This research has designed and developed an integrated supply chain management (SCM) system for optimizing inventory control and reducing material handling costs of pharmaceutical products in healthcare sector. The supply chain in this work is composed of pharmaceutical companies, a wholesaler, and hospitals. At first, we have analyzed hospital’s business processes and reviewed system requirements for the efficient supply chain management. VMI (Vendor-Managed Inventory), which is one of important applications of SCM, has been adopted and implemented to improve material handling efficiency. Online procurement system is also developed for the departments that consume drugs and place orders. Besides, real time information sharing functionalities are provided for optimizing inventory control of pharmaceuticals. The developed SCM system enables hospitals to improve the procurement processes and inventory control of pharmaceutical products, which results in decreasing total inventory more than 30%. By sharing information with hospitals, the wholesaler can gather more timely and exact data about inventory status and drug usage volumes of hospitals, so it can forecast the demand more accurately, which enables needed products to be supplied timely and cost-effectively. With the SCM system, total supply chain cost of pharmaceutical products has been decreased significantly.