The term “Direct to Pharmacy” (DTP) was coined in 2007/2008 and described the schemes that Pfizer and AstraZeneca adopted to replace their traditional 12.5% wholesale distribution.
In this model, pharma companies retain ownership of their products further through the supply chain. They use traditional wholesalers (or logistics service providers) to hold their stock on a consignment or agency basis rather than transferring title of the goods.
The agents receive stock orders in the normal way from customers and provide an additional range of services such as pick, pack, deliver, invoice and cash collection to the pharma company.
The benefit to the pharma company (as they still own the product in the agents’ warehouse) is that they can set the price of their products to the customer channels as they see fit, and as a result of the product ownership shifting down the supply chain, they have perfect visibility of what customers have bought what products, how much of each product and from where and when.
There are many variables to schemes such as this and each pharma company will want different outcomes, different levels and degrees of reporting and different ways to manage risk. All these variables will affect the complexity of implementation and sustainable operation.
Some companies have adopted a significantly simplified DTP scheme which has come to be known as DTP “Lite” which still has many of the benefits of DTP, but with some compromise.
Benefits of Direct to Pharmacy
In our experience adopting DTP has resulted in:
- better supply chain management
- improved relationships with customers and service providers
- removal of costs from wholesalers who no longer have working capital and risk tied up in stock
…..and ultimately a better service for the patient.
How can we help you in this process?
We can help from decision support, through supply chain design and on to negotiation and contract management. We have experience of the end-end process and can either simply advise or drive the change management process in your company.
Call or e-mail us for further information on how it could benefit your company.