Henry Schein 2009 Annual Report Download - page 15

3
PART I
ITEM 1. Business
General
We believe we are the largest distributor of healthcare products and services primarily to office-based
healthcare practitioners. We serve more than 600,000 customers worldwide, including dental practitioners
and laboratories, physician practices and animal health clinics, as well as government and other institutions.
We believe that we have a strong brand identity due to our more than 77 years of experience distributing
healthcare products.
We are headquartered in Melville, New York, employ more than 12,500 people (of which over 5,500 are
based outside the United States) and have operations in the United States, Australia, Austria, Belgium,
Canada, China, the Czech Republic, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Luxembourg,
the Netherlands, New Zealand, Portugal, Spain, Switzerland and the United Kingdom. We also have affiliates
in Iceland, Saudi Arabia and the United Arab Emirates.
We have established strategically located distribution centers to enable us to better serve our customers
and increase our operating efficiency. This infrastructure, together with broad product and service offerings
at competitive prices, and a strong commitment to customer service, enables us to be a single source of supply
for our customers’ needs. Our infrastructure also allows us to provide convenient ordering and rapid, accurate
and complete order fulfillment.
We conduct our business through two reportable segments: healthcare distribution and technology. These
segments offer different products and services to the same customer base. The healthcare distribution
reportable segment aggregates our dental, medical (including animal health) and international operating
segments. This segment consists of consumable products, small equipment, laboratory products, large dental
and medical equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical
products, diagnostic tests, infection-control products and vitamins.
Industry
The healthcare products distribution industry, as it relates to office-based healthcare practitioners, is
highly fragmented and diverse. This industry, which encompasses the dental, medical and animal health
markets, was estimated to produce revenues of approximately $27.5 billion in 2009 in the combined North
American and European markets. The industry ranges from sole practitioners working out of relatively small
offices to group practices or service organizations ranging in size from a few practitioners to a large number
of practitioners who have combined or otherwise associated their practices.
Due in part to the inability of office-based healthcare practitioners to store and manage large quantities of
supplies in their offices, the distribution of healthcare supplies and small equipment to office-based healthcare
practitioners has been characterized by frequent, small quantity orders, and a need for rapid, reliable and
substantially complete order fulfillment. The purchasing decisions within an office-based healthcare practice
are typically made by the practitioner or an administrative assistant. Supplies and small equipment are
generally purchased from more than one distributor, with one generally serving as the primary supplier.
The healthcare products distribution industry continues to experience growth due to the aging population,
increased healthcare awareness, the proliferation of medical technology and testing, new pharmacology
treatments and expanded third-party insurance coverage, partially offset by the effects of reduced insurance
coverage due to unemployment. In addition, the physician market continues to benefit from the shift of
procedures and diagnostic testing from acute care settings to alternate-care sites, particularly physicians’
offices.