G G IRP G G IRP 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
IRPGGIRP
29 March 2006
IRPGGIRP 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
IRPGGIRP
29 March 2006
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.
IRPGGIRP
29 March 2006
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!
IRPGGIRP
29 March 2006
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
IRPGGIRP
29 March 2006
The concept of pharmaceutical full-line
wholesaling
IRPGGIRPthe vital link in healthcare
IRPGGIRP
29 March 2006
The typical perception...
… ever thought why the medicines are readily available when and where you need them?
Pharmacist dispenses & advises
communicatesinnovation
Pharmaceutical Company develops andmanufactures drugsPatient has an
illness
prescribes & advises
Doctormakes a diagnosis
IRPGGIRP
29 March 2006
The right perception...
PHARMACEUTICAL FULL-LINE WHOLESALERS ARE
THE VITAL LINK IN HEALTH CARE
Pharmacist dispenses & advises
communicatesinnovation
Pharmaceutical Company develops andmanufactures drugsPatient has an
illness
prescribes & advises
Doctormakes a diagnosis
IRPGGIRP
29 March 2006
Full-line Wholesaling
INDUSTRY INDUSTRY INDUSTRY INDUSTRY
PHARMACY PHARMACY PHARMACY PHARMACY
FULL-LINE WHOLESALER FULL-LINE WHOLESALER
3.500 manufacturers
133.000 retail pharmacies in the EU-22
IRPGGIRP
29 March 2006
Short Line Wholesaling
133.000 retail pharmacies in the EU-22
PHARMACY PHARMACY PHARMACY PHARMACYPHARMACY
3.500 manufacturers
INDUSTRY INDUSTRY INDUSTRY INDUSTRY
SHORTLINERSHORTLINER SHORTLINER
FULL-LINER FULL-LINER FULL-LINER FULL-LINER
IRPGGIRP
29 March 2006
Single Channel System
FULL-LINE WHOLESALER
FULL-LINE WHOLESALER
FULL-LINE WHOLESALER
133.000 retail pharmacies in the EU-22
PHARMACY
PHARMACY
PHARMACY
PHARMACY
PHARMACY
INDUSTRY INDUSTRY INDUSTRY INDUSTRY
3.500 manufacturers
IRPGGIRP
29 March 2006
The vital link in healthcare
If the vital link breaks, the safe and continuous distribution and supply of medicines CANNOT be guaranteed!!!
The vital link in healthcareThe vital link in healthcare
MANUFACTURER CONSUMERWHOLESALER PHARMACIST
IRPGGIRP
29 March 2006
Ways for further expansion
WHOLESALER
PHARMACIST
Integ
ration
Integ
ration
Vertical integration downwards:
Wholesalers buying pharmacies
IRPGGIRP
29 March 2006
Ways for further expansion
MANUFACTURER
WHOLESALER
Inte
gra
tio
nIn
teg
rati
on Vertical integration
upwardsWholesalers buying
a manufacturer (generic)
IRPGGIRP
29 March 2006
Ways for further expansion
WHOLESALER
IntegrationIntegrationSERVICESSERVICES IntegrationIntegration
Horizontal integration Wholesalers buying Other wholesalers,
Services providers (IT, pre-wholesaling,…)
SERVICESSERVICES
IRPGGIRP
29 March 2006
Economic Aspects of pharmaceutical
full-line wholesaling
IRPGGIRPthe vital link in healthcare
IRPGGIRP
29 March 2006
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.
IRPGGIRP
29 March 2006
Percentage of Medicines (Quantity) distributed by full-line Wholesalers, EU-22, 2004
source: IPF
Patients (100%)
Wholesaler (100%)
87,7% 8,5% 1,2%
Retail pharmacies
Hospitalpharmacies
Dispensingdoctors
Drugstores Others
0,2% 2,4%
7,7%0,4% 0,3%90,7% 0,8%
Su
pp
lyD
em
an
d
IRPGGIRP
29 March 2006
Transactions of pharmaceutical wholesalers
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!
source: IPF
IRPGGIRP
29 March 2006
Aggregate multiplying effects on employment and value addeed
Economy as a whole
2.61 Jobs
2.23 Euro
Pharmaceutical Wholesaling
1 Euro
1 Job
source: IPF
IRPGGIRP
29 March 2006
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
Who is paying for medicines in Europe?
IRPGGIRP
29 March 2006
The European Market– Regulated wholesale margins –
NONODENMARK
FINLAND
LUXEMBOURG
NETHERLANDS
SWITZERLAND
NORWAY
SWEDEN
SLOVENIA
YESYES
UNITED KINGDOM
LITHUANIA
LATVIA
FRANCE
GERMANY
SPAIN
AUSTRIA
BELGIUM
IRELAND
GREECE
PORTUGAL
ITALY
ESTONIA
POLAND
IRPGGIRP
29 March 2006
Top 5 pharmaceutical wholesalers worldwide (sales 2004, in billion €)
57.153.9
43.2
19.216.2
0
10
20
30
40
50
60
CardinalHealthCardinalHealth CelesioCelesioMcKessonMcKesson AmerisourceAmerisourceBergenBergen
PhoenixPhoenix
IRPGGIRP
29 March 2006
Top 3 pharmaceutical wholesalers in Europe (sales 2004, in billion €)
19.2
16.2
12.7
0
2
4
6
8
10
12
14
16
18
20
CelesioCelesio PhoenixPhoenix AllianceAlliance UniChemUniChem
IRPGGIRP
29 March 2006
Market Share of the top-3 European Full-line wholesalers in the EU-22
Pan-European wholesalers
Others
Source: Alliance UniChem, Celesio, Phoenix, GIRP 2004
46.5%
53.5%
IRPGGIRP
29 March 2006
Number of full-line wholesalers in 2004
133
58
5791116
0
20
40
60
80
100
120
140
IT ESP GER UK AUT FR NLFR: Wholesalers operating overseas not considered
source: IPF
IRPGGIRP
29 March 2006
Number of warehouses of full-line wholesalers in 2004
254
191 189
129
2518
54
0
50
100
150
200
250
300
IT ESP FR GER UK AUT NL
FR: Warehouses overseas not considered
source: IPF
IRPGGIRP
29 March 2006
Share of different distributors in the pharmacy market, 2004
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
UK
NL
IT
GER
FR
ESP
AUT
EU-15
EU-22
Full-line wholesaler Short-line wholesaler Direct distribution Others
source: IPF
IRPGGIRP
29 March 2006
Pharmaceuticals and non-pharmaceutical products on stock (in thousand), 2004
90
76
50
3328
18
28
54
2533
2114 12 10
0
10
20
30
40
50
60
70
80
90
100
GER IT AUT NL FR UK ESP
Products on stock Pharmaceuticals on stocksource: IPF
IRPGGIRP
29 March 2006
Legislation governing our
sector
IRPGGIRPthe vital link in healthcare
IRPGGIRP
29 March 2006
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
IRPGGIRP
29 March 2006
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)
IRPGGIRP
29 March 2006
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.
IRPGGIRP
29 March 2006
The distribution of medicines in
Europe
IRPGGIRPthe vital link in healthcare
IRPGGIRP
29 March 2006
There is NO EUROPEAN DISTRIBUTION of medicines…
it is still a regional or at the most a national business…
IRPGGIRP
29 March 2006
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.
IRPGGIRP
29 March 2006
Threats for full-line wholesalers
IRPGGIRPthe vital link in healthcare
IRPGGIRP
29 March 2006
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”
IRPGGIRP
29 March 2006
Development of Margins
Development of Wholesale Margins on Pharmacy Purchase Prices
0
20
40
60
80
100
120
1 2 3 4 5 6
from 1989 index 100 to 2004 margin 71.6
Ind
ex,
Yea
r 19
89 =
100
source: IPF
IRPGGIRP
29 March 2006
Direct sales
Increase in direct sales from manufacturers to pharmacies
(source: IMS)
0
2
4
6
8
10
12
14
16
Germ
any
Fran
ce UK
Spain
Austri
a
Irlan
d
2003
2004
IRPGGIRP
29 March 2006
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 ?
IRPGGIRP
29 March 2006
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
IRPGGIRP
29 March 2006
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.
IRPGGIRP
29 March 2006
The only way to avoid counterfeit medicines
Develop a close, interlinked fast trackDevelop a close, interlinked fast trackinformation system involving authoritiesinformation system involving authorities
and ALL partners of the supply chain!and ALL partners of the supply chain!
WholesalerWholesaler
PharmacistPharmacist
ManufacturerManufacturer
AUTHORITIES
IRPGGIRP
29 March 2006
IRPGGIRP the vital link in healthcare
GIRP – The European Association of Pharmaceutical Full-line Wholesalers13B, Avenue de TervurenB – 1040 Brussels+32 (0) 2 777 99 77www.girp.org
Thank you for your attention !