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the vital link in healthcare

the vital link in healthcare. Challenges and Changes in the European Distribution of Medicines. René Jenny GIRP President Monika Derecque-Pois GIRP Secretary General Brussels, 29 th March 2006. What is GIRP?.

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the vital link in healthcare

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  1. the vital link in healthcare Challenges and Changes in the European Distribution of Medicines René JennyGIRP President Monika Derecque-PoisGIRP Secretary General Brussels, 29th March 2006

  2. What is GIRP? • Founded in 1960, GIRP is the umbrella organisation of pharmaceutical full-line wholesalers in Europe. • The members of GIRP: • employ about 140.000 staff • hold products on stock from over 3.500 manufacturers • supply above 100.000 medicines • distribute medicines throughout the whole continent to more than 133.000 pharmacies • GIRP and its members ensure that medicines are delivered in a timely, safe and efficient way and thereby guarantee the access to medicines for patients throughout Europe.

  3. What is a full-line Wholesaler? • Pharmaceutical full-line wholesalers… • Hold a full range of medicines, including seldom used, but vital medicines • Hold the necessary stock for their area of activity • Make medicines continuously available: 24 hours a day, 365 days a year (European average delivery time: 2-4 hours) • Deliver to ALL pharmacies in their region • Recognize a public service obligation to supply many slow-moving medicines which are often vital to meet the complete needs of patients Full-line wholesalers ensure that even the most isolated patients can receive the most specialized medicines via their pharmacist in a safe and timely manner!

  4. GIRP Membership • Full Members • National associations of pharmaceutical full-line wholesalers and the 4 largest European companies/groups in EU and EFTA countries • Associated Professional Members • National associations/companies of pharmaceutical full-line wholesalers in Europe • Associated External Members • Companies/organisations whose business interests are related to the distribution of medicines

  5. The concept of pharmaceutical full-line wholesaling the vital link in healthcare

  6. The typical perception... communicates innovation prescribes & advises Doctor makes a diagnosis Pharmacist dispenses & advises Pharmaceutical Company develops and manufactures drugs Patient has an illness … ever thought why the medicines are readily available when and where you need them?

  7. The right perception... communicates innovation prescribes & advises Doctor makes a diagnosis Pharmacist dispenses & advises Pharmaceutical Company develops and manufactures drugs Patient has an illness PHARMACEUTICAL FULL-LINE WHOLESALERS ARE THE VITAL LINK IN HEALTH CARE

  8. Full-line Wholesaling INDUSTRY INDUSTRY INDUSTRY INDUSTRY FULL-LINE WHOLESALER FULL-LINE WHOLESALER PHARMACY PHARMACY PHARMACY PHARMACY 3.500 manufacturers 133.000 retail pharmacies in the EU-22

  9. Short Line Wholesaling INDUSTRY INDUSTRY INDUSTRY INDUSTRY SHORTLINER SHORTLINER SHORTLINER FULL-LINER FULL-LINER FULL-LINER FULL-LINER PHARMACY PHARMACY PHARMACY PHARMACY PHARMACY 3.500 manufacturers 133.000 retail pharmacies in the EU-22

  10. Single Channel System INDUSTRY INDUSTRY INDUSTRY INDUSTRY FULL-LINE WHOLESALER FULL-LINE WHOLESALER FULL-LINE WHOLESALER PHARMACY PHARMACY PHARMACY PHARMACY PHARMACY 3.500 manufacturers 133.000 retail pharmacies in the EU-22

  11. The vital link in healthcare MANUFACTURER WHOLESALER PHARMACIST CONSUMER If the vital link breaks, the safe and continuous distribution and supply of medicines CANNOT be guaranteed!!! The vital link in healthcare

  12. Ways for further expansion WHOLESALER Integration PHARMACIST Vertical integration downwards: Wholesalers buying pharmacies

  13. Ways for further expansion MANUFACTURER Integration WHOLESALER Vertical integration upwards Wholesalers buying a manufacturer (generic)

  14. Ways for further expansion Integration Integration SERVICES SERVICES WHOLESALER Horizontal integration Wholesalers buying Other wholesalers, Services providers (IT, pre-wholesaling,…)

  15. Economic Aspects of pharmaceutical full-line wholesaling the vital link in healthcare

  16. Economic Aspects • Study on: • « The European Pharmaceutical Wholesale Industry: Structure, Trends and socio-economic Importance » • Can be downloaded from www.girp.org • The wholesale industry not only creates value added, but also has direct, indirect and induced effects on employment.

  17. Percentage of Medicines (Quantity) distributed by full-line Wholesalers, EU-22, 2004 Wholesaler (100%) Supply 87,7% 0,2% 8,5% 2,4% 1,2% Retail pharmacies Drugstores Hospital pharmacies Others Dispensing doctors 90,7% 0,4% 7,7% 0,3% 0,8% Demand Patients (100%) source: IPF

  18. Transactions of pharmaceutical wholesalers source: IPF The coninuous supply of medicines involves more than 28 billion transactions between pharmacies, wholesalers and manufacturers. Without wholesalers, this number would increase to 528 billion transactions per year!

  19. Aggregate multiplying effects on employment and value addeed Economy as a whole Pharmaceutical Wholesaling 1 Euro 2.23 Euro 1 Job 2.61 Jobs source: IPF

  20. Who is paying for medicines in Europe? • Pricing and reimbursement issues underlie the principal of “subsidiarity” • The social security systems of the Member States decide upon the pricing and reimbursement of medicines • Pricing and reimbursement varies widely in the EU • In some Member States products can only be placed on the market after the pricing and/or reimbursement decision has been taken

  21. The European Market– Regulated wholesale margins – AUSTRIA BELGIUM YES NO DENMARK ESTONIA FRANCE FINLAND GERMANY NORWAY GREECE IRELAND LUXEMBOURG ITALY NETHERLANDS LATVIA POLAND SWEDEN PORTUGAL SPAIN SWITZERLAND LITHUANIA SLOVENIA UNITED KINGDOM

  22. Top 5 pharmaceutical wholesalers worldwide (sales 2004, in billion €) McKesson CardinalHealth AmerisourceBergen Celesio Phoenix

  23. Top 3 pharmaceutical wholesalers in Europe (sales 2004, in billion €) Celesio Phoenix AllianceUniChem

  24. Market Share of the top-3 European Full-line wholesalers in the EU-22 46.5% Pan-European wholesalers 53.5% Others Source: Alliance UniChem, Celesio, Phoenix, GIRP 2004

  25. Number of full-line wholesalers in 2004 140 133 120 100 80 58 60 40 16 20 11 9 7 5 0 IT ESP GER UK AUT FR NL FR: Wholesalers operating overseas not considered source: IPF

  26. Number of warehouses of full-line wholesalers in 2004 300 254 250 191 189 200 150 129 100 54 50 25 18 0 IT ESP FR GER UK AUT NL FR: Warehouses overseas not considered source: IPF

  27. Share of different distributors in the pharmacy market, 2004 EU-22 EU-15 AUT ESP FR GER IT NL UK Full-line wholesaler 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Short-line wholesaler Others Direct distribution source: IPF

  28. Pharmaceuticals and non-pharmaceutical products on stock (in thousand), 2004 100 90 90 76 80 70 54 60 50 50 40 33 33 28 28 25 30 21 18 14 20 12 10 10 0 GER IT AUT NL FR UK ESP Products on stock Pharmaceuticals on stock source: IPF

  29. Legislation governing our sector the vital link in healthcare

  30. EU Pharmaceutical Legislation • The pharmaceutical legislation is lying under the Treaty principle of free movements of goods • The Community Code relating to pharmaceutical products for human use is Directive 2001/83/EC • Amended in 2004 after a 2-year review process by Directive 2004/27/EC • Both Directives have to be implemented in the national legislations of the 25 Member States by 31st October 2005 • The Guidelines on Good Distribution Practice (94/C 63/03) guarantee the quality of the medicines delivered • Unlike a directive, guidelines are only recommendations and therefore not binding

  31. EU Pharmaceutical Legislation • Provisions on wholesale of pharmaceutical products are to be found in Title VII • Distribution authorisations • Distribution and storage requirements • Public service obligation • New provisions especially concern • The storgage of products in any Member State if the products have 1 marketing autorisation (article 76) • The obligation of continuous supply of products from manufacturers to wholesalers and distributors to pharmacies (article 81)

  32. Implementation of Directive 2004/27/EC • Article 81 – paragraph 2 • The holder of a marketing autorisation for a medicinal product and the distributors of the said medicinal product actually placed on the market in a Member State shall, within the limits of their responsibilities, ensure appropriate and continued supplies of that medicinal product to pharmacies and persons authorised to supply medicinal products so that the needs of patients in the Member State in question are covered.

  33. The distribution of medicines in Europe the vital link in healthcare

  34. There is NO EUROPEAN DISTRIBUTION of medicines… it is still a regional or at the most a national business…

  35. Distribution of medicines in the EU • Marketing authorisations are either granted: • for each Member State and then mutually recognised or • centrally granted by the EMEA for the new innovative products. The EMEA authorisation is valid throughout the EU Member States. • Although the EMEA (European Medicines Agency) has celebrated its 10th anniversary there is still NOT A SINGLE PRODUCT, WHICH CAN BE DISTRIBUTED THROUGHOUT THE EU, without additional authorisations. • In order to make consumers and patients benefit from the immediate accessibility of the most innovative medicines, pharmaceutical wholesalers ask the European institutions to allow them to distribute the centrally registered medicines without additional authorisations.

  36. Threats for full-line wholesalers the vital link in healthcare

  37. Threats for full-line wholesalers • Erosion of margins • Liberalisation of retail markets • New distribution channels to patients and consumers • Internet and mail-order pharmacies • Direct distribution • Increasing generic penetration • Counterfeit Medicines • Supply Quotas • Attempts to use wholesalers as logistic providers – “The Pfizer Approach”

  38. Development of Margins Development of Wholesale Margins on Pharmacy Purchase Prices 120 100 80 60 Index, Year 1989 =100 40 20 0 1 2 3 4 5 6 from 1989 index 100 to 2004 margin 71.6 source: IPF

  39. Directsales Increase in direct sales from manufacturers to pharmacies (source: IMS)

  40. The Pfizer Approach in Europe • Pfizer has challenged Spain with the introduction of the « new distribution system » • Pfizer now tries to implement their initial plan, selecting some wholesalers and using them as logistic providers, in Germany and the UK! • If wholesalers do not agree to Pfizer’s proposal, Pfizer threatens to use a logistic company to compete with wholesalers. Which country will be the next one ?

  41. Supply quota systems • Manufacturers in Europe impose supply quotas on wholesalers in an attempt to curb parallel trade and protect their innovative potentialities • Full-line wholesalers therefore regularly experience shortage on their geographic markets

  42. Counterfeit medicines • GIRP Members are committed to a « zero tolerance » towards counterfeits in the legal supply chain • Measures against counterfeits include • Regulation of Internet/mail order pharmacies and information to consumers about possible risks • Stringent control of licenses and GDP comppliance for non-full-line distributors • No more « spot markets » for medicines • No supply quota systems creating shortages • GIRP is in favour of a close collaboration between authoritites, manufacturers, wholesalers and pharmacies to develop an efficient early warning and tracking system.

  43. The only way to avoid counterfeit medicines Manufacturer Wholesaler Pharmacist AUTHORITIES Develop a close, interlinked fast trackinformation system involving authoritiesand ALL partners of the supply chain!

  44. the vital link in healthcare Thank you for your attention ! GIRP – The European Association of Pharmaceutical Full-line Wholesalers 13B, Avenue de Tervuren B – 1040 Brussels +32 (0) 2 777 99 77 www.girp.org

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