DTP is a slight misnomer as it should really read "Direct to Customer" in that supply to dispensing doctors and hospitals as well as pharmacists, are also covered by this new and innovative change to the supply chain.
What is DTP?
It is the supply of medicines direct from the manufacturer to the customer, using one or a number of distribution partners (typically, but not necessarily, former wholesalers).
It should not be confused with a reduction in the use of a number of wholesalers to perform the same traditional wholesaling job.
Manufacturers which have taken the initiative in this space:
- GSK implemented the very first DTP scheme in the mid-1990's. This agency model is being refined in November 2008 with the use of 2 agents.
- Pfizer went live with a new breed of DTP schemes in March 2007, and chose a single distributor for their products
- AstraZeneca implemented its DTP scheme with two distribution agents in February 2008.
- Lilly has implemented a 2 distributor DTP scheme in July 2009
OFT Market Study
In December 2007, the OFT delivered their medicines distribution market study, summarising that they are... "allowing manufacturers the flexibility to adopt the distribution method they consider most efficient and commercially attractive".
Reduced Wholesaling
In contrast to the above manufacturers adopting a DTP model, there are now an increasing amount of manufacturers who are choosing to simply reduce the number the wholesalers they sell to. This change process is certainly quicker to implement than a DTP model and still retains many of the benefits. Speed of implementation, simplicity of solution and reduction of internal inefficiencies are often the driving forces behind such changes. There are also the opportunities to discuss different commercial models, and to employ a range of wholesaler services not previously enjoyed by the manufacturer. A reduction in the number of wholesalers can reduce the internal and external costs of distribution, as well as forging closer working partnerships with these reduced number of wholesalers which can in turn increase service levels to customers.
The Imperative
All pharmaceutical manufacturers should look at these new and innovative supply chain solutions to increase the visibility of who is buying their products, get closer to their customers and remove inefficiencies.
In view of the benefits that this change can bring, it is in the interests of all manufacturers to review their supply chain options. If manufacturers do not make any changes to their supply chain, it must be part of a conscious and informed decision not to do so.