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How Did Allergan’s Anda Distribution Segment Perform?

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Anda distribution segment

Allergan’s (AGN) Anda distribution segment distributes generic pharmaceutical products, vaccines, and over-the-counter products in the US markets. With sources from over 300 brands and generic manufacturers, Anda distribution is the fourth largest generic pharmaceutical products distributor across the US.

Anda distribution has over 13,000 prescription and over-the-counter products, including generic drugs, specialty drugs, vaccines, over-the-counter products, and veterinary drugs. The company has distribution facilities in Florida, Weston, Puerto Rico, Ohio, Mississippi, and Groveport.

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Performance of Anda distribution segment

The revenues for the Anda distribution segment fell by 34.2% to $364.7 million in 1Q16 as compared to the previous year due to the loss of business from Target, as CVS Health (CVS) had acquired Target’s Pharmacy and Clinic businesses in December 2015.

The gross margin for the Anda distribution segment improved by 2.3% to 16.9% during 1Q16 as compared to 14.6% for 1Q15. Gross margin improved due to the favorable product mix. The selling, general, and administrative expenses rose to 10.7% as a percentage of revenues during 1Q16, a 2% growth due to loss of its retail customer Target. However, the segment margin improved by 0.5% to 6.3% during 1Q16 as compared to 5.8% during 1Q15.

Investors can consider ETFs like the PowerShares Dynamic Pharmaceuticals (PJP), which holds ~4.9% of its total assets in Allergan, or the Vanguard Healthcare ETF (VHT), which holds ~3.4% of its total assets in Allergan in order to divest the risk. Apart from Allergan, PJP also holds 4.9% of its total assets in Pfizer (PFE), 5.0% in Gilead Sciences (GILD), and 5.1% in Johnson & Johnson (JNJ).

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