D. Smith is America’s largest, privately held national wholesale distributor in the pharmaceutical industry. But it’s no secret how the Springfield-based health care distribution business achieved that status.

“We have a focus throughout the company on providing an extraordinary customer experience in everything we do,” said Dale Smith Jr., chairman and chief executive officer of H. D. Smith Holding Company. “So, whether you are customer service taking calls from pharmacists, interacting with one of our manufacturer partners, or you are on our finance team sending reports to fellow associates, you can still provide that extraordinary experience to whoever you are working with.”

“Our associates are what make this company successful,” said Smith, the son of founder H. Dale Smith Sr. “We’ve always taken pride in the talent we hire from central Illinois, or recruit to live and work in the area.”

H. D. Smith is a health care distribution company with locations across the United States. It provides full-line distribution of brand, generic and specialty drugs, as well as other services for manufacturers and health care providers. H. D. Smith customers include retail and specialty pharmacies, long-term care facilities, institutional and hospital systems, and independent physicians and clinics.

The company’s long-term growth and success is what led to the recent announcement that pharmaceutical product and service provider AmerisourceBergen will purchase H.D. Smith for $815 million, a transaction that is expected to close, pending Federal Trade Commission review, in early 2018.

H.D. Smith’s large distribution center in Springfield’s Park South industrial park is part of a nationwide network that includes facilities in Carson, California; Pompano Beach, Florida; Carol Stream, Illinois; Louisville, Kentucky; Stratham, New Hampshire; Kearney, New Jersey; and Flower Mound and Los Indios, Texas.  The Springfield distribution center, like the others, is packed floor to ceiling with shelves stocking every health care product imaginable, including prescription and specialty pharmaceuticals, consumer products, home health care supplies, durable medical equipment, prescription containers and seasonal merchandise. Like their fellow 1,000 employees nationwide, Springfield H.D. Smith associates can be seen busily sorting, moving and packing at all hours of the day and night.

The company has come a long way from its founding in 1954.       

“My father started in a small warehouse on Fourth Street with two employees, a very limited number of suppliers, very little knowledge of the business community and of course, no customers,” Smith said. “But working in his father’s drugstores, he knew what drugstores needed and had the desire to build a business that would meet those needs.”

“Dad said once that there was a lot of luck in realizing the company’s success, but he was quick to add that it didn’t happen by accident either,” Smith said. “The big advantage for my brother, Chris, and me was that we got to know Dad, not only as a father, but also as a boss, a coworker and a friend, and gained a better perspective on who he was as a man in the process.”

The family atmosphere of the business extends to the firm’s employees, and Smith credits them with much of the company’s success.

“We are deeply proud of and committed to our associates, the H. D. Smith ‘family’ that has created our success and made this journey fun,” Smith said. “Throughout our company’s history, it was this team who shouldered the workload and continued to put our customers first.”

H. D. Smith isn’t just in the wholesale distribution business. They also operate subsidiaries Smith Medical Partners, Valley Wholesale Drug, Triplefin, Arete Pharmacy Network and CompleteCare Pharmacy.

Smith Medical Partners delivers specialty medications, including plasma derivatives, oncology medicines, vaccines, women’s health products, antibiotics, diabetic products and nicotine replacement therapy.    

Valley Wholesale Drug Co. was acquired by H.D. Smith in 2012 and continues to serve more than 600 pharmacies from its Stockton, California, distribution center.    

Triplefin is a leading pharmaceutical brand support company that coordinates benefit verification, patient reimbursement, co-pays, and other services that streamline the approval, payment and fulfillment process of name brand prescription products.

Arete Pharmacy Network supports the effective management of the financial, quality and operational aspects of more than 2,500 independent pharmacies.

CompleteCare Pharmacies are retail outlets located in Springfield and Champaign.

Triplefin, CompleteCare Pharmacy and Arete Pharmacy Network are not part of the AmerisourceBergen purchase. But for H.D. Smith, Smith Medical Partners and Valley Wholesale Drug, the time was right to join forces with a larger international leader in the industry.   

“The health care system has seen massive consolidations in the last few years. To best support and serve our customers, partners and ultimately, patients across the country, this is the right time for H. D. Smith to combine with a national partner,” said Chris Smith, president and chief executive officer of H. D. Smith and son of the company’s founder. “H. D. Smith is joining an organization with the same fundamental commitment to our associates and our customers, paired with unrivaled access, scale and expertise.”

“For many years, H. D. Smith has been proudly independent. As a leader in wholesale distribution, we continually assess market trends and our business position,” Chris Smith said. “Industry pressures have continued to challenge our customers, and we’ve seen firsthand the impact these pressures have had on them. We see this transaction as the right path forward, at the right time, with the right partner to ensure the future success of our customers and the patients they serve.”

“We are confident AmerisourceBergen’s aligned values will carry forward the H. D. Smith legacy and hallmark of extraordinary customer service,” Chris Smith said.

AmerisourceBergen, based in Valley Forge, Pennsylvania,  provides pharmaceutical products and services to tens of thousands of health care providers, veterinary practices and livestock producers. The company has 20,000 employees, a presence in more than 50 countries, and is ranked number 11 on the Fortune 500 with more than $150 billion in annual revenue.

AmerisourceBergen leaders are pleased to be adding H.D. Smith to the fold.

“H. D. Smith has always shared our passion for supporting its customers across community pharmacy, health systems, long-term care and specialty distribution,” said Robert Mauch, group president, Pharmaceutical Distribution and Strategic Global Sourcing at AmerisourceBergen. “The established legacy of H. D. Smith in serving community pharmacies is strongly aligned with and complements the services AmerisourceBergen provides.”

Steven Collis, who is AmerisourceBergen chairman, president and CEO, said the purchase will mean good things for health care providers and customers.    

“The acquisition of H. D. Smith, a best-in-class private distributor with facilities across the country and a diversified customer base, strengthens our core business and expands and enhances our strategic scale in U.S. pharmaceutical distribution,” Collis said. “We remain committed to building our business to meet the evolving needs of our customers, driving long-term value for the health care system and delivering compelling returns for our shareholders. Importantly, we are united in our responsibility to create healthier futures.”

David Blanchette is a freelance writer from Jacksonville and is also the co-owner of Studio 131 Photography in Springfield. 

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