George Rafferty and Jason Dinger of AmerisourceBergen discuss the investment interests of the venture capital fund AB Health Ventures within the retail pharmacy space.
Pharmacy Times interviewed George Rafferty, president of Corporate Partnerships at AmerisourceBergen, and Jason Dinger, SVP of Strategy and Innovation at AmerisourceBergen, on the launch of AmerisourceBergen’s venture capital fund AB Health Ventures.
Alana Hippensteele: Hi, I’m Alana Hippensteele with Pharmacy Times, and joining me is George Rafferty, president of Corporate Partnerships at AmerisourceBergen, and Jason Dinger, the SVP of Strategy and Innovation at AmerisourceBergen, and they are here to discuss the launch of AmerisourceBergen’s venture capital fund AB Health Ventures, which looks to invest in areas of growth within retail pharmacy, such as in strategic programs designed to progress the future of pharmacy and distribution.
So to start us off, would you mind giving me some background and context around the teams that you each lead, and the projects that you work on within those teams?
Jason Dinger: Great to be with you today. Jason Dinger, I serve as senior vice president for strategy and innovation. Here at AmerisourceBergen, what that means is the team that I work with oversees the building of new products and solutions across AB, as well as the invest strategy around startups, including the fund that we just launched, AB Health Ventures, where we're investing every day in new and exciting technologies that are coming to market. So I'm the build and invest, and then have the pleasure of working with George and his team on the on the partnership side.
George Rafferty: Great. So good segue. Thanks, Jason. Alana, you and I actually met a year ago, we did an interview. So good to be back—I remember you.
So I lead what is called our corporate partnerships team at AmerisourceBergen. It's essentially our largest, although not always largest, but some of our more advanced customers in the AmerisourceBergen portfolio. It's a bit of a mosaic of customers but includes several retail customers in in our portfolio. So we manage the relationship, our portfolio probably represents about 50% of ABs revenues, which fall within the team that I manage, and we've got a group of team that's really focused on, I would say, the account management, which is the day-to-day experience of our customers with AB.
Then a couple of years ago, we built out a new team called the Strategic Initiatives team that is now led by a gentleman by the name of Francis Vincent, that just joined us, and Francis works with my team through teams like Jason's as well, and really building strategic initiatives and innovating with the customers in our portfolio. I know we're going to dig into that a little bit more in a moment, but that's really what my team does is service our large and most advanced customers on a day-to-day basis, and strategically as well.
Alana Hippensteele:Why was launching AB Health Ventures such an important step for AmerisourceBergen at this time?
Jason Dinger: Sure, I think we have an unprecedented amount of change occurring in all of our markets and in the lives of our customers. We feel like part of our responsibility is to ensure that we're delivering best in class solutions every day. We're not going to be able to do that entirely on our own. So there are some things that we obviously are trying to solve for the future. But as George mentioned, a huge piece of what we do is co-developing solutions with our customers, and that's where this relationship between our team and Georgie’s team is so important, and we feel like the startup community has a lot to bring to that over our partnership approach.
So we felt at AB Health Ventures that it was the time for us to launch a dedicated venture fund that is actively reaching out to that startup community and engaging some of the best-in-class entrepreneurs who are part of developing new transformative ideas and businesses that we can then bring into this conversation with our customers. Whether or not that's innovations in delivery or cold chain storage or clinical trials, we want to be able to be a convener for our customers and develop some really exciting things, which in the end, improve the lives of patients and our communities every day.
George Rafferty: I'm going to if I could just jump on to that, Alana, a little bit. When I think about it from a corporate partnerships standpoint, one of the things that we have really tried to focus, not just on the corporate partnership, team, but across AmerisourceBergen, and Jason kind of hit on this is—we made a big shift a few years ago and made this distinction of instead of trying to convince our customers of our strategy, why don't we just help them deliver on their strategies under the basic premise of our customers that we grow along with them. So it was a bit of a bind shift for us several years ago.
I'll embarrass Jason a little bit here, but we were so excited when Jason joined the team in AB, because one of the things he really said loud and clear at the beginning was we should be innovating with our most strategic and advanced customers, which was really music to my ears, and not something I wouldn't say we weren't doing it in the past, but to have a committed process and team to help us do that. I think everyone's heard on all of our investor calls, where we talk about leading with leaders is a key tenant of our organization. Jason's team, whether it's through the venture fund, or through innovation or strategy, has enabled us to do that. And again, I think you'll hear a constant theme of “We innovate shoulder to shoulder with our customers,” and rather than be presumptuous of what we think they may need, I think the venture fund provides another avenue for us to really be able to co-create and co-invest with customers that really build long-term strategic relationships with us. So we were super excited to have that.
I always hate that expression that “tool in our toolkit,” because it just feels a little bit too basic, but we do like having that available to us to really partner with our customers to find ways to invest together.
Alana Hippensteele:Absolutely. So to just expand on that—George, would you mind kind of diving into what some of those areas are within pharmacy that AmerisourceBergen Corporate Partnerships, as a team, is prioritizing in terms of innovation?
George Rafferty: Yeah, it's a great question. We're hearing a lot of themes come out from our customers, as we're spending more and more time with them. And Alana, just to give you an idea of kind of the intimacy that we have with our customers, we were with a retail customer about 3 or 4 weeks ago, and they really shared 1 or 2 of their key strategy slides and gave them to us and said you guys at AmerisourceBergen, go back to hash these out and come back to us with some ideas. We're actually in the process right now—we have a process of how we do that internally.
But my point is one of the things that we're hearing very clearly come across with our customers—and this is going to be no surprise to anybody listening to this—is I'm going to use the word “inventory management” very broadly, and there's so many different interpretations of what that means. I think, ultimately, what we're trying to do is make sure our customers have a great experience. And as a consumer, all of us want to make sure that the product we want is there when we want it, whether in a store or on Amazon, whatever. So one of the things that we're working on is trying to find ways that we can most effectively make sure that that the inventory that our customers need is there. And it doesn't sound novel, but we're looking at approaches around that. Are there vendor managed inventory solutions that are used in other areas, like consumer products, etc., is there are a model there for us to be able to do that on behalf of or with and on behalf of our customers.
So I would say inventory is a big area for us. Different financial models around inventory consignment are certainly something that we actually have done and are exploring some new ways to do that. And for a couple of our customers, not necessarily retail, but smaller independent specialty pharmacy customers, bringing—I guess I would call them kind of financial solutions—to really help them manage cash flow as it relates to carrying inventory, days payable, and when they get reimbursed, which is really a pressure quite honestly on them and that puts some pressure back on us.
Then we have some really basic things like we've launched—just actually—I was just on a call before this, the short-dated solution where we have an opportunity to be able to bring short-dated products out to our customers and have them take advantage of it. It's helpful for them with a lot of our retailers that are facing pressures today around reimbursement, how can we find ways just as simple as that as trying to bring some solutions. So, we're being really creative. And I think the one thing that you can bank on is that they are going to be individually developed solutions. We're not going to come out with a suite of solutions that you can pick and choose which one do you want? We're going to really be very specific on solutions. And if they're scalable, more than one customer, that's great, but if not, if it meets a certain need of a customer, we're going to commit to doing that. So that was a long-winded answer. Hopefully, I answered you in there.
Alana Hippensteele:Absolutely. Yeah, that's really interesting. Jason, what are some examples of the types of opportunities within the retail pharmacy space that AB Health Ventures is looking to invest in to support the future of pharmacy and distribution?
Jason Dinger: Yeah, I think we're very excited about what we are seeing on the horizon and our ability to help and support there. I think the primary area has been to continue to accelerate and support some of the changes we've seen in retail pharmacies over the last couple of years. We are very excited to see how, quite honestly, patients have begun to embrace things within the retail pharmacy that they traditionally maybe wouldn't have done before, whether or not that's vaccination or testing. So, how do we help pharmacies do more of that?
So I think areas where we're linking telehealth and retail is one of the areas that we're looking at, not surprisingly. I think contactless solutions, whether or not that's helping with last mile delivery or autonomous delivery is an area where we feel like we can do more and support our retailers more. I think the other is even moving into clinical trials. We found that there was a lot of interest both on patients and retailers to think differently about how we accelerate some of these really unique solutions coming to market. So, clinical trials, telehealth integration, delivery—all areas we're looking at and remain very excited about.
George Rafferty: Yeah, and I think, Jason, on that point is, and listen, I think we all know that COVID-19 has changed everything for everybody. I think the way patients and consumers want to experience the delivery of health care has changed dramatically. Quite honestly, what we've seen, whether it's our larger retail pharmacy customers, and quite honestly, our independent retail pharmacy customers, is the role that the pharmacy and pharmacist can play in the health care continuum going forward.
I do think what's on our mind is: How do we help solve some of the health inequities that we're seeing out there? I mean, I think COVID-19 is a great example, where we saw lack of care, lack of testing, lack of vaccinations available in areas that are underserved communities. So I think a big part of it is, again, helping our customers to close the gap on some of these health inequities that have really become apparent. They've always been there, I think they're just more obvious to us now, which is something that we're really, really focused on. So really supporting the pharmacy as a hub in health care and in the community is an area we're going to continue to focus really, really heavily on.
Alana Hippensteele:Right, absolutely. Jason, what is AB Health Ventures process for selecting opportunities for investment? You're mentioning some of the areas of interest--if a pharmacy has a growth opportunity, potentially in an in an area that you brought up, how would they be able to throw their hat in the ring for consideration if they were interested in doing so?
Jason Dinger: Yeah. So, I think the most straightforward answer is you can find us at AB Health Ventures and read lots about what we have, what we're up to, what we're investing in, and how you can participate.
I think as it pertains to kind of our retail partners, please reach out to us directly with what we will indicate so the job to be done if there's a challenge you're facing that you think we or one of our portfolio companies or a portfolio company, that they've identified that they'd like us to look at, we'd love to hear from you. We'd love to make that connection because, to George's point, which I think was really well said, we work shoulder to shoulder with our partners here, we're not somehow investing or inventing in a black box and then having some “aha” moment that we hope that you're really excited about. We're with you and kind of working on solutions side by side with you. So anytime they identify an area where we can help, we'd love to hear from them on that.
I think the other thing is, if you're interested in kind of joining that early adopter phase for us as well, so if you're a pharmacy or a retailer that's really interested in this type of work and want to be at the forefront of new technologies, and bringing those, we'd love to add you to our list of partners who have raised their hand to join us in the testing of some of the things like this. So those are the 2 ways, I think, to get most actively engaged.
Alana Hippensteele:George, is there a vision for the future of pharmacy that AmerisourceBergen is particularly interested in driving forward?
George Rafferty: Yeah, I want to go back a lot to what I said, because I do think that's the vision of where we see kind of the north star for us is enabling pharmacy to really continue to evolve its role. Then just a couple of things, if I think about what we're doing to enable that—we talked a little bit about some of the solutions that we're building to what I would say, handle the I don't want to call it the logistics of pharmacy versus the clinical practice of pharmacy. But again, it's really important for us to make sure that that we are playing the role that we need, as the wholesaler, to make sure the product is there.
I'll give you a real live case—I was at calling on a pharmacy customer of ours, and I met the head pharmacists. And I said, how's everything going with AmerisourceBergen. And she said, to tell you the truth George, I don't even think about you guys, like ever. And I was like, okay, I'm not sure if I should be insulted by that or like that comment. But her point was, ‘I don't have to think about all that's going on behind me because you guys do a great job, which allows me to really be doing what I want to do as a pharmacist as being a clinician and practicing at the top of my license.’
So I think we're going to continue to make sure that we make the role of the firm, we do everything we can to allow the pharmacists that are to practice clinically, and to Jason's point, all the things that we can do to bring into the pharmacy and the retail setting to continue to enable that. So I'd say it's 2-prong: making sure that that we're delivering on the table stakes, that the pharmacist doesn't have to worry about whether or not the product is there or not, and finding things that we can do, whether it's through the venture capital funding or other ways to be able to help pharmacists practice at the top of their license. We've done a lot, as I'm sure most people have seen, to support legislation that continues to support the role of the pharmacist. That's a key area for us from a government affairs standpoint as well.
Alana Hippensteele:Any closing thoughts to kind of tie things up?
Jason Dinger: I had the pleasure of starting my career as a hospital administrator in rural Zimbabwe. I think I really am a strong believer that strong supply chains can make a deep difference in the lives of people all around the world. I think in many ways, to George's point, we often live in a place where we don't have to think about those things in a material way, we don't have to worry about some of those things that occur in the background. I just feel it's a privilege to do the work that we do every day to empower so many retailers not only in the US, but around the world.
We are also grateful for the day-to-day work that they do, engaging patients and making sure that they are there for them that their medicine is there when they need it at the right time in the right place. I think it's just called upon us to collectively come together as a community to make sure those equities that George spoke to are not only recognized but addressed in a meaningful way. As well as we consistently respond to the dramatic changes in our communities and what they're going to need over the next decade. So, it's just a pleasure to do this work, and I hope the folks who are listening today reach out to us on how we can work better together.
George Rafferty: Yeah, that's so well said, Jason, and I'll just piggyback a little bit off of that. Alana, we really do lead with our purpose of being united around creating healthier futures. And that really is our north star for what we do every day. And again, that takes on many, many different aspects of what a healthier future looks like. But in that, making sure that we do everything we can to support retail pharmacy, and the pharmacy practice in general, because we truly do believe that that is an area that's going to continue to be important in health care in general, for all those reasons that we talked about.
So we actually get super excited about what the future of retail pharmacy is. It does excite us every single solitary day. I will say for any AmerisourceBergen customers that are listening, thank you for being our customer and entrusting you with your patients every day. But we're excited. And again, I think the venture fund is just another way for us to really be thinking creatively about how we're going to advance health care and help create healthier futures. So, it's very exciting.