Bergen Brunswig Corp., a $2.4-billion pharmaceutical, medical supply and electronics distribution concern, expects to complete a move of its headquarters and general offices to an "intelligent building" in Orange by Oct. 15.
Once the company consolidates its Century City and Carson operations, it will become the second largest business based in Orange County--behind Fluor Corp.--and one of the fastest growing.
Bergen Brunswig already has 500 employees at the leased facility in Orange, which was built to the company's specifications and includes capabilities for fiber optics communications and modular outlets for data and voice computer communications. The state-of-the-art-and-beyond "intelligent building" will help Bergen Brunswig sustain its rapid growth rate, said Emil Martini Jr., chairman and chief executive of the company.
Option to Buy
The company has an option to purchase the four-story, 200,000-square-foot building, which can accommodate an expansion of its work force to 750 workers. Its current payroll in Orange County is about $15 million.
At the growth rate Bergen Brunswig has maintained in recent years, it may be only a few years before it reaches the 750-employee figure. Through internal growth and acquisitions, the company has maintained an annual growth rate of 25% for five years and expects to continue to expand at that rate. "We can manage the 25% growth," said Martini. About 15% of the growth is expected to come internally, he said, with the remaining 10% from acquisitions or start-up businesses.
Bergen said it wanted to consolidate its facilities and upgrade its communications. "The new technology permits the growth rates we have been experiencing," said George Reinhardt, vice president of finance. A company study had shown that 80% of its employees already lived in Orange County. Bergen settled on a site in the city of Orange after considering two other locations in the county.
At first glance, Bergen Brunswig's blend of medical supplies, pharmaceuticals and electronics might seem an odd business coupling. But Brunswig is using many of the same distribution links it established for its health products and drugs for its electronics goods--a network of 100 warehouses and distribution points. And it expects to be ideally placed to serve the "drugstore of the future," which Bergen envisions will retail a greater diversification of small electronics products than present.
Benefit From Trends
Bergen figures to benefit from three other trends: an increase in prerecorded videocassette sales; an aging population, which uses substantially more pharmaceuticals; and hospitals' growing preference for purchasing their pharmaceuticals and medical supplies from a distributor rather than direct from manufacturers.
Bergen executives cite bundles of statistics to back their business forecasts:
- Revenue from the sale and rental of videocassettes is projected to surpass revenue from movie theaters in the near future, Bergen said, and its 15,000 Commtron retail outlets are positioned to take advantage of the growth. Commtron, Bergen's electronics division, already is the nation's largest distributor of videocassettes. Commtron accounted for about 13% of Bergen's total fiscal 1985 revenue, with sales of $314 million, compared to sales of $210 million for the previous year.
- Americans over 50 years old consume three to four times more pharmaceuticals than younger people, Martini said. With the exception of Michigan, Bergen's operations are concentrated in the high-growth Southwest, the Southeast and the Mountain states. Thus the company expects to be able to take advantage of geographical and demographic movement.
- Ten years ago, drug wholesalers controlled 40% of the pharmaceutical distribution business. That percentage has grown to 65% and will go to 85% within 10 years, Martini said. Buying from a distributor shortens a hospital's order lead time and allows it to operate with reduced inventories, the company said.
Martini said that Bergen expects to continue to make acquisitions in all areas of its business, with emphasis on drug distribution in the Southeast. Revenue for fiscal 1986 are expected to reach $3 billion, he said.