Pharmaceutical Distribution in Europe

The Emergence of Direct-to-Pharmacy Supply

Publication Date February 2008
ISBN 978-1-905751-082
Pages 102
Tables n/a
Figures n/a

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Comprehensively reviews the business of medicines distribution in Europe

"Each day millions of patients across Europe rely on the supply chain to deliver the medicines they need"

Pharmaceutical Distribution in Europe - The Emergence of Direct-to-Pharmacy Supply from URCH Publishing, is a market report that comprehensively reviews the business of medicines distribution in Europe.

The traditional model of pharmaceutical supply chain in Europe is under threat as major pharmaceutical manufacturers in the UK attempt to change the way they distribute their products. The adoption of a Direct-to-pharmacy (DTP) model by some of the industry's most powerful players in the UK signifies a new trend that could spread across Europe.

The report is logically divided into four chapters.

Chapter 1 provides a comprehensive history and overview of the key issues related to the pharmaceutical supply chain in Europe, including European law, parallel trade and the recent EU enlargement.

Chapter 2 fully reviews the role of pharmaceutical wholesale companies. Issues tackled include regulations, technologies used, plus reviews of the major players such as Celesio, Phoenix Group and OPG and the market in France, Germany, Italy and the UK.

Chapter 3 discusses how pharmaceutical manufacturers organise the distribution of their products. The current vogue for direct-to-pharmacy is analysed, as is reaction to the UK's OFT report. Recent changes by major manufacturers to their supply chain are summarised.

Chapter 4 looks at the pressures that the pharmacy sector is under. Liberalisation still in its infancy in some countries and pharmacists are being encouraged to expand their role beyond just dispensing. Changes to the supply chain could have a profound effect on established business models.

The report provides an objective perspective on important industry questions, such as;
  • Will direct-to-pharmacy become the dominant method of drug distribution
  • Do pharmacists have a future beyond the administration of dispensing?
  • Are counterfeit medicines now a major issues that the industry has to deal with?
  • What is the current thinking on the role of parallel trade in the European market?
Key features of the report include:
  • Contains 20 Case studies including these companies, Bayer, DocMorris, Galencia, IBS, Novartis, Phoenix and Pfizer
  • Unbiased synopsis of the UK's Office of Fair Trading's (OFT) report into the medicines' supply chain
  • Overview of the European pharmaceutical supply chain and the stakeholders involved in medicines distribution
  • Insight into the aggressive Pan-European expansion strategies of some wholesalers
  • Summary of regulations governing pharmaceutical wholesaling and pharmacy
With 14 Tables and 26 Figures this report is essential reading for anyone working in the pharmaceuticals supply chain including manufacturers, wholesalers, distributors and pharmacists.

Companies and organisations mentioned in the report include:
3i, Alliance Unichem, Amedis UE AG, Apteka, Associazione Distributori Farmaceutici, Astellas Pharma, AstraZeneca, Authentix, Azienda Speciale Farmacie Comunali Riunite, Bayer, British Association of Pharmaceutical Wholesalers, Celesio AG, Chambre Syndicale de la R?partition Pharmaceutique, Chiron, Dainippon Sumitomo Pharma, Der Bundesverband des pharmazeutischen Gro?handels, DocMorris, EAEPC, Eli Lilly, Europharm, Farmaceutica Bolognese, Farmacija d.d, FDA, Galenica Group, Galexis, GEHE Pharma Handel, Groupement International de la R?partition Pharmaceutique, HgCapita, Independent Pharmacy Federation, International Pharmaceutical Excipients Council, Itriafarma, Mediceo Paltac Holdings, Medifarm Velebit, MediService, Merck, Neuhaus Partners, Norsk Medisinaldepot, Novartis, OPG Group, Pfizer, Pharmexx, PhRMA, PHOENIX group, Plus Pharmacie, Retail Working Group, Sanofi-Aventis, Surgency, Syncra Systems, Takeda, Tamro, Unione Farmaceutica, Viafarma, Voigt AG

  • Identify key areas that will change in the pharmaceutical market structure over the next five years.
  • Support internal planning and decision-making with an external perspective founded on detailed analysis and transparent market forecasts.
  • Understand how the regulatory environment could change to reflect new business models.
Remember URCH Publishing's healthcare management reports are designed to help business executives make properly informed and timely business decisions.
Executive Summary

Chapter 1: The Nature of the European Pharmaceutical Supply Chain
The pharmaceutical supply chain
Pharmaceutical manufacturers in the EU
Pharmacies in the EU
Wholesalers in the EU
The hospital sector
History of the pharmaceutical supply chain
Dynamics in the supply change
Relationships within the supply chain
Vertical integration
New changes in the supply change
Outlook for the supply chain
Global lessons for the supply chain
Case study: Consolidation among Japanese pharmaceutical wholesalers
European status of the supply chain
Stability of the European supply chain
Product shortages in the supply chain
Case study: Vaccine shortages and the effect on the supply chain
Case study: Supply chain disruption in Latin America
Traceability throughout the supply chain
Counterfeit products
Internet trading and pharmaceuticals
Parallel trade
The view of pharmaceutical manufacturers
The view of parallel importers
Legalities of parallel trade
Exhaustion of intellectual property rights
Repackaging and relabelling of products
Consumer views of intellectual property rights
The European Union
History of the EU
The set-up of the EU
EU law
Primary legislation
Secondary legislation
Decision-making in the EU
The institutions of the EU
The European Economic Area (EEA)
The creation of the EEA
EU Enlargement and the EEA
The Euro
The Euro and pharmaceuticals

Chapter 2: Challenges for medicine wholesalers in Europe
The role of the pharmaceutical wholesaler
Channels of distribution
Wholsalers and the Single European market
Wholesaler opposition to supply quotas
Case study: Bayer's Export Policy for Adalat
Case study: Syfait versus GlaxoSmithKline
Wholesaler views of Direct-to-Phamacy distribution
Crossborder mergers and acquisitions
Case study: Double acquisition by Phoenix ensures successful market entry into Croatia
EU harmonisation and the outlook for pan-European wholesaleing
The major players in pan-European wholesaleing
Celesio AG
OPG Group
Alliance Boots
European regulations for wholesalers
Guidelines on Good Distribution Practice of Medicinal Products for Human Use (94/C 63/03)
Lack of harmonisation and the supply chain
Wholesaler technology solutions
Electronic data interchange
Collaborative planning forecasting and replenishment
Enterprise resource planning
Wholesalers develop value added services
Case study: GEHE Pharma Handel chosen as "Best-Practice-Enterprise" for value added services
Case study: PHOENIX wins pharmacy partner award
Order fulfilment packages
Database technology
Electronic point-of-sale technology
Bar coding
Case study: US highlights benefits of bar code and RFID technologies
Case study: Pfizer France reviews the RFID system for Viagra
Case study: AstraZeneca opts for mass serialisation to prevent counterfeiting
European wholesaler opinions on technological solutions
Warehouse technology
Dispensing technology
Techology in the future of pharma distribution
Consumers and e-commerce
Case study: DocMorris
Pharmaceutical distribution in UK
Pharmaceutical distribution in France
Case study: Industry support of the Masters Degree in Pharmaceutical Distribution at University of Limoges
Pharmaceutical distribution in Germany
Pharmaceutical distribution in Italy
Case study: IBS introduces supply chain management solutions into the Italian pharmaceutical market
Pharmaceutical distribution in Spain
Pharmaceutical distribution in Switzerland
Case study: Galenica expands its service offerings

Chapter 3: Manufacturers start to control the distribution of pharmaceuticals
Pharmaceutical manufacturers in Europe
The pharmaceutical industry and the supply chain
The role of pharmaceuticals
Drug development and innovation
Cost containment
The pharmaceutical market
Lack of harmonisation in the EU pharmaceutical market
Pharmaceutical industry efforts to combat counterfeiting
Manufacturers exert control over the supply chain
The Office of Fair Trading investigation
Implications of changes in the supply chain
Service standards to patients
Rationale behind changes in the supply chain
Pfizer's feedback on Direct-to-Pharmacy distribution
Case study: Pfizer UK's Direct-to-Pharmacy website
Reaction to the Office of Fair Trading enquiry
AstraZeneca changes its supply chain arrangements
Sanofi-Aventis changes its supply chain arrangements
Napp Pharmaceuticals changes its supply chain arrangements
Novartis considers changes to supply chain arrangements
Eli Lilly considers changes to supply chain arrangements
Astellas adopts direct distribution for Transplant Medicines
Patients and healthcare
Case study: The International Alliance of Patients' Organizations
Pharmaceutical manufacturers and the developing countries
Collaborations with healthcare providers
Case study: Novartis makes agreement with the World Health Organization for distribution of malaria treatment
Case study: Diversion of anti-retroviral drugs destined for Africa

Anti-diversion tactics

Chapter 4: Pharmacy and the Future of Medicines Distribution
Pharmacies in Europe
Additional pharmacy services
Differences in pharmacy regulations
Hospital pharmacy in Europe
Wholesaler Margins and VAT
Rebates and discounts
Distribution of OTCs
Independent pharmacies
Pharmacy chains
Wholesaler involvement in pharmacy chains
Pharmacy purchasing groups
Drugstore chains
Mail-order pharmacy
Removing restrictions in the European pharmacy sector
Case study: European Commission challenges Italian legislation concerning pharmacies
Case study: European Commission challenges Spanish legislation concerning pharmacies
Case study: European Commission challenges Austrian legislation concerning pharmacies
Sale of non-prescription products outside pharmacies
Implications of liberalisation in the European pharmacy sector
Liberalisation of the pharmacy sector and accessibility
Liberalisation of the pharmacy sector and market dominance
Liberalisation of the pharmacy sector and quality of service
Pharmacies and changes in the supply chain


Figure 1.1 Outline of the Supply Chain
Figure 1.2 Number of pharmacists (per 1000 population)
Figure 1.3 Total revenue of European pharmaceutical wholesalers (without VAT)
Figure 1.4 Worldwide Vaccine Market
Figure 1.5 Share of parallel imports in European pharmacy markets
Figure 2.1 Number of Full-line Wholesalers
Figure 2.2 Average gross margin of wholesalers in 9 West Europe Countries
Figure 2.3 Celesio AG Wholesale Revenue by Market (2006)
Figure 2.4 Celesio AG Pharmacy Revenue by Market (2006)
Figure 2.5 Phoenix Group Turnover (2002 - 2007)
Figure 2.6 Breakdown of OPG Sales (2006)
Figure 2.7 Alliance Boots Wholesale Division Revenue (Q1,2,3 2006)
Figure 2.8 Percentage of electronic orders from pharmacies to wholesalers
Figure 3.1 Pharmaceutical R&D Expenditure in Europe 1195 - 2006
Figure 3.2 Pharmaceutical R&D Expenditure across Europe
Figure 3.3 NHS expenditure per person in the UK
Figure 3.4 Community prescribing in the UK: Prescriptions Per head
Figure 3.5 Patient satisfaction with quality and effectiveness of healthcare received
Figure 3.6 Patient satisfaction with ability to access information on new medicines or treatments
Figure 4.1 Number of Public Pharmacies (12 European Countries)
Figure 4.2 Pharmacy sales per inhabitant Europe (?)
Figure 4.3 Number of Hospital Pharmacies in 8 Countries
Figure 4.4 VAT rates applied to prescription medicines across Europe
Figure 4.5 Share of generics in European pharmaceutical markets
Figure 4.6 Percent change in number of pharmacies N, E, N, A, F, S(1995 - 2005)
Figure 4.7 UK Pharmacy respondent views on potential costs of setting up a separate Pfizer account for DTP

Table 1.1: Types of manufacturer medicines
Table 1.2: The institutions of the EU
Table 1.3: Adoption of the euro
Table 2.1: OPG's activities in Europe
Table 2.2: Summary of GDP Guidelines
Table 2.3: The BAPW's Gold Standard of Good Distribution Practice by Pharmaceutical Wholesalers as endorsed by the MHRA
Table 2.4: Process of adoption of IBS supply chain management solution by Itriafarma
Table 3.1 Key areas of focus for the International Medicinal Products Anti-Counterfeiting Taskforce (IMPACT)
Table 3.2: Overall risks due to DTP identified by OFT
Table 3.3: Implications of reduced service standards due to DTP (adapted from OFT, 2007)
Table 3.4: Anti-diversion tactics employed by pharmaceutical manufacturers and cited by WHO
Table 4.1: Goals of the EAHP
Table 4.2: Summary of liberalised pharmacy sector in "case study" countries chosen by ?BIG
Table 4.3: Summary of regulated pharmacy sector in "reference study" countries chosen by ?BIG
Dr Faiz Kermani has 15 years' experience in both academia and the pharmaceutical industry. He has worked in pharmaceutical R&D, pricing and reimbursement, marketing and medical education. Dr Kermani holds a PhD in Immunopharmacology from St. Thomas' Hospital, London, and a First Class Honours degree in Pharmacology with Toxicology from King's College, London. He has written extensively on international healthcare issues, and is on the editorial board of a number of publications. In March 2006, he was a delegate on the UK Government's Trade and Investment Biotech Scoping Mission to China and contributed to the subsequent report.