Reduced Wholesaling? ….it does what it says on the tin !
Historically, pharma companies sold to as many wholesalers as they felt comfortable with, selling their products to these customers at an industry accepted norm of 12.5% discount from the NHS list price. The rationale for the size of this discount is lost in the midst of time, but at some point when medicines were less complex and less expensive than they are now and the costs of distribution, due to lack of mechanisation, were high, this percentage discount was probably a fair price to pay to have your products distributed into the market.
In time some of this discount was passed on to the retail pharmacies by the wholesalers to win accounts and business.
Of course the Department of Health’s clawback mechanism then saw that a large part of the 12.5% discount was returned to them through the pharmacy reimbursement process.
Pharma companies have challenged the 12.5% accepted norm. In simple terms, wholesalers tender for the opportunity to be one of a select few wholesalers to provide distribution services for the Pharma company.
This has the effect of putting the same volume of wholesale sales through a fewer number of wholesalers and the historical 12.5% discount price previously given is re-negotiated in to an agreement with associated services.
This process must be performed in a controlled and pro-competitive manner with an eye on the PPRS scheme rules.
There are many additional benefits to the pharma company of such an arrangement:
- close account management with selected wholesalers
- fewer relationships and customers to manage
- increased service levels with wholesalers
- higher visibility of reporting from wholesalers
- potentially reduced pre-wholesaling costs
Can we help you in this process?
If you need any help in deciding if a reduced wholesaling model might be the appropriate strategy for your company’s portfolio, or even just some of your products, but you don’t know where or how to start, then do contact us. We would be happy to have a conversation to outline the services we can offer, and the opportunities that might as yet be uncovered for your specific situation.