Better relationship between wholesalers and manufacturers could cut costs

By Gregory Roumeliotis

- Last updated on GMT

Related tags Supply chain Pharmacy Pharmacology Pharmaceutical industry

The traditional adversarial relationship of wholesalers with
manufacturers must change to true partnership if both are to
achieve better profits and secure the integrity of the drug supply
chain, delegates of the annual general meeting of the European
Association of Pharmaceutical Wholesalers (GIRP) in Budapest have

As manufacturers are determined to limit all costs, they often fail to see the important role wholesalers can play in the supply chain and consider them as loss of margin and profit, United Drug CEO Liam FitzGerald told the conference.

"Bypassing wholesalers, as has happened with biopharmaceuticals in the US for example, is not the answer, the answer is collaboration,"​ he said to​ after his speech.

"Manufacturers believe they can do things better but packaging is a supply chain activity so it makes a lot of sense to outsource elements of it if you can."

Backward integration according to Fitzgerald may cover several subassembly functions including packaging, printing and product finishing, and can transform the role of manufacturers from suppliers to customers of wholesalers.

Collaboration is also needed in the area of track and trace technology, where radiofrequency identification (RFID) has not yet been taken up by the pharma industry as many had predicted.

Because of the high cost of implementation as well as concerns about security, reliability and privacy, only few drugmakers, such as GlaxoSmithKline, Pfizer and PurduePharma, have adopted the technology, and even then only for particularly commercially successful and vulnerable products, such as Viagra, and only in just some markets.

"After having analysed several possibilities, GIRP members believe that the utilisation of a two-dimensional code with the European Article Number (EAN) data structure would be the best way forward."​ GIRP president Rene Jenny told​.

"Tests with RFID tags have shown that the technology is not mature yet as its scan can be distorted by several elements such glass and metal, which forms a screen, and liquids, which absorb the electromagnetic rays."

Nevertheless, Rene stresses the technology looks very promising for the future as speedy commissioning and fast automatic data capturing will be enabled through the use of RFID.

But irrespective of the tracking and tracing procedure adopted, the priority of the wholesalers is to have the expiry date, the batch number and the national identification number on every pack of medicines.

Counterfeit drugs is one of the most critical issues facing the pharma industry today, having evolved into a burgeoning global industry which is estimated to grow 13 per cent a year to reach $75bn (€58.5bn) in 2010, a 92 per cent increase from 2005 - compared to just 7.5 per cent estimated annual growth for global pharmaceutical commerce.

"The biggest risk for counterfeit medicines entering the market are certainly internet and mail order sale of medicines, as in many cases there is no serious involvement of a pharmacist or a health care professional,"​ said Jenny.

"The EU in this respect has the necessary legislation in force and if it is properly reinforced, and licenses as well as good distributing practice (GDP) compliance is controlled, the risk of counterfeit medicines entering the trusted, legal supply chain should be very small."

There are over 130,000 retail pharmacies throughout the EU and GIRP members distribute medicines of an annual value of above €100bn.

Thus, throughout the conference, speakers were eager to emphasise that pharmaceutical wholesalers deliver faster, more frequently, and at less cost than most other distribution industries, and they deliver products requiring special storage and secure handling.

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