How the Role of the Wholesaler has Evolved in a Complex Supply Chain
Pharma IQ caught up with Monika Derecque-Pois, Director General of the European Association of Pharmaceutical Full-line Wholesalers (GIRP), to discuss how the role of the wholesaler has evolved in recent years.
How do wholesalers ensure an efficient, safe and secure pharmaceutical supply chain?
Full-line wholesalers ensure an efficient pharmaceutical supply chain by the very nature of their activities. Full-line wholesaling can best be described as follows: the activity consisting of the purchase, warehousing, storage, order preparation and delivery of medicines. Pharmaceutical full-line wholesalers carry and distribute the complete assortment of products in range and depth within the framework set by the authorities and the market to meet the needs of those with whom they have normal business relations. In addition to delivering all medicines in their geographical area of activity on the same day/within less than 24 hours, pharmaceutical full-line wholesalers provide working capital and extended financing services, funding of stock and receivables of pharmacies and health care professionals.
Full-line wholesalers ensure an efficient pharmaceutical supply chain as they:
- carry and distribute the complete assortment of products in range and depth within the frame set by the authorities and the market
- continuously ensure product availability to patients within a matter of hours
- create and maintain quality standards that ensure, above all, safety and integrity of the medicine when delivered to the retail pharmacists as well as other health care professionals
- fulfil a public service function
Full-line wholesalers ensure a safe, and secure pharmaceutical supply chain by putting in place a wide range of measure to achieve this objective. Full-line wholesalers implement a package of practical measures to ensure that the risk of falsified medicines entering the supply chain is minimised. Full-line wholesalers carefully select suppliers, undertake sample checks, specifically train staff, and run risk awareness campaigns for their staff as part of their activities
In their activities, they meet and go beyond quality and safety standards set down in legislation at European and national level in addition to the standards and good practices set out in European Good Distribution Practice Guidelines (GDP).
GIRP, as the representative trade organisation for full-line wholesalers, is actively engaged in a wide range of safe supply chain initiatives: International Medicinal Products Anti Counterfeiting Taskforce (IMPACT), World Health Organisation, Council of Europe and European Union institutional activities.
What are the key drivers of pharmaceutical wholesale distribution?
To answer this question it is important to explain first the background of pharmaceutical full-line wholesaling. Pharmaceutical full-line wholesalers buy the medicines from the manufacturers and are the owner of the goods. Pharmaceutical full-line wholesalers assume the full financial risk for the products. Due to the existing public service obligations or assumed public service functions, the ownership of goods is a responsibility of the pharmaceutical full-line wholesalers, as they must have sufficient stock on hold, must deliver on the same day/within less than 24 hours, must cover a certain geographic area and finally have to guarantee independence regarding customers and suppliers. They hold buffer stocks and emergency supplies.
The full-line wholesaling business model relies on striking a delicate balance between generating revenues from high- and low-priced products in such a way that they respectively contribute with greater or lesser amounts in absolute terms towards covering the costs involved in operating a full-line wholesaling model for the distribution of the full range of medicines. As the full range comprises all medicines used in the geographical area of the full-line wholesalers’ activity, the distribution of low-priced medicines is subsidised by revenues generated from high-priced products in a solidarity-based approach. This cross subsidisation ensures that inexpensive medicines can be supplied in exactly the same quality and frequency as expensive ones.
Considering the pure economic aspects of the model, if the delicate balance cannot be maintained full-line wholesalers would have re-evaluate the means through which they would be able to distribute the slow moving medicines as part of the full product range. Therefore, the first key driver in the full-line wholesaling sector is a sound and stable market that recognises the value of the above. The business of full-line wholesaling thrives best when there is sound and stable market environment in the countries in which they are active, in addition to a solid legislative and regulatory framework that ensures the patient is guaranteed continuous access to medicines.
Other drivers include:
- Meeting progressive quality standards for product distribution, cold chain requirement, speciality handling of medicines and the need to prevent falsified medicines entering into the supply chain – full-line wholesalers are the trusted supply chain partners
- Need for new solutions for manufacturers, pharmacists and patients
- Optimisation of warehouse usage
Marketing authorisation holders hold a distribution authorisation for the supply of their products. However, it is important that full-line wholesalers have access to the full-range of medicines so that they can continue to offer a one-stop shop solution for pharmacists and carry out the public service role and function.
What are current trends in the European distribution landscape?
- Legislative changes
- Cost containment measures (price cuts and cuts of the distribution margins)
- Selective distribution
- Selective procurement procedures
How do you think DTP will impact on future drug distribution trends?
Selective distribution and DTP models have taken a grip in the UK market. There is a possibility that they may spread to other countries in Europe, but for the moment, this seems not to be the case in any significant terms.
Pharmaceutical full-line wholesalers provide customised solutions to the complex supply chain needs of all healthcare products and services for citizens. They are the trusted supply chain partners of all stakeholders in the supply chain. Pharmaceutical full-line wholesalers meet the specific needs of their clients and customers in a patient focus healthcare environment.