Here is a chart that shows the various players in the pharmaceutical industry in the U.S.:

Click to enlarge

One of the fast-growing sectors within the healthcare industry is the pharmacy benefit management(PBM) business. The companies in this space provide administration services to control drug cots to patients and other clients. Express Scripts Holding Company(ESRX) is of the top firms in the PBM sector.

Another type of player operating in this industry is the pharma distributors. These companies are the wholesalers of drugs. They buy drugs in bulk from manufacturers and supply hospitals and pharmacies after jacking up the prices by several percentage points for acting as the middle men. These companies do not contribute anything productive other than to buy in bulk and sell after a markup. These companies are analogous to auto dealers. One does not need to be a genius to figure out that auto dealers do not contribute nothing to the society other than to make high profits from unsuspecting car buyers. Some of the major firms in this sector include  AmerisourceBergen Corporation (ABC), Cardinal Health (CAH) and McKesson Corporation (MCK).

Other players in the industry include the insurers, pharmacy companies, hospital companies and so forth. One of the reasons for the atrocious prices of drugs can be attributed to so many players involved in the pharmaceutical industry.

Source: Angles and Perspectives, Q2, 2013,  the Quarterly Newsletter of PSG Asset Management