29 March 2006 the vital link in healthcare Challenges and Changes in the European Distribution of...

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


PHARMACY PHARMACY PHARMACY PHARMACYPHARMACY

3.500 manufacturers


SHORTLINERSHORTLINER SHORTLINER

FULL-LINER FULL-LINER FULL-LINER FULL-LINER

IRPGGIRP

29 March 2006

Single Channel System

FULL-LINE WHOLESALER




PHARMACY

PHARMACY

PHARMACY

PHARMACY

PHARMACY


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


MANUFACTURER

WHOLESALER

Inte

gra

tio

nIn

teg

rati

on Vertical integration

upwardsWholesalers buying

a manufacturer (generic)

IRPGGIRP

29 March 2006


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


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


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


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


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 !

29 March 2006 the vital link in healthcare Challenges and Changes in the European Distribution of...

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