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Pharmaceutical Supply Chain in Europe - Adoption of Direct to Pharmacy (DTP) Model to Boost Efficiency and Optimize Pricing - Product Image

Pharmaceutical Supply Chain in Europe - Adoption of Direct to Pharmacy (DTP) Model to Boost Efficiency and Optimize Pricing

  • Published: July 2012
  • Region: Europe
  • 78 Pages
  • GBI Research

GBI Research, leading business intelligence provider, has released its latest research report, entitled “Pharmaceutical Supply Chain in Europe - Adoption of Direct to Pharmacy (DTP) Model to Boost Efficiency and Optimize Pricing”. The report focuses on the current scenario of supply chain management. Key participants in the pharmaceutical supply chain in Europe are covered in the report as well as issues such as pricing, labeling, packaging, warehousing, logistics, and distribution.

The number of full-line wholesaler in the UK is decreasing due to an increase in the adoption of alternate distribution systems such as DTP and RWA. A study conducted by the Institute for Pharmaeconomic Research (IPF) in 2010 revealed that Spain had the highest involvement of full-line wholesalers in the pharmaceuticals supply chain process, with 96% of total turnover in the country, while direct sales from manufacturers accounted for only 4%. France had the highest share of direct sales from manufacturers. In 2010, the DTP and RWA models had a high market share of 25% in the UK.

European member states have a lot of differentiation in the pricing of pharmaceuticals. As a result READ MORE >

1.1 List of Tables
1.2 List of Figures

2 Pharmaceutical Supply Chain in Europe - Introduction

3 Pharmaceutical Supply Chain in Europe - Overview
3.1 Introduction
3.2 Structure of Supply Chain - Channels of Distribution
3.2.1 Manufacturers - Pharmaceutical Companies
3.2.2 Wholesalers
3.2.3 Pharmacies
3.2.4 Parallel Traders
3.3 Evolution of Pharmaceutical Supply Chain in Europe
3.3.1 The Traditional method
3.3.2 Direct-to-Pharmacy (DTP) model

4 Pharmaceutical Supply Chain in Europe - Industry Dynamics
4.1 Introduction
4.1.1 Current Scenario
4.1.2 Breakdown of the Retail Price of a Medicine
4.2 Pharmaceutical Manufacturers
4.2.1 Label Supply Chain
4.2.2 Raw Material Supply Chain
4.2.3 Third Party Logistics (3PL)
4.2.4 Production Supply Chain
4.2.5 Distribution Supply Chain
4.2.6 Reversed Supply Chain
4.2.7 Profit % for Pharmaceutical Manufacturing Company
4.3 Wholesale Distributors
4.3.1 Current Scenario
4.3.2 Split of Turnover of Distribution Channels
4.3.3 Time of Delivery and Total Number of Deliveries per Week
4.3.4 Distribution Margin
4.3.5 Discounts
4.4 Pharmacies
4.4.1 Horizontal and Vertical Integration
4.5 Direct-to-Pharmacy (DTP) Distribution
4.6 The Impact of the Distribution Chain on Prices
4.7 Policies to Encourage Generic Pharmaceuticals

5 Pharmaceutical Supply Chain in Europe - Principles of Pharmaceutical Supply Chain Management
5.1 Management Systems
5.1.1 Commitment and Accountability
5.1.2 Legal and Customer Requirements
5.1.3 Risk Management
5.1.4 Documentation
5.1.5 Training and Competency
5.1.6 Continual Improvement
5.2 Ethics
5.2.1 Business Integrity and Fair Competition
5.2.2 Identification of Concerns
5.2.3 Animal Welfare
5.2.4 Privacy
5.3 Labor
5.3.1 Freely Chosen Employment
5.3.2 Child Labor and Young Workers
5.3.3 Non-Discrimination
5.3.4 Fair Treatment
5.3.5 Wages, Benefits and Working Hours
5.3.6 Freedom of Association
5.4 Health and Safety
5.4.1 Worker Protection
5.4.2 Process Safety
5.4.3 Emergency Preparedness and Response
5.4.4 Hazard Information
5.5 Environmental Protection
5.5.1 Environmental Authorizations
5.5.2 Waste and Emissions
5.5.3 Spills and Releases

6 Pharmaceutical Supply Chain Industry - Key Issues
6.1 Introduction
6.2 Parallel Trade
6.2.1 Percentage Share of Parallel Imports among EU Countries in Pharmacy Market Sales
6.2.2 Supply Quota Systems (SQS)
6.2.3 Dual pricing systems
6.3 Counterfeits
6.3.1 New Directive by EU Commission for Falsified Medicines
6.4 Difference in Price Regulation
6.5 Packaging Variations
6.6 Variation in Applicable VAT Rates
6.7 Difference in Registration Procedure
6.7.1 GSK- Case Study
6.8 Difference in Marketing Authorization
6.8.1 GSK- Case Study
6.9 Lag in Technological Adoption
6.9.1 GSK- Case Study
6.10 Specific Market Labeling
6.10.1 Repackaging and Relabeling of Products
6.11 EU Draft Guidelines on GDP in Europe
6.11.1 Introduction
6.11.2 Problem
6.12 Tendering
6.13 Disruption in Supply Chain- Case Study
6.13.1 Drug Shortages in Europe - The UK

7 Pharmaceutical Supply Chain in Europe - Strategies Shift in the Business Model
7.1 Introduction
7.2 Factors Leading to Changes in the Business Models of Pharmaceutical Companies in Mature Markets
7.2.1 Diminishing Revenues in Mature Markets Due to Patent Expiries of Blockbuster Drugs
7.2.2 Rising Competition in Mature Markets and Rapid Growth of Pharmaceutical Sales in Emerging Countries
7.2.3 Rising imports
7.2.4 Point of Delivery
7.2.5 Requirement of New Packaging Practices
7.2.6 Pricing Pressures
7.2.7 Patient Centric- B2C Supply Chain
7.3 Strategies to Evolve Supply Chains
7.3.1 Introduction
7.3.2 Entering Emerging Markets
7.3.3 Free Trade Agreements to Generate Cost Savings
7.3.4 Raw Material Procurement Strategies
7.3.5 Distribution Cost Reduction
7.3.6 Strategic Sourcing Models
7.3.7 Supply Chain Agility
7.3.8 Centralized Supply Chain and Local Logistics Presence
7.4 Examples of Change in Supply Chain Arrangements in the UK

8 Pharmaceutical Supply Chain In Europe - Risk Management
8.1 Market Risks
8.1.1 Economic Risks
8.1.2 Regulatory Risks
8.1.3 Specific Market Risks
8.2 Corporate Strategy Risks
8.3 Operating Business Risks
8.3.1 Interruption of Operating Business
8.3.2 Counterfeit Pharmaceuticals
8.3.3 Dispensing Errors
8.3.4 Incorrect Handling of Medicines in the Logistics Chain
8.4 Financial Risks
8.4.1 Currency Risks
8.4.2 Risk of Default on Receivables
8.4.3 Liquidity and Financing Risks
8.4.4 Interest Rate Risks
8.4.5 Counterparty Risks from Derivatives
8.4.6 Measurement Risks
8.5 Information Technology (IT) Risks
8.6 Personnel Risks
8.7 Legal Risks

9 Pharmaceutical Supply Chain In Europe - Drivers and Restraints
9.1 Drivers
9.1.1 Free Trade Policy
9.1.2 DTP Model
9.1.3 Universal Health Care
9.1.4 New Directive on Counterfeit Medicines
9.2 Restraints
9.2.1 Parallel Imports
9.2.2 Differences in Price Regulation
9.2.3 Differences in Packaging Variations
9.2.4 Differences in VAT rates

10 Pharmaceutical Supply Chain In Europe - Company Profiles of Leading Wholesalers
10.1 Celesio Group
10.1.1 Pharmacy Solutions
10.1.2 Patient and Consumer Solutions
10.1.3 Manufacturer Solutions
10.2 Alliance UniChem in Europe
10.2.1 Pharmaceutical Wholesaling and Distribution
10.3 PHOENIX Pharmaceutical Activities in Europe
10.3.1 Wholesale Business
10.3.2 Retailing
10.3.3 Supplier Services
10.3.4 Subsidiaries

11 Pharmaceutical Supply Chain Industry in Europe - Company Profiles of Leading Logistic Providers
11.1 UPS
11.2 DHL

12 Pharmaceutical Supply Chain in Europe - Appendix
12.1 Market Definitions
12.2 Abbreviations
12.3 Bibliography
12.4 Research Methodology
12.4.1 Coverage
12.4.2 Secondary Research
12.4.3 Primary Research
12.4.4 Expert Panel Validation
12.5 Contact Us
12.6 Disclaimer

1.1 List of Tables

Table 1: Pharmaceutical Supply Chain in Europe, Top Five Countries in Europe, Split of Turnover of Distribution Channels in Respective Countries (%), 2010
Table 2: Pharmaceutical Supply Chain in Europe, Number of Deliveries per Week and Time Taken for Each Delivery (Hours), 2010
Table 3: Pharmaceutical Supply Chain in Europe, Discount Rates Offered by Wholesalers (%), 2010-2011
Table 4: Pharmaceutical Supply Chain in Europe, Total Number of Pharmacies in EU-32, 2011
Table 5: Pharmaceutical Supply Chain in Europe, Pharmacist Remuneration Systems for Reimbursed Generic Medicines in Europe, 2011
Table 6: Pharmaceutical Supply Chain in Europe, Overview, Share of Parallel Imports in Pharmacy Market Sales (%) 2009
Table 7: Pharmaceutical Supply Chain in Europe, VAT Rates for Outpatient Prescription Medicines, 2009
Table 8: Pharmaceutical Supply Chain in Europe, Import and Export in European Pharmaceutical Industry ($bn), 2009-2011
Table 9: Pharmaceutical Supply Chain in Europe, The UK, Companies Implementing Distribution Changes in the Supply Chain Model, 2011-2012
Table 10: Pharmaceutical Supply Chain in Europe, Company Profile of Leading Wholesalers, Celesio, Full-Line Wholesaler Brands, 2012
Table 11: Pharmaceutical Supply Chain in Europe, Company Profile of Leading Wholesalers, Celesio, Pharmacy Trademarks, 2012
Table 12: Pharmaceutical Supply Chain in Europe, Company Profile of Leading Wholesalers, Celesio, Business Marketing and Logistics Trademarks, 2012

1.2 List of Figures

Figure 1: Pharmaceutical Supply Chain in Europe, Overview, Supply Chain Structure, 2012
Figure 2: Pharmaceutical Supply Chain in Europe, Overview, Customized Supply Chain Structure, 2012
Figure 3: Pharmaceutical Supply Chain in Europe, Overview, Breakdown of The Retail Price of A Medicine (%), 2010
Figure 4: Pharmaceutical Supply Chain in Europe, Overview, Breakdown of the Retail Price of A Medicine (%), 2009
Figure 5: Pharmaceutical Supply Chain in Europe, Manufacturer’s Role in the Pharmaceutical Supply Chain, 2011
Figure 6: Pharmaceutical Supply Chain in Europe, Profit for Pharmaceutical Manufacturing Company, %, 2011
Figure 7: Pharmaceutical Supply Chain in Europe, Market Share of Full-Line Wholesalers, 2010
Figure 8: Pharmaceutical Supply Chain in Europe, Top five Countries in Europe, Split of Turnover of Distribution Channels in Respective Countries (%), 2010
Figure 9: Pharmaceutical Supply Chain in Europe, Number of Deliveries per Week and Time Taken for Each Delivery (Hours), 2010
Figure 10: Pharmaceutical Supply Chain in Europe, Working Capital Flow Through Supply Chain, 2010
Figure 11: Pharmaceutical Supply Chain in Europe, Wholesale Distribution Margin, 2009-2010
Figure 12: Pharmaceutical Supply Chain in Europe, Total Number of Pharmacies in EU-32, 2011
Figure 13: Pharmaceutical Supply Chain in Europe, PSCI Founding Members, 2012
Figure 14: Pharmaceutical Supply Chain in Europe, Principles of Pharmaceutical Supply Chain Management, 2007
Figure 15: Pharmaceutical Supply Chain in Europe, Overview, Share of Parallel Imports in Pharmacy Market Sales (%) 2009
Figure 16: Pharmaceutical Supply Chain in Europe, Case Study
Figure 17: Pharmaceutical Supply Chain in Europe, Case Study
Figure 18: Pharmaceutical Supply Chain in Europe, Case Study
Figure 19: Pharmaceutical Supply Chain in Europe, Case Study
Figure 20: Pharmaceutical Supply Chain in Europe, Case Study, 2011
Figure 21: Pharmaceutical Supply Chain in Europe, Factors Leading to Changes in the Business Models of Pharmaceutical Companies in Mature Markets, 2012
Figure 22: Pharmaceutical Supply Chain in Europe, Import and Export in European Pharmaceutical Industry ($bn), 2009-2011
Figure 23: Pharmaceutical Supply Chain in Europe, Global Supply Chain Model, 2012
Figure 24: Pharmaceutical Supply Chain in Europe, Using Free Trade Agreements to Generate Cost Savings, 2012
Figure 25: Pharmaceutical Supply Chain in Europe, Raw Material Procurement, 2012
Figure 26: Pharmaceutical Supply Chain in Europe, Reforming Costs by Optimizing Cash Flow and Working Capital Structure, 2012
Figure 27: Pharmaceutical Supply Chain in Europe, Strategic Sourcing Model, 2012
Figure 28: Pharmaceutical Supply Chain in Europe, Case Study, 2011
Figure 29: Pharmaceutical Supply Chain in Europe, Agile Supply Chain, 2012
Figure 30: Pharmaceutical Supply Chain in Europe, Centralized Supply Chain and Local Logistics Presence, 2012
Figure 31: Pharmaceutical Supply Chain in Europe, Risk Management, 2012
Figure 32: Pharmaceutical Supply Chain in Europe, Drivers and Restraints, 2012
Figure 33: Pharmaceutical Supply Chain in Europe, Company Profiles of Leading Wholesalers, Celesio, 2012
Figure 34: Pharmaceutical Supply Chain in Europe, Company Profile of Leading Wholesalers, Alliance Healthcare, 2012
Figure 35: Pharmaceutical Supply Chain in Europe, Company Profile of Leading Wholesalers, Phoenix Healthcare, 2012
Figure 36: Pharmaceutical Supply Chain in Europe, Company Profiles of Leading Logistic Providers, UPS, 2012
Figure 37: Pharmaceutical Supply Chain in Europe, Company Profiles of Leading Logistic Providers, DHL, 2012

The European Pharmaceutical Supply Chain Branches Out.

Pharmaceutical companies are hiring a little help, and joining with Third Party Logistics (3PL), but are they abandoning too much control over their business, asks a new report by healthcare experts GBI Research.

The new report states that use of 3PL companies is a growing trend in the global pharmaceutical supply chain, as cost cutting measures encourage businesses to use outside companies, who can offer services at competitive prices. However, while Direct to Pharmacy (DTP) and Reduced Wholesaler Agreements (RWA) models play a vital role in the UK, other EU countries are boosting their direct sales, and only time will tell which approach will succeed.

Around 772 full-line wholesalers in Europe supplied pharmaceutical products to pharmacies, hospitals and doctors in 2010, according to the European Association of Pharmaceutical Wholesalers (GIRP). During this year, the overall sales turnover generated within EU-27 countries was valued at $180 billion. The Institute for Pharmaeconomic Research (IPF) concluded that over 703 million transactions took place between pharmaceutical full­line wholesalers, pharmacies and manufacturers every year within France, Germany, Italy, Spain, the Netherlands and the United Kingdom collectively.

However, the number of full-line wholesalers in the UK is decreasing due to a rise in the adoption of alternate distribution systems such as DTP and RWA. The impending absence of full-line wholesalers is expected to increase the number of transactions to 97.9 billion per year, and result in unnecessary transportation and delays for doctors who desperately need medicines.

Logistical help has been prevalent in the pharma industry for several years, as Merck’s partnership with United Parcel Service (UPS) in 2003 set the scene for business collaborations. UPS agreed to provide distribution and logistics services in the US, and this was later extended internationally. UPS Inc. now manages the distribution, warehousing and transportation of medicines and vaccines manufactured by Merck in North America, and according to the new deal, the company is set to additionally provide distribution, warehousing and transportation services for Merck in some Asian countries and Latin America, and transportation in Europe. While Merck benefit from a comprehensive delivery service, UPS have secured an enormous contact, and work in the upcoming pharma powerhouses of China and Brazil. However, does this deal signify a loss of control for Merck, as aspects of their business are run by another company?

A study conducted by IPF in 2010 revealed that Spain had the highest involvement of full-line wholesalers in the pharmaceuticals supply chain process, with 96% of total turnover in the country, while the DTP and RWA models had a high market share of 25% in the UK. Whether these two differing approaches lead to disparity between the Europe’s quality of healthcare remains to be seen.

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