British Association of Pharmaceutical Wholesalers
“Whither wholesaling,” asks the BAPW
Ian Brownlee, BAPW chairman |
The full-line wholesaling sector in the UK is under unprecedented external
pressures to change its business model, Martin Sawer, executive director
of the British Association of Pharmaceutical Wholesalers, told attendees
at the association’s annual conference entitled “Whither wholesaling?”.
He said: “It is clear that, whatever the Office of Fair Trading decides,
the traditional model of full-line wholesaling will change.”
Ian Brownlee, BAPW chairman, spoke of the adverse affect to competition
that he believed had come about by changes in the sector, namely Pfizer’s
direct-to-pharmacy distribution scheme and other manufacturers’ proposed
models. “The [usual] system of medicines distribution, despite its
perceived imperfections, works well because of its intense competition,” Mr
Brownlee claimed.
Mr Brownlee said that the BAPW is not against change, but it does want
it to occur after informed discussion that recognises the implications
of such changes for manufacturers, wholesalers, pharmacists, the NHS and
patients. “The setting of quotas at pharmacy level gives little thought
to the individual pharmacy. There are many reasons why buying volumes vary
that cannot be known to a manufacturer remotely setting quota levels,” he
went on to say.
He added: “The pharmacist is a health care professional who accepts
that running a pharmacy is a chore that needs to be dealt with, and in
many cases they do not have the skills or resources to manage easily when
the supply chain is getting more complicated.”
Lord Hunt of Kings Heath, health minister with responsibility for pharmacy,
addressed the conference. He told participants: “We clearly do need
an efficient supply chain … for the NHS.” He said that the Government
is interested in the quality and efficiency of the distribution of medicines
to pharmacies and other parts of the health sector. “We undoubtedly
do have much to discuss,” he stated.
Lord Hunt said he understood that issues surrounding the reorganisation
of the supply chain were of “critical concern” to participants.
However, he was unable to comment specifically on the changes that are
taking place. “As a minister, for me to go into that while the [Office
of Fair Trading] is doing its study would actually be highly inappropriate.
… I do think of course that the OFT study and report will allow many
of these issues to be teased out,” he said.
Medicines distribution changes “not unique to UK”
Dean Arnold, from financial consulting firm Deloitte, spoke about how
wholesalers could adapt their business models in response to the inexorable
changes occurring within the industry. “There are some outstanding
opportunities, not only in the UK market in wholesale, but also across
Europe,” he told participants.
Mr Arnold believes that health care is an attractive market. He said that
the world compound annual growth rate for health care expenditure is around
7 per cent, with certain markets growing at well over 10 per cent. He also
described the pharmaceutical market as “attractive”, growing
at around 5 to 6 per cent.
He said the market showed “healthy signs for the people sitting in
this room in terms of the opportunities for distribution and pharmaceutical
wholesale”.
Mr Arnold said that there is a significant amount of change taking place
that is “not unique to the UK”, rather a European and global
initiative. He said that Pfizer learnt from its introduction of a new distribution
model in Spain, and introduced a similar model in the UK. “Other
organisations are following suit,” he said. “It is also interesting
to note that similar initiatives are being launched in Poland, in Germany
and in a number of other European countries as well.”
He told participants that parallel trade is a legal part of wholesaling
in Europe, which is a €5bn business. He said that manufacturers recognise
this and have looked at imposing quotas, changing the way they distribute
their products, and implementing various pricing strategies. “[Deloitte
has had] extensive discussions with both source wholesalers and destination
wholesalers and they are indicating that quotas are having a pretty significant
effect on parallel trade,” he told the meeting.
Ways that Mr Arnold suggested wholesalers could adapt their businesses
to “avoid becoming a commodity” included:
• Channel integration — providing more integrated services between
hospitals, pharmacists, primary care and consumers
• Value added services — not the old model, but innovative, revenue-enhancing
services (eg, provision of “specialty drugs” requiring cold
chain, consumables and nurse support)
• Direct to patient and internet — opportunities to provide secure,
trusted websites
• Generics — backward integration into the branded generics market
Participants discuss future supply models
Issues surrounding possible future models of medicines distribution were
discussed in a series of roundtable discussions. The issue of whether wholesalers
would change to once daily delivery was raised. However, many participants
held the view that it would take all wholesalers to move simultaneously
away from twice-daily delivery for that to occur.
Participants also discussed the possible environmental impact that an increase
in the number of deliveries to pharmacies might have.
A general view was held that change was inevitable; however it is particularly
uncomfortable if there is insufficient dialogue and engagement with stakeholders.
Counterfeit medicines
Discussing the recent discoveries of counterfeit medicines in the UK supply
chain, Martin Sawer, executive director, BAPW, raised the question of why
over 1,700 wholesaler dealers’ licences have been issued currently
by the Medicines and Healthcare products Regulatory Agency. Lord Hunt of
Kings Heath said that it is not for ministers to intervene in the affairs
of the regulator but “I will take that issue back in my discussions
with them”. |
The
Pharmaceutical Journal