Post on 28-Nov-2014
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© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
9 April 2023 1
Supply Chain Changes
A manufacturer’s perspective
Mike Isles Andy Carr
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
MPI Associates Limited
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
9 April 2023 3
Andrew Carr Associates Ltd
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
9 April 2023 4
Two high level supply chain models
•More accurately DTC–ie “Direct to Customer” channel
– Retail Pharmacists– Hospitals– Dispensing Doctors
•Selling to:– 14,000 customers (from eg 14)
•Using “partners” to perform a range of distribution services
DTP
• Sell product to a small number of wholesalers
– Ownership of stock is still with wholesalers
– Risks and rewards still owned by wholesalers
– Commercial relationship with “customers” not owned by manufacturer
– Downstream discounts determined by wholesalers
Reduced wholesaler
There are benefits of both to manufacturers
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
9 April 2023 5
Supply Chain – Traditional method
Department of Health
Manufacturer Control Outside Manufacturer Control
pre-wholesaler /
own warehouse
~14 Wholesalers
Manufacturer
Patient
Pharmacy
?%
?%
margin
? %
12.5%
disc
clawback
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
9 April 2023 6
Supply Chain – Reduced wholesaling
Department of Health
Manufacturer Control Outside Manufacturer Control
pre-wholesaler /
own warehouse
2-3 Wholesalers
Manufacturer
Patient
Pharmacy
?%
?%
margin
? %
?%
disc
clawback
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
9 April 2023 7
Supply Chain – DTP
Department of Health
Manufacturer Control Outside Manufacturer Control
pre-wholesaler /
own warehouse
Agents/LSP
Manufacturer
Patient
Pharmacy
Man.
terms
? %
clawback
Control & ownership move further down the Supply Chain
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
8
Manufacturers’ supply chain activity
1. Pfizer (03/07) (U)
2. Astellas*(11/07) (U)
3. AstraZeneca (02/08) (A,U)
4. GSK (11/08) (A,U)
5. Lilly(07/09)(A,P)
DTP1. Napp(10/07)
(A,P,U)
2. sanofi aventis (11/07)
(A,P,U)
3. Novartis (08/08) (A,U)
4. Roche (01/09) (A,U)
5. Janssen-Cilag(01/09)
(A,P,U)
6. Novo Nordisk (03/09) (P,U)
7. UCB* (11/09)(A,P,U)
8. S & N (06/09)
(A,P,U)
9. Bayer Schering(07/09)(A,P,U)
10. BMS(08/09) (A,U)
11. MSD (10/09) (A,P,U)
12. LEO Pharma (10/09) (A,P,U)
Reduced Wholesalers
A – AAH Pharmaceuticals Ltd
P – Phoenix Healthcare Distribution
U – Alliance Healthcare (Distribution) (Unichem) * Product specific arrangements
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
October 2009 9
Manufacturers’ supply chain partners
1. Pfizer (03/07)
2. Astellas*(11/07)
U
A – AAH Pharmaceuticals Ltd
P – Phoenix Healthcare Distribution
U – Alliance Healthcare (Distribution) (Unichem) * Product specific arrangements
1. GSK (11/08)
2. AstraZeneca (02/08)
3. Novartis (08/08)
4. Roche (01/09)
5. BMS(08/09)
A & U1. Lilly(07/09)
A & P1. Novo Nordisk
(03/09)
P & U1. Napp(10/07)
2. sanofi aventis (11/07)
3. Janssen-Cilag(01/09)
4. S & N (06/09)
5. Bayer Schering(07/09)
6. MSD(10/09)
7. LEO Pharma (10/09)
8. UCB (11/09)
A, P, U
DTP programs
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Why are manufacturers changing?
9 April 2023 10
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
PPRS – direct impact on prices
9 April 2023 11
PPRS price reductions1993 – 2.5%1999 – 4.5%2005 – 7.5%2009 – 3.9%2010 – 1.9% 0
5
10
15
20
1993 1999 2005 2009 2010
Cummulative price reduction
Manufacturers have seen an 18% reduction in the price of
their medicines over 18 years, with a large patent
expiry cliff-edge approaching in forthcoming
years
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
PPRS – impact of price cuts
9 April 2023 12
Pharma Manufacturers are exploring all avenues to mitigate the impact of price cuts
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Why are manufacturers changing?
9 April 2023 13
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Supply and distribution legacies
9 April 2023 14
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Efficiency savings in UK distribution
9 April 2023 15
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Why are manufacturers changing?
9 April 2023 16
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Partnership approach
9 April 2023 17
Simplification, focus, opportunities
Supply partners Supply partners
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Win-win opportunities – Patient adherence/compliance
9 April 2023 18
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Why are manufacturers changing?
9 April 2023 19
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Increased visibility
• Getting closer to the point of medicine delivery brings the following benefits for manufacturers:– End–to-end supply chain visibility
– Reduction of product wastage
– Commercial relationships with end contractors (pharmacists/D Doctors)
– Reliable information on who is buying product
– Management of increased demand
9 April 2023 20
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Management of supply
9 April 2023 21
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Why are manufacturers changing?
9 April 2023 22
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Safety & security
9 April 2023 23
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
Summary
9 April 2023 24
© 2008 Andrew Carr Associates LtdAll Information is Strictly Private and Confidential and may
not be reproduced without consent of Andrew Carr Associates Ltd
9 April 2023 25
Supply Chain Changes
A manufacturer’s perspective
Mike Isles Andy Carr