The entire pharmaceutical industry, from supplier to wholesaler to retailer, is experiencing fundamental change. As the health care industry reaches 18 percent of the gross national product, the public has become increasingly aware of escalating health care costs. Much of the blame, right or wrong, has been directed to the pharmaceutical industry. This, coupled with an aging population, increased popularity of drug therapy, and the shift of primary medical care out of the hospital, has caused competitors at all three levels of the pharmaceutical industry to change both their strategies and structures in an attempt to become more efficient. This report clearly illustrates that the catalyst for change originated at the wholesaler level, but has now expanded to all levels of the industry. While many industries (e. g., retail) have made efforts to eliminate the middleman from the manufacturer-retailer relationship, in order to cut expenses, the wholesale pharma ceutical industry has improved its technology and customer service to a level cannot be duplicated by either manufacturers or retailers. Elimination of the drug wholesaler would no longer be cost effective to the industry. Through automation, computer linkages, and efficient delivery systems, the drug wholesaler industry has responded to constant squeezing of profit margins. In addition to productivity improvements, the drug wholesaler continue to experience changes through extensive consolidations, alterations in delivery systems, re-evaluations of product mix, reexaminations of their strategic approaches (niche or national markets), and redefining“customer service”. Continual change is inevitable as a new health care system unravels in the U. S.