Pharmaceutical Distribution in Europe: Pfizer Breaks the Mold

Decision Resources, Inc, August 2007, Pages: 22

Beginning March 2007, Pfizer introduced a direct distribution system for its products in the United Kingdom, making them available only from the company’s sole appointed distributor rather than from a choice of wholesalers.

This approach, should it prove successful, threatens to overturn the established model of pharmaceutical distribution, imposing enormous changes upon key stakeholder groups—wholesalers, pharmacists, hospitals, dispensing doctors, and government.

Get the Answers You Need to Shape Your Strategy

- Like Pfizer, two-thirds of pharmaceutical companies have considered changes to their European distribution systems, threatening what was in 2004 a $130 billion pharmaceutical wholesale market for the region. What other pharma companies are considering a switch to direct distribution, and why? How are wholesalers adjusting their practices in anticipation of such a change in the business environment?

- Pfizer has reduced the discounts it provides to purchasers, changing from a percentage of the purchase value to a flat fee per pack; other companies considering direct-to-pharmacy (DTP) distribution may follow suit. What recourse do pharmacists and prescribers have in the face of this revenue loss? What government involvement, if any, might help offset this loss? What impact could this have on services provided?

- In 1991, GlaxoSmithKline (then-Glaxo) introduced a direct distribution program in the United Kingdom, an excursion that may provide some insight into potential outcomes of Pfizer’s current venture. What changes has the company made to this system in the intervening 16 years? How have wholesalers and pharmacists responded to this program?

Scope

- The distribution market in flux: the changing patterns of pharmaceutical distribution and companies’ motives for adopting direct distribution.

- Pfizer’s pursuit of DTP: the company’s attempts at direct distribution in Germany, Spain, and the United Kingdom.

- Market impact: other multinational manufacturers interested in direct distribution.

- Key stakeholders’ response: reactions of wholesalers, pharmacists, and dispensing doctors, as well as the government view of the program and the ensuing investigation of U.K. pharma distribution.

- Outlook and implications: our forecast for the impact of DTP on future drug distribution trends.

Executive Summary
Strategic Considerations
Stakeholder Implications
Changing Patterns of Pharmaceutical Distribution
Motives for Adopting Direct Distribution
Pfizer Rebuffed in Germany and Spain
Pfizer Implements Direct Distribution in the United Kingdom
Other Manufacturers Interested in Changing Their Distribution Systems
Investigation of U.K. Pharmaceutical Distribution
Wholesalers’ Response
Pharmacists’ Response
Other Stakeholders’ Responses
Government View
Outlook and Implications for the Pharmaceutical and Wholesale Industries

Table:
1. Discounts Offered to Pfizer’s Direct Distribution Pharmacy Customers in the
United Kingdom

Figure:
1. Timetable of Key Events in the Development of Direct-to-Pharmacy Distribution in the
United Kingdom

Sidebars:
Glaxo’s Approach to Agency Distribution
Single-Channel Distribution in Finland and Sweden
Logistics Service Providers: New Competition for Traditional Wholesalers

- AAH Pharmaceuticals (part of Celesio)
- Alliance Boots
- Anzag
- AstraZeneca
- Avicenna
- Beta
- Cambrian Alliance
- CamRx
- Celesio
- Cofares
- Gehe
- GlaxoSmithKline
- Ivax
- Lilly
- Napp
- Novartis
- Noweda
- Nucare
- Numark
- Pfizer
- Pharmaco 2000
- Pharma Plus
- Phoenix Group
- Phoenix Healthcare Distribution (part of the Phoenix Group)
- Roche
- Sanacorp
- Sangers (affi liate of United Drug)
- Sanofi -Aventis
- UniChem (part of Alliance Boots)
- United Drug

Organizations

- Association of the British Pharmaceutical Industry
- British Association of Pharmaceutical Wholesalers
- Dispensing Doctors’ Association
- Groupement International de la Répartition Pharmaceutique (European Association of Pharmaceutical Full-Line Wholesalers)
- International Federation of Pharmaceutical Wholesalers
- National Health Service
- Office of Fair Trading
- Pharmaceutical Services Negotiating Committee
- Royal Pharmaceutical Society of Great Britain
- U.K. Department of Health

Customers who bought this item also bought

• UK Electronic Cigarettes Market 2011-2015
• United Kingdom Diagnostic Imaging Market Outlook to 2017 - Ultrasound Systems, MRI Systems, Computed Tomography Systems, Nuclear Imaging Equipment, X-Ray Systems, Mammography Equipment and Others
• The UK Health and Wellness Industry Outlook to 2017 - Robust Growth in Fitness and Nutraceutical Segment
• Future Horizons in the UK Tumor Marker Testing Market: Supplier Shares and Sales Forecasts for 40 Cancer Assays by Market Segment
• European Markets for Computer-Aided Detection
• United Kingdom Ophthalmic Devices Market Outlook to 2017 - Vision Care, Ophthalmic Diagnostic Equipment, Cataract, Refractive, Vitreo Retinal and Glaucoma Surgery Devices
• The UK Molecular Diagnostics and NAT Market: Sales Forecasts and Key Supplier Shares (DataPack)
• The Top 100 Distributors Of IVD Reagents, Instruments & Accessories In Europe
• United Kingdom In Vitro Diagnostics Market Outlook to 2017- Clinical Chemistry Genetic Testing, Haematology, Histology and Cytology, Immuno Chemistry, Infectious Immunology and Microbiology Culture
• United Kingdom In Vitro Diagnostics Market Outlook to 2018 - Clinical Chemistry Genetic Testing, Haematology, Histology and Cytology, Immuno Chemistry, Infectious Immunology and Microbiology Culture