The European Pharmaceutical Wholesale Industry: - phagro

The European Pharmaceutical Wholesale Industry
Figure 15: Average Development of average Wholesale Margins on Pharmacy Purchase
Prices in AUT, ESP, FR, GER, IT, NL, UK, 1989-2004
110
100
90
80
70
60
Index, Year 1989 = 100
100
73,1
1989 1992 1995 1998 2001 2004
UK: claw backs excluded
Source: IPF research, GIRP data
In most European countries, wholesale margins are at least regulated indirectly by
the state, e.g. via price fixing and/or average pricing. Margins represent an average
value which should cover wholesalers operating cost of distribution and still
leave space for (regulated) profits. The fact that wholesalers’ sales have increased
in the past, must not leave the impression of a highly prosperous branch, since
the improvement of turnover is solely the result of productivity gains due to successful
reorganizations of business processes in the past. But having reached a
high level of operational efficiency, productivity gains constantly got smaller since
2000 (see p.46). All in all, the drastic cut in margins led to a situation, where the
cost of some services wholesalers are obliged to render, are not covered anymore.
Measures influencing margins directly and indirectly reduced
wholesalers’ margins dramatically since the beginning of the
1990s by approximately 26.9%. This means that e.g. a wholesale
margin of 15% in 1989 would have decreased by 3.53
percentage points to 11.47% until 2004.
4.2.1.2 The Influence of Prices for “new” Pharmaceuticals
The entry of new, innovative medicines into the market led to a consistent increase
in prices on ex-factory bases. Consequently, sales’ growth in the pharmaceutical
market is triggered by innovation. However, innovation does not automatically
significantly improve wholesalers’ sales, as many highly innovative
drugs, especially biotechnologically produced molecules, are not sold in the phar-
IPF Institute for Pharmaeconomic Research 20