The European Pharmaceutical Wholesale Industry: - phagro

The European Pharmaceutical Wholesale Industry
3 The Role of the Pharmaceutical Wholesale Industry
within the Pharmaceutical Sector
In many ways the pharmaceutical sector is vital to the society and the economy as
a whole. On the one hand, the development and production of medicines is innovative,
making the business prone for economic policies targeted at promoting
research and development and establishing high-quality work places in order to
stimulate economic growth. On the other hand, the innovation of medicines helps
to improve the people’s quality of life. An improved overall state of health in turn
has a positive impact on the development of the economy as a whole: “only
healthy people are also wealthy people”.
Despite the important contribution of the pharmaceutical sector as a whole to the
economic development, the analysis predominantly focuses on the pharmaceutical
manufacturing industry. The crucial question of how medicines are supplied from
manufacturers to pharmacies is not often tackled, therefore disregarding the contribution
of a well organized distribution system to the functioning of the overall
health care system. As intermediaries in the pharmaceutical supply chain, wholesalers
enhance the efficiency of pharmaceutical distribution by bridging distances
and time, delivering medicines demanded several times a day. Along with this
basic function go several additional (free) services provided by wholesalers, which
generate added value for manufacturers as well as for distribution partners in the
retail sector. In a highly competitive environment, mainly these added value services
make the industry valuable for the functioning of a country’s health care sector.
Traditional Logistics
Function
Service Function
Figure 1: Functions of Wholesalers
Bridging Distances
Bridging Time
Quality Function
Quantity Function
Services creating added Value
Source: IPF
The wholesale industry’s contribution to the overall efficiency of the pharmaceutical
distribution chain is greatest where retailers, like retail and hospital pharmacies
or dispensing doctors, are facing a wide product range combined with low
inventory capacities, high order frequencies and the need for immediate delivery
of products out of stock. These special needs generate demand for high-end specialist
logistic solutions, as is especially the case with retail pharmacies. They are
by far the most common type of dispensing units in all European countries, making
them the most important clients for the wholesale industry. Almost 88% of the
IPF Institute for Pharmaeconomic Research 6