Pharmaceutical trading and distribution Industry – Challenges, trends, and technical solution to advance business
The world wide pharmaceutical market is approximately worth USD 1,204.8 billion* which heavily rests on the shoulders of the global pharmaceutical distribution industry. The aim of the pharma distribution industry is to make the right products available for the right customer, in the right amount, at the right time.
The pharmaceutical supply chain is a dynamic process, described as a forward flow of materials and a backward flow of information & funds among multiple operating units both within and between the chain members.
The pharmaceutical distribution industry comprises of multiple layers. The outbound supply chain can be very complicated with various stakeholders such as clearing and forwarding (C&F), super stockists, dealers, distributors, and sub-stockists. Additionally, a wide range of collaborators are also involved in the pharmaceutical supply chain, including manufacturers, wholesale distributors, and pharmacy benefit managers (PBM). There are many variations on this basic structure of the pharmaceutical supply chain, largely due to the constantly evolving players in the supply chain.
Transformational technologies such as an ERP software fulfills the need to transform the way this industry operates with its industry-oriented solutions.
Challenges prevailing in this industry
Shortage of Skilled Talent
The shortage of human capital such as pharmacists, regulatory experts, competent managers, and salespeople, in the pharmaceutical and healthcare sectors of emerging /developing markets is a systemic challenge that cannot be solved overnight as education and infrastructure takes decades to improve. For larger companies, the problem can be mitigated by paying high salaries and bringing in foreign skilled talent from other countries. However, these same options don’t exist for smaller distributors.
Complex Regulatory Environments
With the advent of new products and the increase in their reach in the domestic as well as global markets, there has been an equal increase in the governing bodies imposing various regulations which are growing in numbers with every passing day. The government and the regulatory authorities have implemented stringent protocols to bring order in the industry. In the last few years, the pharma and healthcare regulators have been actively implementing stringent rules and guidelines across the manufacturing, retail, sale, and storage of drugs, among other processes. Hence, the pharmaceutical industry needs to get compliant with these requirements to ensure they do not incur any loss on spoilt cargo.
Lack of visibility into the supply chain may be the root cause of many challenges such as drug shortages, counterfeits, and opioids. The path to visibility represents more than an ability to track-and-trace goods for the consumer’s sake. In some cases, it may also boost margins and result in a safer product.
Globalization has increased the dependency of countries on each other and has given them easy accessibility and affordability to better quality pharmaceutical products. This puts pressure on the pharmaceutical distribution industry to have the life-saving drugs delivered efficiently and effectively without tampering with its life-saving quality.
Trends and Opportunities on the global scale
Navigating New Business Paradigm
With the advent of the current distribution paradigm, there is an expectation that distributors will continue investing in a diversity of services, in their provider customers and in their trading partner’s need to succeed. To remain partners of choice to the manufacturers of the future, major distributors will need to navigate these new provider customers and possess the infrastructure and expertise to support new product launches for these entities.
This presents ample opportunities for distributors to offer manufacturers and providers a broader suite of services, including wellness products beyond pharmaceuticals, as well as patient-centered support and adherence programs.
Patient Centric Distribution System
The pharmaceutical distribution industry has been pivoting toward medicines produced for specific patients, which then presents a need for Direct-to-Patient (DtP) shipments. This approach is seen as the next frontier for specialized logistics and commercialization services.
Every market around the globe is becoming more customer centric. Patient surveys play an increasingly important role in the way the pharmaceutical distribution system operates worldwide. Enterprises are forming commercial strategies based on the collected customer data. Observing and improving customer satisfaction is an important aspect even in the medical world.
Significance of E-commerce
The retail pharmacy segment has been relatively late to join the e-commerce bandwagon. However, the younger generation has shown support for this channel, and the consumer base of these portals is steadily increasing.
Investment in New Technologies
The data available is highly sensitive in nature and requires careful scrutiny. Automation of the segment would ensure the safety of the data and minimize the risk of errors in the system.
Information Technology (IT) Establishment
New technologies can be used to accurately determine sales forecast, while reducing inventory costs by addressing the issue of inactive inventory. The visibility from the sales forecast causes less bullwhip effects and increases reliability.
Blockchain allows for the storage of information in a way that is permanent and unalterable. Every new transaction is another “block” added to the “chain.” Blockchain accommodates decentralized data storage by connecting and duplicating information across a network that can be easily accessed but not manipulated.
Influence of Artificial Intelligence
The speeds, accuracy, and efficiency that AI’s myriad applications have brought to this sector allow for greater benefits to the industry and we are yet to see its full potential.
Why Orion™ ERP is the right technical solution
Orion™’s pharma business suite is an integrated IT solution tailored for the global pharmaceutical distribution sector addressing the needs of brand analysis, product listing, pricing strategies, customer loyalty, competitor analysis, online retailing, logistics and distributors. The solution is a highly functional product that fits the pharmaceutical industry and focuses on pharmaceutical retailer, distributor & warehouse management, customer service, collaborative forecasting, procurement, and distribution logistics, while also providing financial & business intelligence. The ability to link customers to supplier contracts, capture and analyze demand at the retail level, and to aggregate this information back to the regional and national level for production and replenishment, can improve national and regional sales performance. Additionally, closer alignment of global supply contracts tied to Forex contracts, guarantees margins, and ensures that currency cash flows are aligned with purchasing commitments. Orion™ ERP software optimizes business operations and analysis, helping you to maximize profits by focusing on:
- Increased customer awareness and personalized service
- Optimized warehouse utilization
- Reduced costs
- Improved productivity
- Optimized supply chain collaboration
- Closed loop batch control and ‘best by date’ handling
- Automated decision support
- Enhanced profits and measurable ROI
Designed in collaboration with world-leading pharmaceutical manufacturers and distributors, Orion™ incorporates advanced customer-oriented functionality meeting critical requirements such as processing high order volumes; EDI, XML or Web services communications; and delivery of pallets or cartons in-sequence with extremely short lead-times. It supports rapid identification of products with supporting specifications and pricing, online availability checking, original manufactures’ recalls, and product sales restrictions, thereby translating sales demands directly to suppliers’ products. All applications support multi-language, multi-currency, and multi-company processes.
Pharmaceutical trading businesses mainly engage in wholesale, export, and distribution across geographies where they cater to the demands of their customers. However, though this vertical has become the lifeline of the entire globe, yet it encounters countless challenges in its day-to-day functioning. Moreover, it has experienced numerous trends and opportunities that determine the course this vertical would take in the years to come. Orion™ ERP applies competence and expertise specific to the global pharmaceutical industry to offer it the right integrated solution and comprehensive services.