The Pharmaceutical Journal
Vol 269 No 7218 p499
5 October 2002

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UniChem convention 2002 summary

Do pharmacists need or value wholesalers' services?

The difficult balance for wholesalers between how much discount they give away, versus the quality and extent of the services they provide, is getting more uneven, according to Jeff Harris, executive chairman, Alliance UniChem Plc. "We are beginning to question whether our customers either need or value some of the services which we are providing," he said.

Mr Harris described the situation in Switzerland, where wholesalers' services have been reduced. In the past, Swiss pharmacists refused to allow their deliveries to be cut from five deliveries per day to four. However, the Swiss government changed the rules of reimbursement and wholesalers began charging pharmacists on a fee for service basis. "All the pharmacists found they could cope with just one delivery per day," he said.

Mr Harris acknowledged that the pharmacy profession faces a lot of government intervention, and has to meet tough public service obligations. But he remained optimistic about the future. "No other commercial market is as secure as health care or shows better growth characteristics," he said.

He went on to say that the economic outlook for the pharmaceutical industry is getting much tougher. The rapid phase of consolidation is being driven, not by executive megalomania, but by economic necessity. "The threat to patent life; competition from generics and parallel imports, a reduced number of blockbusters in the research and development pipelines; grumblings from America about high drug prices and margins — all these factors are worrying for the manufacturer."

He added that he was sceptical that the GlaxoSmithKline Agency Scheme is a blueprint for other countries or other manufacturers. "I do not see that it has given Glaxo any significant competitive advantage. On the contrary, I can see some regulatory problems to its extension and some real resistance among the pharmacists who are, after all, the manufacturers' customers."

Equally, Mr Harris was sceptical that direct distribution would catch on for the generality of drugs. He could not see that any manufacturer would be prepared to invest in the infrastructure and systems to distribute on the time scales and reliability that the market demands. Direct distribution would have significant implications for the pharmacist. "There would be fewer chances to negotiate discount; increased stock levels to compensate for any decline in service, and more importantly, hours spent sourcing individual products from many different suppliers," Mr Harris predicted.

However, he took a different view about the next generation of genomic drugs for which distributors and manufacturers would need to evolve different systems. "As wholesalers and pharmacists we need to plan how we can deliver these patient-specific drugs most cost effectively and how to monitor treatments more fully, to feedback results to manufacturers and health authorities," he said.