Alessandro de Luca

Senior Vice President

MERCK Group

T I T L E O F T H E P O W E R P O I N T1

Improving Access to HealthSupply Chain & DeliveryAddressing the Last Mile Challenge

AGENDA

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1) Access to Health and Supply Chain Challenges

2) Industry approach

3) Beyond a single company? LUMA

S U P P L Y C H A I N P R E S E N T A T I O N _ B R U S S E LS / S E P T E M B E R 2 0 1 3

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Many constraints to global access to quality medicines

• Leaves households responsible for the cost of essential medicines, placing the heaviest burden on the poor and sick who are least able to pay

Unfair Health Financing

• Inefficient procurement systems have been found to lead to payments of up to twice the global market price for essential medicines and lead to unnecessary waste of resources

Unreliable Supply

• Estimates show that half of all medicines are inappropriately prescribed, dispensed or soldIrrational Use

Barriers to Global Access within the BoP as identified by the WHO

• Medicines account for 25% to 70% of overall healthcare expenditure in developing countries compared to less than 15% in most high-income countries because of price levels

Unaffordable Prices

• One-third of WHO Member States have either no regulatory authority or only limited capacity to regulate the medicines market

• Recent assessments by WHO shows 50% to 90% of samples of anti-malarial drugs failed quality control tests and more than half of ARVs assessed did not meet international standards

Poor Quality Medicines

• Only 1% of medicines developed over the past 25 years were for tropical diseases and TB, which together account for >11% of global disease burden

• Over 90% of R&D is focused on diseases for the richest 20%

Lack of New Medicines

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The Supply Chain Objectives

Balance Supply & Demand• Ensure there is a

sufficient supply available to meet demand

• Provide consistent uninterrupted supply.

Cost• Minimize company

cost and cost implications to countries and patients

Quality & Safety• supply of quality

medicines till the final patient

• Ensure drug safety in each step of the supply chain

To deliver the 3 of them is definitively a challenge in developing countries

Typical Pharma Distribution Channels and…

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…Distribution Systems

S U P P L Y C H A I N P R E S E N T A T I O N _ B R U S S E LS / S E P T E M B E R 2 0 1 3

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The distribution challenge in Developing Countries:

Factor OECD countries Developing counries

Regulatory structure Strong well-defined laws and overall good ability to enforce regulations.

Weak fragmented regulatory structures, ill-defined laws in some instances, and poor ability to enforce regulations.

Distribution systems Few large distributors with nationwide coverage

Relatively low markups in distribution

Very fragmented distribution market

Few or none with nationwide coverage

High markups in distribution

The differences in the regulatory structure and distribution systems of medicines between developing income countries is significant when compared with high income countries .

Number of intermediaries in the channel

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Source: ACT Watch

DEVELOPING COUNTRIES DEVELOPED COUNTRIES

“People will tell you that delivering to Africa is impossible. Please don’t worry because that isn’t true.

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“People will tell you that delivering to Africa is impossible. Please don’t worry because that isn’t true.

We can and will always find a way.

But just don’t expect it to be the way you think or are used to in Europe.”

Global Logistics Provider, June 2013

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AGENDA

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1) Access to Health and Supply Chain Challenges

2) Industry contribution: Some examples

3) Beyond a single company? LUMA

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Registration Manufacturing ShippingClearing

at country Airport

Delivery to Central

Warehouse

Delivery to Patient

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The Last Mile, who is accountable?

Yesterday

WHOPZQ Merck Serono MoH, NGO…

MERCK Example: Logistics for PraziquantelWHO-Merck Donation Partnership to eliminate Schistosomiasis

THE LAST MILECHALLENGE

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Registration Manufacturing ShippingClearing

at country Airport

Delivery to Central

Warehouse

Delivery to Patient

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The Last Mile, who is accountable?

Yesterday

WHOPZQ Merck Serono

Today PZQ Merck Serono

MoH, NGO…

MERCK Example: Logistics for PraziquantelWHO-Merck Donation Partnership to eliminate Schistosomiasis

THE LAST MILECHALLENGE

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Registration Manufacturing ShippingClearing

at country Airport

Delivery to Central

Warehouse

Delivery to Patient

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The Last Mile, who is accountable?

Yesterday

WHOPZQ Merck Serono

TodayPZQ Merck Serono

Tomorrow ? Last Mile Alliance Partners (LUMA ?)

MoH, NGO…

MERCK Example: Logistics for PraziquantelWHO-Merck Donation Partnership to eliminate Schistosomiasis

THE LAST MILECHALLENGE

Sanofi Train the Trainer ProgramInter-University Degree in pharmaceutical supply chain management

- Objective: improve supply chain management of medicines and other commodities for HIV/aids, malaria and tuberculosis

- Inter-University degree from Ouagadougou (Burkina Faso), Auvergne and Lyon (France) Universities

- Target audience : certified pharmacists working in sub-Saharan Africa

- Results (2011-2013): approx. 120 students from 14 countries

AGENDA

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1) Access to Health and Supply Chain Challenges

2) Industry approach

3) Beyond a single company, towards collective action? LUMA

S U P P L Y C H A I N P R E S E N T A T I O N _ B R U S S E LS / S E P T E M B E R 2 0 1 3

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Strengthening Supply Chain: Last United Mile for Africa (LUMA)

LUMA is a partnership currently under development to strengthen the supply chain in Africa. The goal of the alliance is to: expand access, secure supply, improve health and support development

Last United Mile for Africa (LUMA)

S U P P L Y C H A I N P R E S E N T A T I O N _ B R U S S E LS / S E P T E M B E R 2 0 1 3

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Thank you!