Download UNIVERSITATEA “TRANSILVANIA” BRASOV

UNIVERSITATEA “TRANSILVANIA” BRASOV
FACULTATEA DE STIINłE ECONOMICE
SCOALA DOCTORALĂ
DOMENIUL MARKETING
NEW MODELS WITHIN THE HEALTH CARE VALUE CHAIN
AND IMPLICATIONS ON
THE INTERNATIONAL PHARMACEUTICAL SECTOR
MODELE NOI ÎN LANłUL VALORIC AL ÎNGRIJIRII SĂNĂTĂłII
ŞI IMPLICAłII ÎN SECTORUL FARMACEUTIC INTERNAłIONAL
Summary of PhD Thesis
Rezumatul tezei de doctorat
Scientific Coordinator:
Prof. univ. dr. ec. Liliana DUGULEANĂ
Doctoral Student:
Thiemo HAFEMEISTER
Braşov, 2010
MINISTERUL EDUCATIEI, CERCETĂRII, TINERETULUI SI SPORTULUI
UNIVERSITATEA TRANSILVANIA DIN BRASOV
BRASOV, B-DUL EROILOR NR.29, 500036,
TEL. 026841300, FAX 0268410525
RECTORAT
CĂTRE...................................................................................................................................
Vă aducem la cunostinŃă că în data de 25 noiembrie 2010, ora 12.30, în corpul U, sala U II 3, la
Facultatea de ŞtiinŃe Economice şi Administrarea Afacerilor va avea loc susŃinerea publică a tezei
de doctorat intitulată:
”NEW MODELS WITHIN THE HEALTH CARE VALUE CHAIN AND IMPLICATIONS
ON THE INTERNATIONAL PHARMACEUTICAL SECTOR”’/
„MODELE NOI ÎN LANłUL VALORIC AL ÎNGRIJIRII SĂNĂTĂłII ŞI IMPLICAłII ÎN
SECTORUL FARMACEUTIC INTERNAłIONAL”,
elaborată de doctorand Thiemo Hafemeister, în vederea obŃinerii titlului stiinŃific de doctor,
în domeniul MARKETING.
COMPONENłA COMISIEI DE DOCTORAT
Numită prin Ordinul Rectorului UniversităŃii Transilvania Brasov
Nr. 4184 / 10.09.2010
PREŞEDINTE
Prof. univ. dr. ec. Ileana TACHE
Prodecan la Facultatea de ŞtiinŃe Economice
Universitatea “Transilvania” Brasov
CONDUCĂTOR STIINłIFIC
Prof. univ. dr. ec. Liliana DUGULEANĂ
Universitatea “Transilvania” Brasov
REFERENłI ŞTIINłIFICI
Prof. univ. dr. Aurelia Felicia STĂNCIOIU
Academia de Studii Economice Bucuresti
Prof. univ. dr. Ilie ROTARIU
Universitatea “Lucian Blaga” Sibiu
Prof. univ. dr. Niculaie ANTONOAIE
Universitatea “Transilvania” Brasov
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”NEW MODELS WITHIN THE HEALTH CARE VALUE CHAIN AND IMPLICATIONS
ON THE INTERNATIONAL PHARMACEUTICAL SECTOR”
Scientific coordinator:
Prof. univ. dr. Liliana DUGULEANĂ
Doctorand:
Thiemo Hafemeister
.
ABSTRACT
In all Western European Nations public health care systems are regulated by the state due to the fact
that no free market exists in terms of independent customer decisions. On this base the
pharmaceutical market is analyzed considering increasing healthcare costs, the major
pharmaceutical protagonists, as well as different pricing strategies, in Chapter 1.
The distribution channel from the pharmaceutical manufacturer up to the pharmacist will be
analyzed concerning actual structures and future potentials, in Chapter 2. Based on this analysis
considering concentration processes within the pharmaceutical sector future structures and
developments are forecasted, in Chapter 3. To understand and intensively reflect the upcoming
trends it is necessary to understand these changes from a theoretical perspective. Present marketing
models are being discussed and analyzed in Chapter 4. Next to the marketing models the different
selling behaviours are introduced as well, since the field force as the sales vehicle for the
pharmaceutical companies will be significantly affected by these changes as well.
The pharmaceutical environment is pretty well established. Nevertheless in terms of Marketing
models or deeper strategic analysis this area has not been widely covered yet from a theoretical
base. The thesis analyzes on an empirical base future distribution models and hereby assessing in
how far these models can be realized, what burdens and challenges will be faced and if the
necessary support by the key stakeholders is given, in Chapter 5.
Due to the lack of data an empirical study will be necessary to find a base what changes can be
realistically supported and in how far implementations are realistic.
Within this thesis the theoretical frame is given for the changes happening within the
pharmaceutical sector. After the theoretical foundation the implications mainly for the pharmacy
landscape are analyzed empirically, in Chapter 6. Based on a questionnaire an evaluation is done
within the supply chain and clearly analyzing key trends as well as future models. The market
changes are happening presently even faster and more aggressively, then originally expected.
Several trends are moving into the direction which was forecasted and the model created has a high
probability to forecast upcoming trends and developments, since margins are shrinking and
horizontal integration especially is being done to realize synergies. This prediction will be a chance
for all market stakeholders to prepare themselves and undertake preventive actions to react
specifically to market changes. Just with the help of these parameters are the effects and
implications within the healthcare sector assessable.
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„MODELE NOI ÎN LANłUL VALORIC AL ÎNGRIJIRII SĂNĂTĂłII ŞI IMPLICAłII ÎN
SECTORUL FARMACEUTIC INTERNAłIONAL”
Coordonator ştiinŃific:
Prof. univ. dr. Liliana DUGULEANĂ
Doctorand:
Thiemo Hafemeister
ABSTRACT
În toate Ńările Vest Europene, sistemele publice de îngrijire a sănătăŃii sunt reglementate de stat,
pentru că nu există piaŃă liberă, în sensul existenŃei deciziilor independente ale clienŃilor. De aceea
piaŃa farmaceutică este analizată considerând atât creşterea costurilor în sănătate, protagoniştii
majori în domeniul farmaceutic, cât şi diferitele strategii de preŃuri, în cadrul capitolului 1.
Canalul de distribuŃie, de la producătorul farmaceutic până la farmacist, este analizat pe baza
structurilor actuale şi viitor potenŃiale, în capitolul 2. Pe baza acestor analize, considerând procesele
de concentrare din intreriorul sectorului farmaceutic, se previzionează viitoarele dezvoltări şi
structuri, în capitolul 3. Pentru a înŃelege şi a reflecta intensiv la următoarele trenduri, este necesară
înŃelegerea schimbărilor din perspectivă teoretică. Actualele modele de marketing sunt discutate şi
analizate în capitolul 4. Odată cu modelele de marketing sunt prezentate diferite comportamente de
vânzare, pentru că forŃele de vânzare, care constituie forŃa motrice a companiilor farmaceutice, vor
fi în mod semnificativ afectate de aceste schimbări.
Mediul farmaceutic este destul de stabil. Fără îndoială, în termeni ai modelelor de marketing sau a
unei analize strategice mai profunde, acest domeniu nu a fost încă larg acoperit cu o bază teoretică.
Teza analizează, pe baze empirice, modele noi ale distribuŃiei, stabilind în ce măsură pot fi realizate
aceste modele, cu ce sarcini şi provocări se confruntă şi dacă este necesară implicarea principalilor
părŃi interesate, în capitolul 5.
Datorită lipsei de date este necesar un studiu empiric pentru a stabili baza unor schimbări care să fie
în mod real suportate şi în ce măsură acestea pot fi implementate.
Teza conŃine cadrul teoretic al schimbărilor care au loc în sectorul farmaceutic. După
fundamentarea teoretică sunt analizate empiric implicaŃiile, în principal, în mediul farmaceutic, în
capitolul 6. Pe baza unui chestionar, s-a realizat o evaluare a lanŃului de aprovizionare şi o analiză
clară a trendurilor cheie precum şi modele viitoare.
Schimbările pieŃei au loc în prezent, chiar mai repede şi mai agresiv, decât cele iniŃial aşteptate.
Câteva trenduri acŃionează în direcŃia previzionată şi modelul creat poate previziona trendurile şi
dezvoltările viitoare, pentru că marjele sunt în scădere şi integrarea orizontală este, în mod special,
menită să realizeze sinergii. Acestă previziune va fi o şansă pentru toŃi participanŃii pe piaŃă pentru a
se pregăti şi a întreprinde acŃiuni preventive de reacŃie specifică la schimbările pieŃei. Numai cu
aceşti parametri, efectele şi implicaŃiile din domeniul sănătăŃii sunt comensurabile.
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CONTENTS
INTRODUCTION .............................................................................. Error! Bookmark not defined.
CHAPTER 1 – THE PHARMACY MARKET ................................. Error! Bookmark not defined.
1.1 Increasing healthcare costs across the world ··································· Error! Bookmark not defined.
1.1.1 Health Care costs are a severe business problem................ Error! Bookmark not defined.
1.1.2 Opt-Out Incentives ............................................................ Error! Bookmark not defined.
1.1.3 Manage Supplier Performance........................................... Error! Bookmark not defined.
1.1.4 Disease Management options ............................................ Error! Bookmark not defined.
1.2 Pharmaceutical Market Analysis······················································ Error! Bookmark not defined.
1.2.1 Major therapeutic areas ..................................................... Error! Bookmark not defined.
1.2.2 Ten companies dominate the worldwide pharmaceutical marketError! Bookmark not defined.
1.2.3 The US market as the most lucrative market...................... Error! Bookmark not defined.
1.2.4 Blockbuster drugs are dominating the market .................... Error! Bookmark not defined.
1.2.5 Pharmaceutical growth ...................................................... Error! Bookmark not defined.
1.3 Health Care market············································································ Error! Bookmark not defined.
1.3.1 Expenses increase within the pharmaceutical sector........... Error! Bookmark not defined.
1.3.2. Sales share across the major regions throughout the world Error! Bookmark not defined.
1.3.3 Health Care expenditure growth across the countries ......... Error! Bookmark not defined.
1.4 Major pharmaceutical protagonists ·················································· Error! Bookmark not defined.
1.4.1 Pharmaceutical Manufacturing – Start of the process chain Error! Bookmark not defined.
1.4.2 The physician – intermediate within the centre of interests Error! Bookmark not defined.
1.4.3 Pharmaceutical wholesalers............................................... Error! Bookmark not defined.
1.4.4 Pharmacists and the portfolio of a pharmacy...................... Error! Bookmark not defined.
1.5 Reference pricing versus co-payment ·············································· Error! Bookmark not defined.
1.5.1 Reference Pricing .............................................................. Error! Bookmark not defined.
1.5.2 Generic versus branded drugs............................................ Error! Bookmark not defined.
1.5.3 Co-payment....................................................................... Error! Bookmark not defined.
1.5.4 Reference pricing summary ............................................... Error! Bookmark not defined.
1.6 Market development ································································· Error! Bookmark not defined.
CHAPTER 2 - CONCENTRATION PROCESS............................... Error! Bookmark not defined.
2.1 The structure of pharmaceutical markets ································ Error! Bookmark not defined.
2.2 Measures affecting prices internationally ······························· Error! Bookmark not defined.
2.3 Types of intervention in pharmaceutical markets ···················· Error! Bookmark not defined.
2.4 Concentration process within the pharmaceutical field force environmentError! Bookmark not defined.
2.5 Concentration process within the wholesale sector·················· Error! Bookmark not defined.
2.5.1 Growing share of the big 3 biggest worldwide operating wholesalersError! Bookmark not defined.
2.5.2 Only the big survive in an increasing market battle............ Error! Bookmark not defined.
2.5.2.1 Smaller rivals are being put under pressure.................. Error! Bookmark not defined.
2.5.2.2 Oligopolistic structures are established ........................ Error! Bookmark not defined.
2.5.3 Biggest in “Fortune” 500................................................... Error! Bookmark not defined.
2.5.4 Supply cut off.................................................................... Error! Bookmark not defined.
2.5.5 Pricing challenged ............................................................. Error! Bookmark not defined.
2.6 Concentration process within Eastern European Health care systemsError! Bookmark not defined.
CHAPTER 3 - DISTRIBUTION DEVELOPMENTS WITHIN PHARMACEUTICALSError! Bookmark not d
3.1 Characteristics of pharmaceutical distribution ································ Error! Bookmark not defined.
3.1.1 The wholesaling reimbursement system is "fundamentally weak”Error! Bookmark not defined.
3.1.2 “Specialty" pharmaceutical distribution ............................. Error! Bookmark not defined.
3.1.3 Technological changes ...................................................... Error! Bookmark not defined.
3.2 Terminology of Health care chain···················································· Error! Bookmark not defined.
3.2.1 Existence and objectives of a value chain .......................... Error! Bookmark not defined.
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3.2.2 Relationship with Consumers ............................................ Error! Bookmark not defined.
3.2.3 Dimensions of competition................................................ Error! Bookmark not defined.
3.2.4 Pricing............................................................................... Error! Bookmark not defined.
3.2.5 Geographical Location ...................................................... Error! Bookmark not defined.
3.2.6 Product Selection .............................................................. Error! Bookmark not defined.
3.2.7 Level and Quality of Retailer Service ................................ Error! Bookmark not defined.
3.3 Logistic problems within the health care distribution chain··········· Error! Bookmark not defined.
3.4 Distribution challenges within the health care market in Europe ·· Error! Bookmark not defined.
3.4.1 Background of the distribution challenges ......................... Error! Bookmark not defined.
3.4.2 Potential reforms of the supply network ............................ Error! Bookmark not defined.
3.4.3 Structure of the work analysis............................................ Error! Bookmark not defined.
3.4.4 European regulations and trends ........................................ Error! Bookmark not defined.
3.4.5 Goal and Principles of the European pharmaceutical strategyError! Bookmark not defined.
3.5 Distribution network and simulations ·············································· Error! Bookmark not defined.
3.5.1 Distribution within the micro and macro economic environmentError! Bookmark not defined.
3.5.2 Distribution logistics ......................................................... Error! Bookmark not defined.
3.5.3 Logistics costs................................................................... Error! Bookmark not defined.
3.5.4 Delivery service ................................................................ Error! Bookmark not defined.
3.5.5 Logistics service in the pharmaceutical wholesale ............. Error! Bookmark not defined.
3.5.6 Medicaments- products with special value and high requirementsError! Bookmark not defined.
3.6 Basic conditions and development tendencies around the globe ··· Error! Bookmark not defined.
3.6.1 The starting point .............................................................. Error! Bookmark not defined.
3.6.2 Economic dimension ......................................................... Error! Bookmark not defined.
3.6.3 Present legislative changes in the US market ..................... Error! Bookmark not defined.
3.6.4 Present changes of the distribution of medicines in the UK Error! Bookmark not defined.
3.6.4.1 The Office of Fair Trading legal analysis..................... Error! Bookmark not defined.
3.6.4.2 Sanofi-Aventis new model in UK................................ Error! Bookmark not defined.
3.6.4.3 Background for the new distribution model – experience in the UKError! Bookmark not defined.
3.6.5 Direct Selling practices in Spain........................................ Error! Bookmark not defined.
3.6.6 German operations determined to extend operations to Eastern EuropeError! Bookmark not defined.
3.6.7 Location Allocation-Model ............................................... Error! Bookmark not defined.
3.6.8 Simulation of the location allocation model based on profit margin analysisError! Bookmark not define
3.6.9 East European developments – Russia as an example ........ Error! Bookmark not defined.
3.7 Conclusion concerning distribution challenges in Europe ············· Error! Bookmark not defined.
CHAPTER 4 - NEW CONCEPTS WITHIN PHARMACEUTICAL MARKETINGError! Bookmark not defin
4.1 Pharmaceutical marketing mix ························································· Error! Bookmark not defined.
4.2 Application of cost effectiveness and cost benefit analysis to pharmaceuticalsError! Bookmark not defined.
4.3.1 Background for fundamental changes................................ Error! Bookmark not defined.
4.3.2 Social Marketing ............................................................... Error! Bookmark not defined.
4.3.3 Integrated Customer Marketing ......................................... Error! Bookmark not defined.
4.3.4 Proactive Marketing .......................................................... Error! Bookmark not defined.
4.3.5 Marketing as an investment ............................................... Error! Bookmark not defined.
4.3.6 Direct to consumer advertising (DTCA) of prescription drugsError! Bookmark not defined.
4.3.6.1 Factors behind the rise of Direct to consumer advertising (DTCA)Error! Bookmark not defined.
4.3.6.2 Does DCTA expand treatment? ................................... Error! Bookmark not defined.
4.3.7 Time Based Marketing ...................................................... Error! Bookmark not defined.
4.3.8 Customized Marketing ...................................................... Error! Bookmark not defined.
4.3.9 Flexible Marketing ............................................................ Error! Bookmark not defined.
4.4 Forces influencing pharmaceutical Marketing ································ Error! Bookmark not defined.
4.4.1 Cost containment and process realignment ........................ Error! Bookmark not defined.
4.4.2 Intensity of marketing campaigns ...................................... Error! Bookmark not defined.
4.5 Limited product opportunities in pharmaceuticals·························· Error! Bookmark not defined.
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4.6. Selling behaviour analysis in the pharmaceutical market·············· Error! Bookmark not defined.
4.7 The base of personal selling ····························································· Error! Bookmark not defined.
4.7.1 Definition of personal selling ............................................ Error! Bookmark not defined.
4.7.2 Contents, significance and development of sales tactics..... Error! Bookmark not defined.
4.7.3 Models of seller behaviour ................................................ Error! Bookmark not defined.
4.7.3.1 Sales Grid: Blake and Mounton................................... Error! Bookmark not defined.
4.7.3.2 WCF- Model ............................................................... Error! Bookmark not defined.
4.7.3.3 Model of adaptive selling - Weitz et. al. ...................... Error! Bookmark not defined.
4.7.3.4 Integrative behaviour oriented sales model - Plank und ReidError! Bookmark not defined.
4.8 Critical evaluation and applicability of the behaviour explanation modelsError! Bookmark not defined.
4.9 Improvement of customer value······················································· Error! Bookmark not defined.
CHAPTER 5 - NEW DISTRIBUTION MODELS WITHIN PHARMACEUTICALSError! Bookmark not defi
5.1 Cost evaluation as the base for new distribution models················ Error! Bookmark not defined.
5.2 Nature and assessment of costs in healthcare·································· Error! Bookmark not defined.
5.3 Increasing number of counterfeits around the world ······················ Error! Bookmark not defined.
5.4 Increasing control of drug distribution to enhance patient safety ·· Error! Bookmark not defined.
5.5 Parallel trade assessment··································································· Error! Bookmark not defined.
5.5.1 Advantages of Parallel trade .............................................. Error! Bookmark not defined.
5.5.2 Parallel Trade in Europe .................................................... Error! Bookmark not defined.
5.5.3 How far is parallel trade valued-added? ............................. Error! Bookmark not defined.
5.5.4 Implications for Strategy Development.............................. Error! Bookmark not defined.
5.5.5 Risks of Parallel trade........................................................ Error! Bookmark not defined.
CHAPTER 6 - MARKETING RESEARCHES CHARACTER-IZING THE
DISTRIBUTION WITHIN THE PHARMACEUTICAL MARKET, IN GERMANYError! Bookmark not defi
6.1 Questionnaire conception ································································· Error! Bookmark not defined.
6.2 Evaluation and interpretation···························································· Error! Bookmark not defined.
6.2.1 System changes and cost reductions implications .............. Error! Bookmark not defined.
6.2.2 Openness for changes in the distribution cycle in the enterprisesError! Bookmark not defined.
6.2.3 How high are the following cost factors being rated?......... Error! Bookmark not defined.
6.2.4 Physical structure and controlling of the supply chain........ Error! Bookmark not defined.
6.2.5 Equipment of the national and/or European central storage depotsError! Bookmark not defined.
6.2.6 Trends in the outsourcing process...................................... Error! Bookmark not defined.
6.2.7 Supply chain co-operations................................................ Error! Bookmark not defined.
6.3 Expectations and openness for new models in the pharmaceutical sectorError! Bookmark not defined.
6.4 Key results of empirical study ·························································· Error! Bookmark not defined.
6.5 Interpretation of the key trends – based on the findings of the empirical studyError! Bookmark not defined.
6.5.1 Price value analysis ........................................................... Error! Bookmark not defined.
6.5.2 Shifting the power from retailers to customers – new marketing approachError! Bookmark not defined.
6.5.3 Web Superstores versus Specialty Retailers....................... Error! Bookmark not defined.
CONCLUSIONS AND PERSONAL CONTRIBUTIONS................ Error! Bookmark not defined.
ILLUSTRATIONS OVERVIEW ................................................................................................ 43
LITERATURE OVERVIEW...................................................................................................... 44
ABBREVIATION OVERVIEW........................................................ Error! Bookmark not defined.
APPENDIX......................................................................................... Error! Bookmark not defined.
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CUPRINS
INTRODUCERE ................................................................................ Error! Bookmark not defined.
CAPITOLUL 1 – PIAłA FARMACEUTICĂ .................................. Error! Bookmark not defined.
1.1 Creşterea costurilor de sănătate în lume ········································· Error! Bookmark not defined.
1.1.1 Costurile în sănătate reprezintă o serioasă problemă de afaceriError! Bookmark not defined.
1.1.2 Stimulente Opt-Out .......................................................... Error! Bookmark not defined.
1.1.3 Managementul performanŃei furnizorului .......................... Error! Bookmark not defined.
1.1.4 OpŃiuni de management al bolii ........................................ Error! Bookmark not defined.
1.2 Analiza pieŃei farmaceutice ····························································· Error! Bookmark not defined.
1.2.1 Arii terapeutice majore ..................................................... Error! Bookmark not defined.
1.2.2 Zece companii domină piaŃa farmaceutică din toată lumea Error! Bookmark not defined.
1.2.3 PiaŃa Statelor Unite, ca piaŃa cea mai lucrativă .................. Error! Bookmark not defined.
1.2.4 Medicamentele cardiovasculare domină piaŃa ................... Error! Bookmark not defined.
1.2.5 Creşterea domeniului farmaceutic ..................................... Error! Bookmark not defined.
1.3 PiaŃa în sistemul îngrijirii sănătăŃii··················································· Error! Bookmark not defined.
1.3.1 Cheltuielile cresc în sectorul farmaceutic .......................... Error! Bookmark not defined.
1.3.2 Cota de vânzări în marile regiuni ale lumii ........................ Error! Bookmark not defined.
1.3.3 Creşterea cheltuielilor cu îngrijirea sănătăŃii la nivelul ŃărilorError! Bookmark not defined.
1.4 Marii protagonişti în domeniul farmaceutic ··································· Error! Bookmark not defined.
1.4.1 Prelucrarea în domeniul farmaceutic – Începutul lanŃului de procesError! Bookmark not defined.
1.4.2 Medicul – intermediar întrun centru de interese ................. Error! Bookmark not defined.
1.4.3 Angrosiştii în domeniul farmaceutic ................................. Error! Bookmark not defined.
1.4.4 Farmacişti şi portofoliul unei farmacii .............................. Error! Bookmark not defined.
1.5 PreŃuri de referinŃă versus co-plată ·················································· Error! Bookmark not defined.
1.5.1 PreŃuri de referinŃă............................................................. Error! Bookmark not defined.
1.5.2 Generic versus medicamente de marcă .............................. Error! Bookmark not defined.
1.5.3 Co-plată ........................................................................... Error! Bookmark not defined.
1.5.4 Concluzii privind preŃurile de referinŃă ............................. Error! Bookmark not defined.
1.6 Dezvoltarea pieŃei ············································································· Error! Bookmark not defined.
CAPITOLUL 2 – PROCESUL CONCENTRĂRII........................... Error! Bookmark not defined.
2.1 Structura pieŃelor farmaceutice ·············································· Error! Bookmark not defined.
2.2 Măsuri care afectează preŃurile internaŃionale························· Error! Bookmark not defined.
2.3 Tipuri de intervenŃie în pieŃele farmaceutice ·························· Error! Bookmark not defined.
2.4 Procesul concentrării forŃelor din domeniul farmaceutic·········· Error! Bookmark not defined.
2.5 Procesul concentrării în sectorul vânzărilor angro ·················· Error! Bookmark not defined.
2.5.1 Cota de creştere a celor mai mari 3 angrosişti din lume ..... Error! Bookmark not defined.
2.5.2 Numai cei mari supravieŃuiesc într-o bătălie pe piaŃă în creştereError! Bookmark not defined.
2.5.2.1 ConcurenŃii mai mici sunt puşi sub presiune ............... Error! Bookmark not defined.
2.5.2.2 Structuri oligopolistice sunt stabilite............................ Error! Bookmark not defined.
2.5.3 Cei mai mari în “Fortune” 500........................................... Error! Bookmark not defined.
2.5.4 Aprovizionarea anulată...................................................... Error! Bookmark not defined.
2.5.5 Provocări pentru stabilirea preŃurilor ................................ Error! Bookmark not defined.
2.6 Procesul concentrării în interiorul sistemelor de sănătate din Europa de Est Error! Bookmark not defined.
CAPITOLUL 3 – DEZVOLTĂRI ALE DISTRIBUłIEI ÎN DOMENIUL FARMACEUTIC..Error! Bookmark
3.1 Caracteristici ale distribuŃiei în domeniul farmaceutic ·················· Error! Bookmark not defined.
3.1.1 Sistemul de rambursare în vânzarea angro este "fundamental slab”Error! Bookmark not defined.
3.1.2 DistribuŃia farmaceutică de „specialitate” .......................... Error! Bookmark not defined.
3.1.3 Schimbări tehnologice ...................................................... Error! Bookmark not defined.
3.2 Terminologia lanŃului valoric în sănătate ······································· Error! Bookmark not defined.
3.2.1 ExistenŃa şi obiectivele lanŃului valoric ............................. Error! Bookmark not defined.
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3.2.2 Relatia cu consumatorii ..................................................... Error! Bookmark not defined.
3.2.3 Dimensiuni ale concurenŃei .............................................. Error! Bookmark not defined.
3.2.4 Evaluarea .......................................................................... Error! Bookmark not defined.
3.2.5 LocaŃia geografică ............................................................. Error! Bookmark not defined.
3.2.6 SelecŃia produsului ............................................................ Error! Bookmark not defined.
3.2.7 Nivelul şi calitatea serviciilor de vânzare cu amănuntul ..... Error! Bookmark not defined.
3.3 Probleme logistice în interiorul lanŃului de distribuŃie în sănătate Error! Bookmark not defined.
3.4 Provocări ale distribuŃiei pe piaŃa sănătăŃii din Europa ················· Error! Bookmark not defined.
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3.4.2 Reforme potenŃiale al reŃelei de aprovizionare ................... Error! Bookmark not defined.
3.4.3 Structuri ale analizei muncii ............................................. Error! Bookmark not defined.
3.4.4 Reglementări europene şi trendinŃe ................................... Error! Bookmark not defined.
3.4.5 Scopul şi principiile strategiei europene în domeniul farmaceuticError! Bookmark not defined.
3.5 Reşeaua de distribuŃie şi simulări ···················································· Error! Bookmark not defined.
3.5.1 DistribuŃia în mediul micro şi macroeconomic .................. Error! Bookmark not defined.
3.5.2 Logistica distribuŃiei.......................................................... Error! Bookmark not defined.
3.5.3 Costuri de logistică ........................................................... Error! Bookmark not defined.
3.5.4 Servicii de livrare .............................................................. Error! Bookmark not defined.
3.5.5 Servicii de logistică în vânzările farmaceutice angro.......... Error! Bookmark not defined.
3.5.6 Medicamentele – produse cu valoare specială şi cerinŃe mari Error! Bookmark not defined.
3.6 CondiŃii de bază şi tendinŃe de dezvoltare pe întreg globul ··········· Error! Bookmark not defined.
3.6.1 Punctul de pornire ............................................................ Error! Bookmark not defined.
3.6.2 Dimensiune economică ..................................................... Error! Bookmark not defined.
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3.6.4.1 Analiza legală a Oficiului ConcurenŃei ........................ Error! Bookmark not defined.
3.6.4.2 Noul model Sanofi-Aventis în Regatul Unit ............... Error! Bookmark not defined.
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3.6.5 Practici de vânzare directă în Spania.................................. Error! Bookmark not defined.
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3.6.7 Modelul alocării locaŃiei.................................................... Error! Bookmark not defined.
3.6.8 Simularea modelului alocării locaŃiei bazat pe analiza marginală a profituluiError! Bookmark not define
3.6.9 Dezvoltări Est Europene – Rusia, un exemplu ................... Error! Bookmark not defined.
3.7 Concluzii despre provocări ale distribuŃiei în Europa····················· Error! Bookmark not defined.
CAPITOLUL 4 - NOI CONCEPTE ÎN MARKETINGUL FARMACEUTICError! Bookmark not defined.
4.1 Mixul de marketing farmaceutic ······················································ Error! Bookmark not defined.
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4.3.1 Fundamente ale schimbărilor............................................. Error! Bookmark not defined.
4.3.2 Marketingul social............................................................. Error! Bookmark not defined.
4.3.3 Marketingul integrat al consumatorului ............................. Error! Bookmark not defined.
4.3.4 Marketingul proactiv ......................................................... Error! Bookmark not defined.
4.3.5 Marketingul, ca şi investiŃie............................................... Error! Bookmark not defined.
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4.3.6.1 Factori în spatele creşterii publicităŃii directe.............. Error! Bookmark not defined.
4.3.6.2 Poate publicitatea directă să extindă tratamentul? ........ Error! Bookmark not defined.
4.3.7 Marketingul bazat pe timp ................................................. Error! Bookmark not defined.
4.3.8 Marketingul personalizat ................................................... Error! Bookmark not defined.
4.3.9 Marketingul flexibil........................................................... Error! Bookmark not defined.
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4.4.1 Izolarea costului şi realinierea procesului .......................... Error! Bookmark not defined.
4.4.2 Intensitatea campaniilor de marketing ............................... Error! Bookmark not defined.
4.5 OpportunităŃile limitate de produs în domeniul farmaceutic ········· Error! Bookmark not defined.
8
4.6. Analiza comportamentului de vânzare pe piaŃa farmaceutică ······ Error! Bookmark not defined.
4.7 Baza vânzării personale ··································································· Error! Bookmark not defined.
4.7.1 DefiniŃia vânzării personale .............................................. Error! Bookmark not defined.
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4.7.3 Modele ale comportamentului de vânzare ......................... Error! Bookmark not defined.
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4.7.3.2 Modelul WCF ............................................................. Error! Bookmark not defined.
4.7.3.3 Modelul vânzărilor adaptive - Weitz şi alŃii ................ Error! Bookmark not defined.
4.7.3.4 Modelul vânzărilor orientat pe comportamentul integrator - Plank und ReidError! Bookmark not de
4.8 Evaluarea critică şi aplicabilitatea modelelor de explicare comportamentală Error! Bookmark not defined.
4.9 ÎmbunătăŃirea valorii consumatorului ············································· Error! Bookmark not defined.
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5.3 Creşterea numărului medicamentelor false în întreaga lume ········ Error! Bookmark not defined.
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5.5.1 Advantaje ale comerŃului paralel ....................................... Error! Bookmark not defined.
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5.5.4 ImplicaŃii ale Strategiei de dezvoltare ................................ Error! Bookmark not defined.
5.5.5 Riscuri ale comerŃului paralel ............................................ Error! Bookmark not defined.
CAPITOLUL 6 – CERCETĂRI DE MARKETING PENTRU CARACTERIZAREA
DISTRIBUłIEI PE PIEłA FARMACEUTICĂ DIN GERMANIA Error! Bookmark not defined.
6.1 Conceperea chestionarului································································ Error! Bookmark not defined.
6.2 Evaluarea şi interpretarea·································································· Error! Bookmark not defined.
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6.2.4 Structura fizică şi controlul lanŃului de aprovizionare ........ Error! Bookmark not defined.
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6.2.7 Colaborări în lanŃul de aprovizionare................................. Error! Bookmark not defined.
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6.4 Rezultate cheie ale studiului empiric ··············································· Error! Bookmark not defined.
6.5 Interpretarea trendurilor cheie – pe baza rezultatelor studiului empiricError! Bookmark not defined.
6.5.1 Analiza preŃ - valoare ................................................................................ Error! Bookmark not defined.
6.5.2 Deplasarea puterii de la vânzătorii cu amănuntul la consumatori – o nouă abordare de
marketing ...................................................................................... Error! Bookmark not defined.
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CONCLUZII ŞI CONTRIBUłII PERSONALE .............................. Error! Bookmark not defined.
LSTA FIGURILOR...................................................................................................................... 43
BIBLIOGRAFIA.......................................................................................................................... 44
LISTA ABREVIERILOR .................................................................. Error! Bookmark not defined.
ANEXA ............................................................................................... Error! Bookmark not defined.
9
SYNTHESIS
CHAPTER 1 – THE PHARMACY MARKET
The pharmacy market undergoes dramatic changes. One of the key questions within this changing
environment is to determine what products should be manufactured offshore and if in which way.
When deciding the most appropriate products to manufacture offshore, products in the mature phase
of their lifecycles are obvious candidates. The shift offshore presents less Intellectual Property IP
(IP) risk as it has largely been depreciated, and improves the product line’s competitive positioning
as costs are lowered. Taking into consideration the increasing wealth in China and other Asian
countries this growth will continue and be therefore stronger than other industries.
1.1 Increasing healthcare costs across the world
Employers across the United States are grappling with continually rising healthcare costs, but none
more than manufacturers.
While employers understand what is driving health-care costs upward, there is little they can do
about it. How can they counter government mandates or inflation? And unlike companies in
industries such as banks or professional services, unionized manufacturers do not have the option of
passing along the rising costs to employees. But there is a way to bring down drug and hospital
costs, keep health-care provider costs in balance and manage demand. 1
1.1.1 Health Care costs are a severe business problem
The experience showed that too many companies treat the problem of soaring health-care costs as a
benefits problem rather than a business problem.
A perfect example recently appeared in The Wall Street Journal. After spending a year devising
ways to reduce health-care costs, an executive with a major automotive manufacturer remarked that
“the solution wouldn’t come any time soon.” Would shrinking market share be treated soglibly?
Would declining revenues or profits provoke such a cavalier response?
1.1.2 Opt-Out Incentives
In millions of working families across the United States, both husband and wife are eligible for
health coverage. Each of these families represents a potential savings for one employer. But how
does Company A make Company B’s health plan more attractive? Leading companies are
answering this with novel strategies that influence employees’ coverage elections.
One solution is simply to require working spouses to use their own employer’s health-care
programs.
1.1.3 Manage Supplier Performance
1
see ABDA bzw. Instituts für Handelsforschung in Köln 2004
10
Supplier management never stops. The cycle begins with the contract and continues with
monitoring performance, enforcing guarantees and resolving problems; then it begins all over again.
In our experience, strong performance guarantees that focus on the right metrics will generate
higher levels of satisfaction among employers and employees. At the same time, performance
guarantees assure that companies do not lose substantial sums through financial or procedural
inaccuracies.
Companies can be considerably more aggressive in negotiating guarantees by implementing an atrisk compensation strategy, in which the provider places a %age of administrative service fees paid
to the benefits administrator at risk. Following an acquisition, the company decided it was a good
time to address performance issues with one of its key health-plan providers.
1.1.4 Disease Management options
The top-five chronic diseases in the United States—cardiovascular disease and stroke, cancer,
diabetes, obesity and asthma—are responsible for approximately 75% of health-care costs,
according to the DHHS. In many cases, patient behaviour contributes to the disorder and can just as
effectively contribute to the recovery.
Disease-management services can be divided into three phases:
−
Phase one aims to keep employees healthy through education and behaviour modification.
−
Phase two tries to slow or reverse the progress of chronic conditions, and the third phase focuses
on managing acute episodes.
Strong efforts in phase one will result in huge cost savings in phases two and three. The key to costeffective disease management is selecting the right service provider
1.2 Pharmaceutical Market Analysis
While looking deeper into the data of the different therapeutic areas it is absolutely important to
manifest where the most research is being conducted and where the highest need for the patients
exists.
1.2.1 Major therapeutic areas
The central therapeutic areas being Cardiovascular and CNS, which are rising in significance.
Cardiovascular drugs include cholesterol-lowering agents
Central nervous system (an area that remains poorly understood in medical terms) recently
driven by the emergence of important drugs for treating mental illnesses such as depression
and schizophrenia
Anti-infectives (predominantly antibiotics) retain high importance, despite the age of many
of the key products
Gastrointestinal treatment showed a strong growth, most significantly those for ulcers and
acid reflux
Respiratory treatments stagnating
11
Especially Cardiovascular will be the number one syndrome in future where pharmaceutical
companies put a lot of energy in.
1.2.2 Ten companies dominate the worldwide pharmaceutical market
Two major trends are being viewed within the last years. On the hand side the big companies are
getting even bigger and increase their market shares by either internal growth or external growth via
acquisitions. Around 45% of the worldwide sales are being made by the 10 leading companies listed
below2 and half of them are coming from the US based market. These companies are looking for
further synergies and the expectation is that further acquisitions in the coming years will increase
their market share even more. Small companies will struggle in this enormous competition for
innovative drugs and efficient cost bases.
Despite a decade of mergers, the research-driven industry remains highly fragmented
The largest 5 players have together less than 30% market share
This will change as part of the concentration process in the world within the next years
dramatically.
1.2.3 The US market as the most lucrative market
As follows the markets should be analyzed based on the key facts.
North America
–
North America has the least restrictions, larger funding and higher R&D investment than
European and Asian countries; growth is expected to continue
–
Companies in the US show increasing export sales. The ban on drug imports from Canada is
believed to have resulted in windfall profits of $150 billion for the US pharma industry
–
Saturation in the North American market has led all pharmaceutical companies to focus on the
EU market
Europe
–
European market influenced by restrictions on pricing and profits of pharmaceutical
companies: the market has been affected by the new refund list, cuts in regulated drug prices,
growing market competition, and tax cuts
–
Poland expected to be one of Europe's most attractive drug markets
Rest of World / Asia
–
Companies in Asian countries are mainly focusing on generic and biogeneric drugs
–
Only a few Asian companies are entering the US market
–
India is regarded as a major outsourcing hub for pharmaceutical research and clinical tests
–
Chinese market is growing at double-digit rates and within a decade is likely to be the world's
third largest, after the US and Japan
2
Analysis of 2009 annual released reports (http://en.wikipedia.org/wiki/List_of_pharmaceutical_companies)
12
1.2.4 Blockbuster drugs are dominating the market
The pharmaceutical companies are looking for blockbusters to increase their sales situation overall.
Blockbuster drugs continue to dominate the market worldwide and this trend will definitely increase
over time. Specifically the impact of persons increasing their life expectancy contributes to the
above sales increase forecast. The fact that the pharmaceutical industry especially invests in areas
where high return of investments are being seen, the more they look at the drivers where profits can
be generated as cardiovascular and Oncology. The growth rates and blockbuster successes can only
continue, if the investments are being done in the right categories.
1.2.5 Pharmaceutical growth
Health care costs are rising across the world – since all countries are facing the same challenges and
problems. The illustration below shows this impact explicitly.
Especially when you compare this development with the GDP it is obvious that the health care costs
are increasing intensively and the governments have to find ways of financing these additional
costs. Looking now at Romania especially the situation is as follows:
Source: World bank indicators 2009
Figure 1: Romania – Health expenditure; Total (% of GDP)
This page includes a chart with historical data for Health expenditure; total (% of GDP) in
Romania. Romania is an upper-middle income economy. In recent years, domestic consumption
and foreign direct investments have been stimulating Romania's GDP growth.
1.3 Health Care market
The health care market is growing intensively across the world. Maintaining and recreation health is
one of the major functions of the public financed health care system. The health care market is not
13
consistently defined, but it comprises all products and methods, which are in some way
characterized by prevention, diagnosis, and post operative treatment.
1.3.1 Expenses increase within the pharmaceutical sector
Research, development, production and marketing are subject to safety and regulation requirements
and are therefore regulated by the state. For the pharmaceutical manufacturers this Pharmaceuticals
account already for 50%3 of the world’s greatest market the telecommunication market. Both
industries are still growing intensively.
Having analyzed the global trends of course the view in the rest of the world has to be made by
country. In nearly every country the spending has increased.
Therefore the trend to reduce pharmaceutical expenses to reduce governmental budgets is the same
intention in all industrialized countries4. A huge factor for this deviation is the fact that
pharmaceutical prices vary significantly around the world – moreover as expressed before the GDP
and personal income of the inhabitants vary also and contribute to the above significant difference
in absolute spending.
1.3.2. Sales share across the major regions throughout the world
Sales share across the major regions throughout the world are increasing significantly with shares of
more than 5%. The impact per country, especially in the context of financing these additional
expenses will be a tough burden for all countries world-wide.
1.3.3 Health Care expenditure growth across the countries
The following factors contribute to the fact that the pharmaceutical sales are increasing presently
and will probably increase in the next years as well in the same style: roughly one additional year
has been added to life expectancy at birth every five years since 1965; baby boomers will turn 65
form 2010 onwards; Healthcare expenditures fore people 65+ are estimated to be nearly 4 times
those of people under 65
Market penetration: More rapid broad penetration of markets: seeking as many medical indications
for a drug as possible, better marketing of products.
Innovation: Increasing number of targets for drug interaction
In terms of Health care budgets Pharmaceutical companies represent a very cost-effective means for
governments or insurance companies to contain the healthcare costs of an ageing population.
1.4 Major pharmaceutical protagonists
To be able to understand the characteristics of this market the major participants will be analyzed
below. The focus will be put on finished pharmaceutical goods – services offered, therapies and
further utilities and hospital processes will not be covered. Below a short summary, covering the
main stakeholders of the pharmaceutical process chain:
3
4
IMS Deutsche Bank research 2004, PWG
OECD Data analysis 2005
14
Key Stakeholders within the pharmaceutical sector
Key
Participants
(1)
(2)
Government/
regulation
Health
insurance,
HMOs1)
Physicians
Clinics &
rehabs
Pharmaceutical
companies
Pharmacies &
PBMs2)
Medical
devices
Patients
HMO = Health Maintenance Organization;
PBM = Pharmacy Benefits Management
Source: Fourth Report of Session 2004-05, Volume 2
Figure 2: The influence of the key stakeholders within the pharmaceutical industry
These key participants are key protagonists for the upcoming changes. Especially pharmaceutical
companies try to increase their influence.
1.4.1 Pharmaceutical Manufacturing – Start of the process chain
In Germany around 1.100 companies are registered as “Pharmaceutical enterprise”. Looking at
pharmaceutical manufacturers there are 4 main forms to be differentiated between:
•
Companies carrying out fundamental research
•
Companies researching in narrow therapeutic areas
•
Companies who are looking for the further development of already existing actives, but do
not maintain any basic research
•
Companies without own R&D, who are only giving patent expired products a new name and
market them under their own name in the form of generic products
All the above mentioned companies are on the one hand in a tough competition under a free
enterprise system with the intention to maximize their profits
1.4.2 The physician – intermediate within the centre of interests
The physicians are the key partner for the industry, since their prescriptions are the base for their
sales. They are the opinion leaders making the decisions concerning kind, frequency and intensity
of the medicine being prescribed. The patient has to rely on the judgement of the doctor and takes
the recommended product. But the freedom of the doctor is reduced by the health insurance funds,
who limit him by giving a financial budget for his prescriptions. It can therefore be stated that the
autonomy of decision making is limited significantly and this process will continue in the future.
1.4.3 Pharmaceutical wholesalers
15
Wholesalers have the function of the physical distribution of the pharmaceutical products. In
Germany most pharmacists receive between 1 and 5 deliveries per day. The trend in most countries
is towards only one delivery per day to reduce the costs incurred at wholesaler level, since margins
were reduced significantly as part of national healthcare reforms. To increase their power
wholesalers are trying to expand especially into Eastern Europe. Germany’s largest wholesaler
Celesio has reached agreement with the Slovenian manufacturer Lek to acquire its stakes.
Furthermore they prepare to buy stakes of Kemofamacija which has 2 subsidiaries Unipharm and
Pharmafarm in Croatia and Romania respectively. The plan is to build up a pan- European network
involved in wholesale, logistics and Marketing.
The pharmaceutical wholesaler landscape will tremendously change within the next years. Some
key points are the base for the analysis below. Key trends will be analyzed deeper over the next
chapters. Clearly the forward integration of wholesalers plays a major role in this trend.
1.4.4 Pharmacists and the portfolio of a pharmacy
The classical pharmacist’s function exists already since the 13th century in Europe. Pharmacists had
the right to produce pharmaceutical products and the physician was responsible for the therapy and
the diagnosis. This principle of mutual supervision prosecutes the legislator till today5. The
pharmacist has two main functions which are supply of products and a consulting function.
Based on a small sample the following analysis was conducted in Germany. RX products are
identical in price – nevertheless OTC products can be sold at any price and are not related to a fixed
price regulation policy – the drug price ordinance. Therefore two major components have to be
analyzed when comparing the portfolio being offered by pharmacists: Consultancy and the
perceived price level.
CHAPTER 2 - CONCENTRATION PROCESS
Markets for pharmaceutical products differ from markets for consumer goods to their high level of
regulation. Some of these regulations are an absolute imperative to ensure public health. But other
regulations are the consequence of inefficient structures within the whole health sector.
2.1 The structure of pharmaceutical markets
Pharmaceutical products are different consumption goods for several reasons. From a theoretical
perspective the question lays on the table what the background for merger waves is. As stated by
Brealy and Myers6, merger waves are one of the ten unsolved puzzles in economics and finance. At
present, there is not an accepted theory that can simultaneously explain why firms merge, what are
5
6
Gaude, W. 1986; p. 13
Brealy and Myers 2003
16
the characteristics of merging firms and, more importantly, what are the effects of these operations
on firms performance.
Among the many limitations of these empirical works, three are worth to point out. First, recent
findings show the existence of industry clustering in merger activity (Andrade, Mitchel and
Stanford, 2001). This suggests that the use of cross-industry data might be responsible for the
inconclusiveness of previous studies and calls for an analysis that is based on a well-defined
industry. Second, although there is a vast literature studying the short-run effects of Merger and
acquisition firms, prices, products and market value, little attention has been devoted to the long-run
assessment of dynamic efficiency. The traditional static analysis of the effects of mergers on firms,
market power and efficiency shows some important limitations when applied to those R&D
intensive industries where both margins and costs are largely determined by innovation. Finally,
there has been little effort to link the ex-post effects of mergers to the ex-ante observable
characteristics of merging firms. But it is likely that the degree of successful of a merger depends
largely on these characteristics.
2.2 Measures affecting prices internationally
Which measures affect the price? Price authorities generally face difficulties whether the launch
price set by a manufacturer is appropriate or not. The more it needs to be justified in how far
measures are in place and how prices are being affected?
A small but affluent country is especially at risk of being exploited by the drug manufacturer who
may charge more to that small country, than to a country with a comparable GDP per capita but a
much higher population. Many countries are taking into account the prices charged in other
countries when negotiating an appropriate launch price of a new drug. International price
comparisons are also made when a government wishes to re-evaluate the price of a drug after it has
been on sale for a while. These strategies apply to branded and patented drugs and branded off
patent drugs.
2.3 Types of intervention in pharmaceutical markets
For a variety of reasons governments are intervening in the health care market – the most frequent
reasons are the following:
A) Concern over monopolistic pricing
Patented pharmaceuticals do not face any direct competition - that is the reason why many
governments fear that this apparent monopolistic situation will be exploited. Moreover neither
prescribing physicians nor patients have any incentive to act in a price sensitive manner, since
someone else is obviously paying the bill. The purchasing decision lies however solely in the hands
of the physician and the patient. Governments believe that the prices charged by pharmaceutical
companies are negatively correlated with co payment rates of consumers. Price interventions are
therefore regarded as a legitimate way to induce market like prices.
17
B) Concern over excessive demand & expenditures
A patient rationally acting buys a product as long as marginal costs do not exceed marginal utility.
Marginal costs to the patient are only a minor proportion of marginal costs to society. A patient may
therefore require a produce whose marginal utility exceeds his marginal costs (co-payment) but not
the marginal costs to society. The physician who wishes to maintain his business relation with that
customer will readily prescribe the product. Prescription guidelines are a common tool used to
impede uneconomical prescriptions.
Concerns over excessive expenditures are typical for countries with a tax funded NHS system. In
order to procure added funds for the health sector such governments can only: increase taxes,
increase indebtedness, cut expenditures in other sectors.
Increasing taxes or indebtedness negatively influences the attractiveness of that country for
investors and its long term economic growth expectancies. Cutting costs in other government
sectors will generally meet resistance in the affected departments and is difficult to implement.
Therefore healthcare and pharmaceutical budgets are generally the response used by these
governments.
C) Concern over equity and access
Some diseases that can be cured by the pharmaceuticals have a significant impact on society. The
most recent examples in history are the therapies found to combat HIV that can be expected the
productive lifetime of affected patients by years or even decades. Governments may intervene in the
pharmaceutical markets to make such products as available as needed on a socially equitable basis.
Concerns over excessive pricing, prescribing and spending have led all western governments to
implement cost containment strategies. Cost containment strategies may either apply to the
reimbursement price the overall volume consumed or to overall spending on pharmaceuticals.
2.4 Concentration process within the pharmaceutical field force environment
The pharmaceutical industry is undergoing a fundamental transformation. Unprecedented
competition, diminishing margins, public scrutiny, and ever increasing regulation now characterize
the industry7. As a response to the changing dynamics of the business, particularly heightened
competition, many pharmaceutical firms have radically increased the size of their sales forces. The
underlying assumption is the existence of a direct correlation between sales force size and market
share. This widely held belief that the bigger the sales force, the bigger the market share, has long
dominated pharmaceutical sales and marketing strategy. But now, with the sharp rise in the number
of sales representatives and significant changes in the work environment of most physicians, the
logic has to be questioned. Physicians today are facing a rapidly changing work environment
characterized by strict reimbursement policies, extensive budget pressures, and a shortage in
qualified personnel. As a result, their workload has increased significantly. Pharmaceutical firms'
7
e.g. Puschmann et al. 2002
18
efforts to throw an increasing number of sales representatives at the physicians make the situation
even worse. Many physicians, especially the top prescribes, feel under constant assault. They also
perceive that sales representatives do not provide the necessary information and their knowledge is
often limited to the sales pitches devised by marketers at corporate headquarters. As a result,
physicians have started to limit the number of sales representatives they admit each day8. Under
these circumstances, it becomes increasingly difficult for sales representatives to get an opportunity
to speak with a physician.
2.5 Concentration process within the wholesale sector
Pharmaceutical-wholesale industry, and their control over the market is drawing the attention of
lawmakers, the scrutiny of regulators and the wrath of smaller rivals who intensively watch the
market developments and the concentration process within the big wholesalers, whose market share
is increasing over the last years and the potential of new logistic models.
The transition from a central planning to a market economy in Central and Eastern European
countries has led to major and rapid changes in society. Democratic liberalization has empowered
citizens through basic rights, freedom and the development of civil society rights. Economic
liberalization has bought the promise of improved living standards and granted individuals
increased choice in consumption, education, health and employment. The changing norms and
values of society are moving towards Western European ideas and standards. The changing
economic framework and income expectations of health care professionals were the major driving
factors for health financing reforms. All health care financing reforms in CE countries are in the
mainstream of the European tradition, which includes the ideas of solidarity, universal coverage and
active health policies. The CE countries shifted from a strong hierarchical Semashko model to a
more regulated market model.
The new system being developed right now encompasses the influence of western European
marketing models. The effects western countries are facing apply to Eastern countries as well – only
the magnitude differs. But within the next two to five years the same challenges will be faced – for
that reason are the changes being discussed relevant for the East European markets as well.
Health care financing has been an important topic on the political agenda worldwide in recent
decades. For every government it is a subject of continuous concern that costs of health services are
increasing. Health care costs form a substantial burden of the national economy. Every government
is eager to keep this burden as low as possible by implementing cost containment policies. Due to
these severe reductions the financial pressure on pharmaceutical companies is increasing
worldwide. New marketing concepts are being looked for, in order to survive in an intensive
competition to sustain or increase market shares at the cost of competitors. Only the innovative
8
i.e. Elling et al. 2002, 89
19
companies with new, flexible and creative concepts are able to master the increasing challenges all
companies are facing.
CHAPTER 3 - DISTRIBUTION DEVELOPMENTS
WITHIN PHARMACEUTICALS
The goal of this section is to analyze a large segment of the health care industry that is getting more
and more attention within the academic world – the health care value chain. What does this term in
detail contain? Trading relationships are being analyzed between producers (manufacturers) of
health care products, purchasers of these products (wholesalers, distributors) and health care
providers (hospital customers) that are the end users of these products.
3.1 Characteristics of pharmaceutical distribution
The following analysis is more strategic than operational. The goal is to understand the bases of
cooperation and competition along the value chain, the sources of efficiency in contracting between
suppliers and providers and the emerging best practises and strategic alliances along the value
chain.
3.1.1 The wholesaling reimbursement system is "fundamentally weak”
New industry studies see a transition to fee-for-service relationships between manufacturers and
distributors. Furthermore the pace in which wholesalers are running is and has to increase
significantly in future to stay in place. Health care distributors have had phenomenal organic growth
relative to almost any other distribution industry being tracked and analyzed. This has been driven
by growth in end-use consumption, growth in the product prices, and growth in distribution's share
of the channel. Health care distributors now handle the majority of overall market consumption in
the health care supply chain. In fact, their aggregate share of channel volume is up dramatically
over the past 25 years. Alternative channels have not been as much of a threat here compared to
retail and technology channels.
3.1.2 “Specialty" pharmaceutical distribution
Especially with regard to biopharmaceuticals this business is different from traditional
pharmaceutical distribution.
A crucial difference between conventional drugs and new
biopharmaceuticals have created wholly distinct marketing and distribution channels, leaving
incumbent wholesalers poorly positioned in the commercialization of new biotechnologies.
Pharmaceutical manufacturers have found themselves ill-equipped to deal with the new sales and
marketing challenges, leading to broken alliances and even litigation between former alliance
partners. Traditional wholesalers, busy pursuing scale economies through consolidation, ignored the
opportunity to take a leadership position in the fast growing, higher margin business of bringing
20
biopharmaceuticals to market. Today, biopharmaceutical manufacturers rely on the support of the
new channels to remain focused on research and free of burdensome alliances. Operating margins
for specialty distributors are four to five times as large as traditional pharmaceutical wholesalers
due in large part to their many value-added services within the health care system.
3.1.3 Technological changes
The bar-code/electronic product code/RFID movement is changing a lot of business practices in
pharmaceutical distribution. How is this going to play out in the pharmaceutical field? Are
distributors in the lead position in adapting to this, or are they simply following the instructions of
the manufacturers?
The customer is driving most change in the supply chain right now. Wholesalers with ties to buyers
are experimenting with RFID [radio-frequency identification], such as Wal-Mart and the
Department of Defence, are actively assessing the potential impact and getting ready for
implementation.
3.2 Terminology of Health care chain
The term value chain was popularized by Michael Porter among academic circles – he means
herewith the entire production chain from the input of the raw materials to the output of the final
product consumed by the end users9. The chain is called a value chain because each link in the
chain adds some value to the original inputs.
Within the industry the term supply chain tends to be used more frequently than value chain. A
supply chain is a virtual network that facilitates the movement of a product from its earliest point of
production through packaging and distribution up to the ultimate point of consumption10. The
supply chain is thus the path travelled by the product, each stop along that path defines a link in the
supply chain. A marketing term forming the strategic goal from push to pull can be seen in this
environment as well. Supply chain networks may operate to both “push” manufactured products
through the chains using intensive field force activities and promotional campaigns, and “pull”
products through the chain to continually replenish retailers inventories and meet customer
demands.
The “push model” is thereby characterized through manufacturers who promote and sell as much
product as they can to the consumers. According to the “pull model” customers’ demand products
from the preceding link in the chain. Those vendors then become responsible to manage the
customer’s inventories.
3.2.1 Existence and objectives of a value chain
9
Enzyklopedie – in vierundzwanzig Bänden, neunter Band GOT – HERP, 19. völlig überarbeitete Auflage, 1989
Mannheim, p.445
10
Wöhe, G. (2002): Einführung in die Allgemeine Betriebswirtschafts, 21.neubearbeitete Aufl., München 2002
21
Supply chains exist because there is little vertical integration of manufacturers into the distribution
and delivery of their products up to the end customer. Vertical integration is so far relatively low,
since manufacturers believe that the costs of transacting with the marketplace for distribution and
delivery are much less than the costs of attempting to take distribution in-house and coordinating all
of these changes using hierarchical means. And this is the major reason why manufacturers believe
that it is cheaper for them to buy distribution services from product wholesalers in the marketplace
rather than make distribution services in-house. Consequently, manufacturers have elected not to
enter the distribution business but rather let specialist firms produce these services for them.
After having described the details of the value chain the questions arises what the objectives of a
value chain are. Attached a comprised overview of the major objectives:
Optimizing the overall activities of firms working together to create bundles of goods and services.
Managing and coordinating the whole chain from raw material suppliers to end customers rather
than focusing the interests of one player
Developing highly competitive chains and positive outcomes for all firms involved. The goal is
establishing a portfolio approach to work with suppliers and customers, deciding which players to
work with most closely and establishing the processes and information technology (IT)
infrastructure to support these relationships11. Value chains are supposed to be collaborative
partnerships between players engaged in economic exchange.
3.2.2 Relationship with Consumers
What the consumers need, and how they get it, are some of the questions that guide the wholesaler
in providing the service. Effectively, the retailer shapes his service and image in the manner that
responds to consumer needs. This is because consumer places value on the retail experience, and
not just on the product he purchases. While price is an important decision factor, the shopping
experience in itself could significantly affect purchasing behaviour. Some individuals may prefer a
particular geographic location, or put a high value in stores with large product portfolios, or simply
go for stores that provide the best retail service (like fast movement in the queue, properly
ventilated stores, and credit card acceptance even for small purchases). It is very rare that shoppers
would visit a retailer on a purely lowest price service. For this reason, retail competition not just
takes place on the pricing aspect, but also on non-price dimension.12
Non-price dimension, from the consumer’s viewpoint, can come in the form of: convenience,
product range/ selection, quality, cleanliness of retail outlet, friendly staff, convenient operating
hours, store design and atmosphere.
11
Sterzel, A. (2002): Deregulierung des Arzneimittelvertriebs in Deutschland –
Versandapotheken als Reformoption? – Eine ökonomische Analyse, Berlin 2002
12
Raff, Daniel M. (2003):’The Wholesale and Retail Trade in the United States’, The Wharton School
University of Pennsylvania , Reginald H. Jones Centre Working Paper WP 2003-07
22
Retailer image and advertising are the other factors that affect consumer relationship. In most cases,
the image is built through the products the outlet carries, the store design, and quality of retailer
service.
3.3 Logistic problems within the health care distribution chain
Product demand is heavily based on the clinical preference of the physician but not based on a
formal cost-benefit analysis or budgetary constraint.
Professional training in procurement and logistics has never been a hallmark among providers,
given the prominent role of clinicians and their preference for branded items13.
Despite of all consolidation processes taking place the industries along the value chain are still very
fragmented with no clear leadership at any stage. The fragmentation complicates therefore the
difficult task of connecting thousands of different parties involved at each stage of the value chain,
standardizing the ordering process formats and the content of business transactions.
Providers have historically made their technological investments rather in patient care than in
information systems and infrastructure.
As a consequence of the mentioned factors above the health care sector has been rather slow in
changes. The health care industry is often being analyzed via porter’s 5 forces model, which
emphasizes competitive rivalry, supplier and customer bargaining power and the threat of product
substitutes and new entrants to industry. Having analyzed this chain the question arises who the real
customer is. Given the complexity of the flows of the value chain it is evident that there are multiple
customers in the value chain. Hospitals, health care systems and nursing homes are institutionally
based customers – within these institutions there are multiple customers who are directly or
indirectly responsible for the product ordering14.
Based on the ordering process the role of the wholesalers and distributors is classified as following.
Wholesalers are independently owned and operated intermediaries in the distribution channel. As
independent intermediaries they also operate their own warehouses for product inventories.
Wholesalers are firms that sell products to another intermediary. The typical case is that a
pharmaceutical wholesaler purchases drugs from a manufacturer and resells them to a pharmacy,
which in turn sells them to the end customer directly. The basic function of distributor is therefore
to satisfy customer needs and to match supply and demand.
3.4 Distribution challenges within the health care market in Europe
Into the structures of the German medicament distribution significant movement has been coming
within the recent years. Mainly the apparently inexorably rising expenditures of the health insurance
13
Schöffski, O. (1995): Die Regulierung des deutschen Apothekenwesens - Eine
ökonomische Analyse, Baden-Baden 1995
14
Pfohl, H.-C. (2004a): Logistikmanagement: Konzeption und Funktion, 2. überarbeitete und
erweiterte Aufl., Berlin et al. 2004
23
companies for medicaments force the legislator to measures, which are intended to limit the
increasing costs in this sector in a long-term basis.
3.4.1 Background of the distribution challenges
These efforts are executed in the light of the background of an increasing average age and an
associated increase usage of medicaments – especially for people in the ages above 65 years. The
permission of the internet pharmacies, the abolition of reference prices and the existence of
pharmacy chains has taken place recently. Application of fixed prices for certain products and the
permission of small chains represent thereby only the beginning of the changes within a former very
regulated market. The mentioned changes will affect substantially the health care system in the
European countries.
Moreover stores or supermarkets attached pharmacies for the near future are quite conceivable. The
question arises which consequences will have these modifications for the health care system15. And
how they are viewed by the fact that an increasing part of the population is dependent due to
advanced age, increasing immobility and the need of a surface covering supply to evaluate?
3.4.2 Potential reforms of the supply network
In the media and the relevant literature completely different opinions are being expressed
concerning further reforms on the supply network. Certain market studies and strategy papers are
based on a long-term reduction of the pharmacy numbers of up to 30%. Usually these statements
are based on expectations of market participants being questioned via market research. A goal of
this paper is to examine a model which is based on mathematical relations how future reforms and
changes affect the pharmacy net in Germany and Europe. Since the changes are actually happening
simultaneously across the countries the same effects and impacts are being discussed.
3.4.3 Structure of the work analysis
The focus lies apart from the definition on the impact of the medicament distribution. In addition
the initial position and foreseeable developments are described and analyzed. Special attention is
put on the commercial stages. A view in the order-political context of the medicament trade
follows. The third subsection is concerned with the economic situation of the pharmacy and
wholesale level under the influence of the political conditions. The structure of the model and its
variants are described on the basis of the model in this segment. The following section determines
the premises and the acceptance which can be met regarding the model and the regarded market.
The used parameters, their sources and data, are stated in detail. In addition the description of the
used simulation area, economical characteristic numbers and the regulation of two parameters
critical for the model results are being validated. The model validates the conclusion, by means of
one confrontation of results of the two model variants.
15
Kotler, P. et al. (2003): Grundlagen des Marketing, 3. überarbeitete Aufl., München 2003
24
Constructing on the bases a scenario is simulated and their results are being analyzed. Thereby the
determination of effect strength and effect tendencies is certainly the centre of attention, which the
direct consequences of a certain development (e.g. a rising market share of the dispatch pharmacies
or a trade profit margin sinking by increasing competition) represent. This places a payment in
advance for the development of the total scenarios16.
3.4.4 European regulations and trends
As already pointed out within the European countries different trends can be analyzed. Therefore
the European perspective of the pharmaceutical forum and working group on pricing will be
analyzed and described below.
The overall goal is to ensure that more competitive and dynamic markets are put into place.
Innovations and forward oriented market mechanisms should be supported and rewarded across the
member states.
3.4.5 Goal and Principles of the European pharmaceutical strategy
The goal of for the European pharmaceutical strategy should be to ensure that every European has
timely access to safe and effective prescription drugs, and that all patients in the member states of
the European Union are deprived of needed prescription drugs because of his or her states inability
to pay for this medication. To achieve this goal the following principles to frame the strategy’s
development, implementation and evaluation are being proposed:
All policy decisions, including drug approval and program coverage, are based on an impartial
review of the best available scientific evidence and on the adoption of best practices nationally and
internationally. All initiatives are carefully assessed in accordance with a comprehensive evaluation
strategy. Pharmaceuticals are evaluated not in isolation but as an integral part of the health system.
Health care providers and health organizations have access to the knowledge and information
necessary to facilitate optimal and appropriate pharmacotherapy.
Appropriate use is made of the knowledge and skills of physicians, nurses, pharmacists and other
health care providers. The decision-making process is open, transparent and accountable, and
incorporates the active, meaningful participation of patients, health professionals, and other relevant
stakeholders including public and private insurers.
Toward a unified, aligned and prospective oriented European Pharmaceutical Strategy the above
principles, and the following recommendations, apply broadly to any pharmaceutical strategy,
including the nine-point National Pharmaceuticals Strategy (NPS) proposed by governments. The
elements of a comprehensive Canadian pharmaceutical strategy are interdependent and should be
developed concurrently to ensure that the strategy is coherent and holistic. In addition, they should
16
Gersch, M. (2004):Versandapotheken in Deutschland – Die Geburt einer neuen
Dienstleistung – Wer wird eigentlich der Vater? - in: Marketing Zeitschrift für Forschung
25
form part of a broader framework that encourages research and development of new medicines all
across Europe’s Drug Coverage principles.
Coverage should be based on optimal and appropriate standards of treatment for all Europeans. It
should be comparable across the country, minimizing disparities between provinces and territories.
Coverage plans should include coverage for catastrophic drug costs.
As a first step, governments should adopt a common operational definition of “catastrophic”. In
order to find a common formulary the following principles should be adhered to:
Governments should work toward national harmonization of formularies, based on optimal and
appropriate standards of treatment. Decisions regarding inclusion of drugs in formularies should be
based primarily on scientific evidence of their impact on health outcomes, and informed by
evidence regarding their cost-effectiveness.
A process should be in place for allowing patients to access non-formulary agents in cases of
medical necessity.
3.5 Distribution network and simulations
For the classification of the distribution term it is expedient to differentiate in a micro economic and
a macro economic dimension of the expression.
3.5.1 Distribution within the micro and macro economic environment
The macro economic distribution is seen as an economic activity of three branches. Production
covers the range of the goods production, the consumption, the goods consumption for need
satisfaction and the distribution, which represents the link between the two first mentioned ones, is
responsible for the goods transmission and/or the goods conversion. The term of the distribution as
a micro economic term is determined as marketing activities, which concerns the ways of the goods
transmission. From the view of the marketing theory the distribution politics decide the place about
the fourth „P “marketing-mix, the place.
The distribution, or even in the broader sense the selling, has the organization of the product
paragraph on the markets to contents. Two components leave themselves being differentiated: the
acquisition and the physical component. The acquisition stands for the preparation of sales. To it the
determination of the selling ways belongs and their organization. Generally it can be differentiated
between two basic types of selling. Here the enterprise without detour sells directly to the final
consumers and the indirect selling. The latter marketing agents are used, like for example the single
selling agents and the wholesalers. The simplest characteristic of a distribution channel is its length;
it is also determined by the number of stages. All paragraph-intermediate, those to one commercial
level belong to the retail trade, exactly these stages are added. Manufacturers and final users are
regarded in this structure as terminator points. They do not count as own stages, the direct sale
between manufacturers and customers contain no commercial stages. A distribution channel, which
includes gross and retail trade, represents a two-stage channel.
26
In the special case of the trade with medicaments the freedom of election is reduced concerning the
selling ways. The delivery of pharmacy-requiring medicaments is regulated by the legislator. The
delivery to the patients as their customers may only happen via a pharmacy or professionally via the
physician respectively via a hospital. Thus a zero-stage channel - as the direct paragraph of an
enterprise to the final consumer - is not possible yet. At least one marketing agent must be included
into the delivery of the medicaments. Under normal conditions it includes at least the pharmacist in
his role to distribute the product based on the medicament prescription by the doctor. The physical
component has the distribution of the products and goods up to the place of the final usage17.
3.5.2 Distribution logistics
With distribution logistics it concerns a market-connected logistic-system. It connects the
production of the enterprise with the demand level. The major task lies in the bypass of temporal,
quantitative and qualitative differences between the goods production and the consumption. Main
parameters of the organization are planning, the execution and control of the achievement
processes. Therefore the physical availability of the products and goods for the customer is located
in the centre of the activities of distribution logistics. One of the most important fields of activity
becomes the choice of location of the distribution storage places, the storekeeping, the job
execution, the commissioning and packing, the goods despatched. Those charge security as well as
transport parameters being encountered. The optimization of the logistics achievement, with the
dimensions logistics service (delivery service) and logistics costs, is the goal of distribution
logistics in the special one and logistics in general. Regarding the market it can be described as
follows: It is intended for the use of the customer„… as good, competitive considering a one as
possible use cost relationship of the goods transfer. “
3.5.3 Logistics costs
The logistics costs represent one of the major components of the logistics achievement, which can
be divided into the following major cost blocks: System costs, Control costs, Storekeeping
/inventory costs, Storage costs, Transport costs.
It concerns handling costs with the system costs the costs of the organization, planning and control
of the flow of material as well as the pertinent information flows. Under the control costs one
summarizes the expenditures for planning and controls of certain sub functions, like for example
those for the arrangement or the job execution. Stock program costs cover capital freeze costs of the
reproached materials and products as well as of insurance and devaluations of the existence. The
costs of the supply of storage capacities as well as in and paging procedures in the camp are added
to the storage costs. The transport costs block re-clamps the costs of internal and external
17
Dambacher, E./Schöffski, O. (2002): Vertriebswege und Vertriebswegeentscheidung, in:
Schöffski, O. (Hrsg.): Pharmabetriebslehre, Berlin et al. 2002, S. 243 – 270
27
transportation. Under the handling costs the loads for packing, the commissioning and the handling
of the products are being summarized18.
3.6 Basic conditions and development tendencies around the globe
The health care systems and services in Europe and the US are under constant reform pressure. The
composition of the payers and recipients, the technical progress and the strong load of the social
security systems, new records of unemployment rates require a change of the past system. One of
the recent measures relevant for the topic is the law for the modernization of the legal health
insurance (GMG). It is in effect since January 2004. Part of these legislature changes are among
other things the basic conditions for the medicament distribution and the selling conditions. Small
distance trade with medicaments was now made possible by certified pharmacies as well as the
operation of small chains by an individual pharmacist. In the following the used data originate from
the year 2004 and consider the changed basic conditions and regulations19.
3.7 Conclusion concerning distribution challenges in Europe
The substantial consequences of rising expenditures per head, sinking trade profit margins and
rising market shares by mail order pharmacies are indicators for a reduction of pharmacies. On the
other hand it was shown that the existence of multi-possession increases the number of pharmacies.
Therefore both mechanisms have to be monitored in parallel closely to draw a combined result.
Especially the abolition of the multi possession case represents the possibility via stronger
competition to lower fixed costs and to ensure a stable supply at the same time. For these particular
pharmacists the expected changes mean a rising competition pressure, which could endanger
enhance or danger their independence. Altogether the simulations show that also further a certain
stability is to be expected regarding the pharmacy number.
In the long run however it might lead to a market dominance of large pharmacy chains. Individual
pharmacies and the small chains are usually only regionally located and in certain niches. While
specialization on a certain therapeutic areas they can bring in added value and remain to disease
pictures a certain perspective. As consequence of an abolition of multi-possession prohibition is
further a re-organization of the mail order segment. It is expected that the market entrance is
accompanied by large and financially strong multi national companies. After a necessary
standardisation the pharmacy industry might then be consolidated on a new level. From the
circulations mentioned also the wholesale and its logistics are strongly involved. The permission of
pharmacy chains places the wholesale before a dilemma. On the one hand side the conversion
becomes the entrance for the large companies. Chains or other pharmaceutical wholesale dealers
threaten the rest of the market. On the other side the establishment of its own pharmacy chain
18
19
Goeke, C. (2005): Presseinfo 258 - Versandapotheken: Neue Perspektiven
Kaapke, A./Hüsgen, U. (2004): Neue Rechtliche Rahmenbedingungen für die Preispolitik
28
becomes a substantial drift for the remaining individual pharmacies lead. A consequence would be
an extent of utilization reduction for existing systems. The logistics share of the cost might in such a
case substantially rise, which could draw again the service level down to a degree that is already
established in Scandinavia and the Eastern European countries. Pharmacies would then only be
delivered once a day by the wholesalers. The cost avoidance for wholesalers would give them the
chance to fight against mail order pharmacies and furthermore limit them in their goal to extent
their business model on the costs of the well established small pharmacies in the market.
The re-organization of the medicament distribution can then be carried out in two steps. A regional
under delivery which is counter measured via rolling pharmacies. Legal basic conditions have to be
created but first analysis shows that this concept is feasible.
CHAPTER 4 - NEW CONCEPTS WITHIN
PHARMACEUTICAL MARKETING
Based on the changes discussed above, new marketing concepts have to be worked out in order to
react in line with the developments within the market. Perfect marketing organizations have to take
the following pillars into consideration. All points are related with each other and form a well
operating unit.
4.1 Pharmaceutical marketing mix
For the companies within the pharmaceutical industry the competitive strategy is the base for all
marketing concepts. This strategy was in the past dominated by the development and consequent
introduction of new products. Private and public health care systems were obliged to pay for these
products.
The insurers (public and private health care systems) and patients’ willingness to pay for higher
priced products erode and costs of product research and development reduce financial returns.
Therefore pharmaceutical companies are forced to change their traditional approach and are
beginning to make fundamental competitive changes.
Pharmaceutical companies have to move away from merely focusing on the product itself. One the
hand side the number of product innovations are decreasing and on the other side the magnitude of
product innovations is declining. So called “me too” products (products being a copy of other
products) are increasing in the market. Since the companies have realized that they cannot rely on
their product advantages alone, they have to change their marketing focus.
New focus groups are especially patients, pharmacists and wholesalers - that’s why long term
relationships with customers have to be built up. Closer relationships mean intensive dialogues and
29
finding out what is the core customer need, where can it be added value better to the patient than
competitors can?
4.2 New concepts in pharmaceutical marketing
Most of the stringent evidence comes from the USA. This is mainly to the fact that pharmaceutical
companies are responding to the changing conditions in the US market.
The US market has been for long times one of the most liberal environment for pricing.
Pharmaceutical companies were able to require a price which was by definition fully reimbursed by
the state. The US market is now moving inexorably towards a managed care market. But there is
overall considerable evidence that pharmaceutical companies in Europe and Japan are also
rethinking their approach to marketing to adjust to a new and unpredictable, competitive
environment.
4.3 Social Marketing
Most of the concepts being described apply to all industries and are therefore relevant from a
marketing perspective. One central feature is different to other concepts, since pharmaceuticals are
part of health care, which is in fact a pure social market with implicit rules of social responsibility
involving humanitarian issues which are becoming more difficult for the industry to rationalize.
From a global perspective multinational companies are still having difficulties adopting
standardized approaches across the world.
Therefore a strong and sustained program to market their contributions and targets to society would
be a good approach. New social marketing initiatives are emerging to reflect the concerns of the
industry’s primary and secondary publics.
Pharmaceutical companies and industry associations are developing social
marketing initiatives
Local community
General public
Regulators
Competitors
Insurers
Educators
Physicians
Media
Patients
Patient groups
Primary public
Social marketing
initiatives
Secondary
public
Consumer organizations
Environmental groups
Professional
Politicians
Associations
Unions
Universities
Financial community
Employees
Shareholders
Source: Kotler, Philipp; Roberto, Ned; Lee, Nancy
Figure 3: Social marketing initiatives
30
4.4 Integrated Customer Marketing
The conventional way was looking at the product as the sole personification of value. This approach
was highly successful in the 90’s as an environment existed in which the following attributes
existed: product choice was limited to a range of brands rarely identical; the patient did not pay for
the products; prescribing decisions were not based on the price; insurers were relatively
unsophisticated.
The following indicators are examples for the major changes within the market: Deregulation
activities, generic competition, fixed reference prices, higher competition, substitution of higher
priced therapies through lower cost treatments, patients becoming responsible to bear costs of their
treatments as co payers. These indicators are only a sample of challenges the companies and
patients are facing at the moment. The companies have to react immediately in a world wide
increasing competition. Therefore focus groups are being identified and strategies are developed.
The patient is moving from buying what was presented to being a competent purchaser. The more
the patient is relying on the recommendation of the pharmacist, who has the partner role for the
patient. Based on this point the overall question arises, if a brand focused or a customer focused
approach is the better advertising approach. Having decided this approach it can be answered which
strategic channel is appropriate overall.
Source: Merkle - a new prescription for the pharmaceutical industry, 2009
Figure 4: Integrated Customer Marketing (ICM)
Simultaneously social trends towards health awareness and the need for individuals to take more
responsibility for their own health, coupled with insurers’ interest in promoting patient education
and screening for diseases. Prevention of disease began to broaden customer perceptions, which is
31
going far beyond the mere product20. As indicated above pharmaceutical companies are reacting in
several ways. One important strategy is to concentrate on the emerging focus groups as patients,
pharmacists and wholesalers. For each of them a new strategy has to be developed to be successful
in this changing market environment.
4.5 Limited product opportunities in pharmaceuticals
Since more than 5 years the immense growth opportunities in the pharmaceutical market are
limited. Growth in the major markets is slowing down across the world. The continuing emphasis
on cost containment by favouring generic substitution for existing products and by introducing
therapeutic substitution for new products in some managed care programs may create a decline in
the value of a number of large volume therapeutic segments. Value maturity and even marginal
decline in mass therapy markets crowded with too many competitors will inevitably lead to fierce
and costly market share battles as companies attempt to maintain sales. Most market segments can
only support a leader, a second and third product to expand and develop the market, and a fourth
and fifth product to saturate remaining demand. With more, the whole market suffers, even the
leader.
The indicated models are describing how some companies are changing the marketing approaches
in a more vivid, flexible and competitive market environment. This is the only way changing
customer needs are met and to address the growing primacy of customers. The balance of market
power shifts towards the industry’s customers.
CHAPTER 5 - NEW DISTRIBUTION MODELS
WITHIN PHARMACEUTICALS
At the moment one has to differentiate between a large variety of health care insurances which all
maintain large administration, Marketing and sales departments. Competition has to increase in
order to increase innovations within this sector and reduce spending as well. This will be the only
way the patient has the feeling that his money is invested in the most efficient way for him.
5.1 Cost evaluation as the base for new distribution models
Within an economic evaluation costs and benefits of different alternatives and scenarios have to be
evaluated. Major cost components will be analyzed. True economic cost is concerned with the
opportunity cost of that process or intervention. All costs associated with an intervention are
evaluated – not just pure market prices.
Prices for pharmaceutical products are based on 3 major components:
•
20
Ex factory price (Price to which products are actually sold to the wholesaler in the local market)
B. James, 2000, p.39
32
•
Distribution costs (they encompass all related costs for the physical distribution of the product
from the manufacturer up to the wholesaler)
•
Taxes (They are depending on the country legislation and vary in Europe by country).
All three elements should be analyzed in detail in order to have a fair view on the cost structure.
Due to different reimbursement levels the patient as the last element of the chain questions what he
finally has to pay. Especially when considering the development of shipping the products directly to
the patient distribution costs will be a more important factor when determination the final consumer
price. Based on the need to save costs in all areas within the pharmaceutical sector the need to save
costs along the health care value chain arises as well. Herewith different models are possible.
5.2 Increasing control of drug distribution to enhance patient safety
The pharmaceutical distribution market is becoming increasingly consolidated. A few players
control more than 60% of the distribution market, with combined sales of more than 50 billion
euros. These players have grown as a result of local market consolidation (purchase of domestic
competitors) and horizontal integration (cross-border acquisitions). They have used their substantial
profits to fund vertical integration by building pharmacy chains and financing pharmacies where
chains are illegal. These players have also vertically integrated by building generic-pharmaceutical
companies.
The time has come for the pharmaceutical industry to change its distribution model like many other
high-value industries (e.g., automotive) have successfully done. Full control of and visibility into
the pharmaceutical supply chain by manufacturers is the only way to accurately determine product
movement and gain strategic access to retail outlets. It also presents a tested framework in which to
instigate the change. Pharmaceutical manufacturers’ failure to act will severely hinder their
commercial activities in Europe, resulting in profit erosion. Today’s pharmaceutical-distribution
landscape is characterized by a mix of route-to-market strategies with wholesalers taking the central
position (see Exhibit). Almost three-quarters of all medicines sold in Europe are distributed via
wholesalers. They, in turn, sell to retail pharmacies and dispensing doctors. On the other hand,
pharmaceutical companies distribute directly to hospitals in major markets like Germany, Italy, and
France. Mail-order pharmacies are emerging as a new route for marketing pharmaceuticals. Drug
distribution via mail order is legal in six European countries: Denmark, Germany, the Netherlands,
Sweden, Switzerland, and the United Kingdom.
Pharmaceutical companies need to react to increasing environmental pressures to preserve their
profit margins. Given the trends described, it is reasonable to conclude that pharmaceutical
companies are under attack from all sides. The vertical integration of wholesalers into retail
pharmacy chains means they may request higher discounts, or product rebates, or a listing fee. If
they do not get their way, they could take numerous other actions to the detriment of
33
pharmaceutical companies (see Exhibit). In most European countries, wholesalers could exclude
pharmaceutical products from their product portfolios (i.e., “listing out”). They might increase their
involvement in parallel importing and exporting.
Overall it needs to be examined, if alternative distribution models are feasible and what Pros and
Cons need to be evaluated overall. They might also seek to form collaborations with generic
suppliers and parallel importers. For their part, however, pharmacists could rally patients and
physicians against pharmaceutical companies through aggressive lobbying. They would be well
placed to promote competitors’ products to patients, and they could aggressively substitute onpatent pharmaceutical products with parallel imports. What should pharmaceutical companies do?
Gain more control and visibility of the supply chain! Without a doubt, pharmaceutical companies
are under increasing pressure. How can they reassert themselves as key players in the distribution
process? Classic marketing and sales initiatives and supply policies alone will not get to the root of
the problem.
If the wholesaler controls the point of sale by owning the pharmacy, the pharmaceutical company’s
marketing effort will have no effect. Several other viable options exist to address the problem
effectively. One would be for pharmaceutical companies to introduce a new distribution model to
increase their control over the supply chain (see Exhibit). In another option, pharmaceutical
companies might consider acquiring one or more wholesalers. This would certainly give them
greater supply chain control, but the wholesale business is not a pharmaceutical company’s core
competency and it would require hefty investments. Still another option would be to contract a
third-party logistics provider, as Biogen has done with Arvato healthcare service, part of the
Bertelsmann group, for the distribution of its product Avonex®.
In terms of evaluation criteria for strategic options the above mentioned criteria need to be
evaluated. Getting wholesalers to act as agents might also be an option. And some manufacturers
might want to consider building their own direct-to-pharmacy distribution network. All these
options have pros and cons; pharmaceutical companies must assess their long-term sustainability.
Overall it can be summarized that one should recommended that pharmaceutical companies act
quickly to take more legitimate control of the drugs supply chain to enhance patient safety.
CHAPTER 6 - MARKETING RESEARCHES CHARACTERIZING THE
DISTRIBUTION WITHIN THE PHARMACEUTICAL MARKET
IN GERMANY
In the context of the theoretical analysis the formulation of theses are the bases of the empirical
analysis. These are to be verified in the context of an explicative investigation. The investigation
took place in Germany between January and May 2007.
34
In the context of standardized written questions different wholesale dealers were asked. A condition
for the investigation was that the asked ones operate as wholesalers. Response behaviour from both
parties is separately analyzed from each other. According to the analyses of other studies
wholesalers based on their size and market power have different goals they are pursuing. The more
interesting was the analysis of their results.
6.1 Questionnaire conception
The questionnaire to answer took 25-minutes and covered an extent of approx. 6 pages. The
question form was predominantly the closed question. The measurement of the answers is to take
place thereby in particular by means of a metric scale.
The questionnaire in the apron with participants of a course in the people's university in Germany
tested concerning the consistency of the questions, difficulty as well as the duration of the
questioning. This critical evaluation serves for it a specifying of the main theses and/or their
indicators to cause.
In the context of a sample selection some students of the university in Karlsruhe of higher semesters
were asked in the canteen. In the final concept 20 wholesale dealers and 150 pharmacists were
questioned. Whether a problem concerning representativity exists, has to be examined by means of
non response bias a test after Armstrong/Overton. The sample selection took place in the context of
a not coincidental selection, as ratios are assigned, which correspond proportionally to the
distribution of the population.
A coding of the questionnaires was not necessary, since the investigations between the selected
groups were not totally independently in each case, so that the allocation of the groups had to be
marked. For the participants of the questioning the anonymity of the answer remains ensured.
Before the background of the interesting topic hope exists that one wins the participants without
monetary incentive for questioning.
For practical decisions it is not however only of importance like the decision in the long run
precipitates, but also as durable the result is. In the context of an analysis of sensitivity is to be
examined, how strongly the decision result reacts to slight changes of the model parameters.
6.2 Evaluation and interpretation
The challenge of the work lies to ask the positions of the groups who will take part in the future
reform process and their answers in the direct comparison, to evaluate as well as the categories
defined above against each other. Different attitudes, trend, expectations and role changes were
expected. The analysis was even more interesting, because the same question at culturally very well
comparable groups represents a scientific novelty in this area.
To position the wholesaler in a competitive environment, characterized by concentration processes
and significant savings within the pharmaceutical sector the following model should prove the
interdependencies.
35
6.2.1 System changes and cost reductions implications
In the following chapter results of a self conducted empirical research are introduced and discussed.
One could assume that international operating large-scale enterprises, in particular with foreign
origin, initiate no reduction of cost cutting initiatives due to national legislation adaptations.
Reductions of costs or Supply chain Management activities take place usually based on national
activities or decisions. As a consequence rather small and medium-size enterprises with high
turnover of prescription-requiring medicines would act upon legislative changes more sensitively.
This would therefore lead more easily to cost cutting initiatives.
6.2.2 Openness for changes in the distribution cycle in the enterprises
In the Pharma industry the logistic department is in most enterprises an executive committee
directorate. However the responsibility for logistics lies predominantly on the 2nd Management
level and reports directly to the executive committee. Only in one questioned enterprise it was
reported that logistics are on the third leadership level –this statement is rather exceptional. The
usage of the hierarchical level as an indicator for cost optimization steps is however limited.
Regarding the organizational structure the accomplished interviews resulted in a reference to a
substantial potential, which can be obtained by a process orientated organization of the supply
chain. This structure is in the pharmaceutical industry however still an exception in Germany.
6.2.3 How high are the following cost factors being rated?
The significance of administrative expenses as well as the costs of the order handling is always
evaluated very low. As a consequence for cost optimization purposes this should not lead to high
inventory levels especially not for inferior packaging material, samples and finished goods. Looking
at the valuation of transport costs the result shows a mixed picture. For some companies this point
is regarded as not influence able and does therefore have no importance in the sense of cost
reduction options. The different meaning, which is related to transport costs, is very transparent.
The reason for this lies obviously in different transportation solutions. Some companies undertake
the distribution transportation with a third party solution. In other cases the contractors are directly
assigned with these tasks – as a consequence a higher internal effort for the transportation
management is needed.
Production and inventory costs are rated within my interview series with the highest factors. All
asked enterprises quote here at least a medium relevance, the majority even a high significance. The
high product value and current inventory coverage of finished goods from usually 4-6 months have
to be considered. This fact offers potential for inventory optimization. The challenge is even higher
because of the actual need of aligned inventory planning as well as the increase of transparency and
flexibility in the supply chain.
6.2.4 Physical structure and controlling of the supply chain
36
The data situation concerning the Supply chain structure is not-consistent; due to different
production, customer and order structures this result was already expected.
In Germany a central storage depot structure without regional storages and without national cross
docking was established. The pharmaceutical companies supply wholesalers with finished goods
usually locally or even internationally. The present condition of wholesale dealers guarantees a high
delivery service in the German market towards pharmacies, so that none decentralized, regionally
operating stores of the pharmaceutical companies - apart from production locations are necessary.
The wholesale dealers provide an assortment of articles of about 75,000 different articles (stock
keeping units of pharmaceutical products). Its stock turn rate range amounts to about roughly one
month. Delivery service of several times per day is usual and often carried out with an own fleet21.
It was questionable if due to rising health care costs the system of direct supplies towards
pharmacies and hospitals with finished goods stores increases. The questioned enterprises seem to
look for a cost optimization within the range of European distribution nets. Today widespread
national logistics structures exist, even if thinking in regions, like e.g. Northern Europe, Central
Europe the same statement can be made. The European market and in particular the European
Union today and in the near future is served over a central storage depot and several regional
storages. In enterprises with several production locations (usually specialized according to
production engineering a structure with several product group-specific storage depots is the
favoured alternative.
6.2.5 Equipment of the national and/or European central storage depots
Existing national central storage depots in Germany have predominantly a high degree of
automation regarding commissioning and radio data transmission. Nearly everything was
constructed newly or automated during the last 10 years. The high degree of automation does not
surprise. Not only personnel savings and compact flow of material was established. Operating
regulation for pharmaceutical entrepreneurs and GMP is being considered. At production locations
automated logistics concepts, which integrate flow of material and storage of raw material,
packaging means and finished goods were integrated to secure an optimized product flow. Since
incoming goods and samples are temporally decoupled, material release becomes more important.
6.2.6 Trends in the outsourcing process
The outsourcing of storekeeping and logistics increase in value services is traditionally not in the
focus of the pharmaceutical sector, although with PharmLog a highly considered and valued
example exists already. Also different enterprises cooperate within the operational completion. The
feedback of the interviews show that consequently the task assigned to a third party provider is the
pure transport. The reason lies in the fact that large logistic service providers have very good
21
source: www.phagro.de
37
references in the pharmaceutical industry. In the course of the last 10 years they have automated
their capacities across the industry.
6.2.7 Supply chain co-operations
Generally the picture is very heterogeneous regarding supplier-lateral co-operations. Different
structures or a minted development projection with some enterprises e.g. by introduction of
supplier-lateral vendor management Inventory (VMI) or „sample course “with the supplier can be
viewed. As expected co-operations are rated significantly higher with their main suppliers based on
good day to day relations than with the rest of their business partners. The future trend is that cooperations will increase with the main suppliers. The results show that enterprises cooperate only
with few suppliers – a trend which is realistic for the future as well.
6.3 Expectations and openness for new models in the pharmaceutical sector
The EU monitors the legislative structure in all EU countries with the clear goal to increase
competition within and across the countries. Both indicators are strong factors for the liberalization
of the pharmacy market all over the world but especially in Europe. Sales of drugs through cross
border internet pharmacies across Europe and American consumers is picking up tremendously.
How strong the competition of the classical pharmacist will be with mail order pharmacies can be
discussed controversially. Above chart expresses the desire to have the product within 3 days. The
experience from other countries expresses that a border of 7-10% will probably not be accessed,
since only this part of the population is affine for this form of the distribution. Mail order
pharmacies are especially interesting for chronically ill or immobile patients. Definitely it can be
stated that both retailers and their customers are brought together much closer as a great
achievement of the Web. They hope to use the new medium to gather detailed data about
consumers, so they can then make an informed sales pitch.
Data may range from the very basic (a customer's age and address, for instance) to the very specific
(the customer likes blue flower motifs). The greater the amount of information, the argument goes,
the greater the cross-sell potential
The second trend are the new point of sales as local mail order pharmacies who are also the result of
price comparisons and increasing price sensitivity in all countries, to limit pharmaceutical expenses
around the globe.
6.4 Key results of empirical study
The findings of the empirical study fall into two parts – first the expert meetings and secondly the
analysis of the written feedback from the questionnaires.
A) From the accomplished market analysis and the experts’ meetings the following substantial
action fields in the pharmaceutical industry were derived:
1. A high rating was given concerning the potential of supplier integration. This lies in direct
connection with the supply chain management and the IT support used for it. Objective is primarily
38
the creation of transparency and flexibility as well as the reduction of the complexity within the
whole process chain in order to achieve cost reduction potentials.
Usually the incoming goods of the raw and semi finished products for the pharmaceutical
production are set together with incoming goods at the own location. Furthermore one has to take
into consideration incoming goods from other locations of the own group and incoming goods of
external suppliers. Overall this mix is very heterogeneous. However even the largest pharmaceutical
manufacturers are overall for the majority of their suppliers still so small customers that in this
regard no negotiating pressure can be exercised- rather collaborative relation ships should be built
up on which base improvements can be reached.
2. Obstructed by national labelling regulations still large potentials lie in the integration of the
supply chain on European level. International pharmaceutical companies avoid possible constraints
from these obligations in the context of their global production. Despite this fact they aim to
implement integrated European logistics structures, since these offer substantial cost advantages for
them. Concepts detached from national borders strive for a centralization of inventories, a concept
which represents best practice. In the context of a European centralization a European production
group can be implemented for each stock keeping unit at several different locations. The supply of
decentralized existence of national wholesale dealers should take place in optimal combination from
Push and Pull concepts.
3. The differentiation of the distribution after different product and customer groups as well as
associated close co-operations with business partners, wholesale dealers and in particular hospital (chains) on basis of eProcurement and vendor management seems to be a promising action field.
This field is even more interesting taking the associated inventory reductions into account as well.
However the attention of co-operation with suppliers and customers should be intensified. Having
both fields in the centre of interest is for most companies not developed far enough yet.
4. For the realization of the points 1-3 usually appropriate IT systems are needed. Nearly all
participating enterprises see therefore high potentials of implementing EDP-steered processes and
information flows, they already plan the employment of eProcurement, and supply chain
management software usage as well as of RFID. Therein the importance of the supply chain process
is underlined.
5. Apart from „the classical “supply chain management topics specified above in the context of the
study also two organizational approaches with high potential were classified. On the one hand the
process orientated organizational structure and on the other hand the target setting process and the
creation of an achievement transparency is necessary. These topics are interesting, especially
considering that only small investment demand is necessary to realize these topics. The smallest
potential is seen in the cross docking and in the improvement of the contracts with logistic partners.
39
The latter does not surprise, if one realizes how low the outsourcing process of the asked enterprises
is being rated. The above points are the key results of the empirical study.
6.5 Interpretation of the key trends – based on the findings of the empirical study
The liberalization of the pharmacy market is the cause for the existence of internet pharmacies.
Presently lots of regulations are being closely monitored. The increasing pressure of all countries to
reduce costs in the healthcare segment opens the way for new ideas.
The vision for cross-selling on the Internet was intensively analyzed. Those loyal few are more
likely to shrink than expand in number as the Web makes price research easier. Market transparency
has the potential to destroy entry barriers to online retailers and undermine brand loyalty. Bargain
hunting on the Internet is ballooning, in fact as auction sites gain in popularity.
So far, retailers have comforted themselves with the knowledge that price does not count for
everything. Most consumers will also consider value, service, delivery schedules and other factors
in making a purchasing decision. Through branding, a company convinces a consumer that it can
provide superior value. This is what creates customer loyalty.
Yet greater market visibility on the Web means retailers will be under far greater pressure to
provide better value all the time. That is because consumers are able to build comparisons for
service and quality as well as price. Companies as MySimon, for instance, have plans to extend its
research capability to give consumers a better sense of value. Companies are therefore moving into
the next generation of bots, which will not focus exclusively on price, but on quality, terms of sale
and other factors.
A company using a similar strategy is Insite Marketing Technology. The new company is creating
software to improve retailers' ability to provide information to customers. The idea is being used at
the CompUSA Web site, where a customer can get help from a virtual sales advisor. The advisor
asks buyers to prioritize their requirements for a laptop, for instance, including specifications for
disk drive, weight, battery life and other factors. The advisor then makes recommendations based
on the information. Similar questionnaires are used by a number of automobile sales sites.
While recommendation sites share some aspects of tailored marketing, there are key distinctions
between
them.
First,
the consumer's
current,
not historical,
requirements drive
the
recommendations. Second, the shopper, not the retailer, is in the driver's seat. Contact is made only
at the customer's bidding.
CONCLUSIONS AND PERSONAL CONTRIBUTIONS
Branded drugs are products with a high degree of confidence and reliability. This quality has to be
guaranteed to the patients. This service includes competent consultancy, just in time delivery as
well as the pharmacist’s discretion concerning patient’s needs.
40
The market undergoes severe changes and is therefore a highly interesting field for studies
especially within the European context. A number of new models for the pharmacists are under
discussion in Europe and could be the base for the same developments in a number of European
countries. Especially in East Europe where the pharmaceutical companies are realizing high sales
growth due to an increasing growth national product as well as an increasing national income high
investments are made and the base for the above mentioned models is being made. To prove the
assumptions an empirical study was be made with the wholesalers in Germany. Of central interest
were the key trends which are being foreseen and in how far this can be described in a model.
The key trends based on the increasing price sensivity of consumers and national insurances are 2
global developments in the rapidly changing markets. The rise of market imports and exports often
characterized as parallel trade from one wholesaler to the next in different countries to benefit from
price deviations across the world. Especially the common currency in most European markets was
the base for the knowledge where price differences occur and how from them can profited.
The second trend is the also related to the ability of markets growing together based on lower
distribution costs and better IT capabilities around the world. Internet pharmacies are the base for
consumers to offer their products globally while benefiting even from very small price differences.
In the past the absolute value for most products was around 10 -15%, when people decided to go
with a new supplier – today even for margins as small as 1-5% these decisions are being taken.
Within the thesis major processes and structures in the pharmaceutical market were analyzed and
the value proposition of the main protagonists was being described.
Considering potential
legislative adaptations as well as the increasing expansion of international operating pharmaceutical
companies the implications for pharmacists will be analyzed in detail, to be able to react to market
developments in time.
Pharmaceutical wholesalers use a logistic service supplier to cover the last mile to the patient.
Cooperative solution between the pharmacy and the wholesaler large mail order pharmacies through
cooperation and usage of synergies New market entrants – for example international wholesalers.
Many small mail order pharmacies are a supporting leg for the traditional pharmacy. The above
mentioned tendencies show that no player can act on his own, since he cannot dispose over the
necessary resources and competencies to build up a new distribution system. Restrictions within the
present health care system will only be terminated to allow the above models fulfil cost reduction
potentials for the local governments.
Measures adopted by the European government to cap prescription prices have also put pressure on
the parallel traders. The UK is decreasing prices for branded medicines by 7% over the next five
years, while Italy for example is raising prices of some branded products to bring them in line with
E.U. averages. At the same time, the prices of several products that make the bulk of parallel traders
have fallen as patents have expired.
41
Personal Contributions
This thesis follows an empirical study based on an intensive theoretical framework within the
pharmaceutical environment. This approach was carefully designed to meet all theoretical
requirements.
A) Scientific contributions
The thesis is a contribution based on an intensive analysis in the pharmaceutical environment. It
included the analysis of the different distribution processes and models, while incorporating the
analysis of present marketing theory.
The analysis is based on an empirical study to see in how far the market is open for new models and
an implementation of a direct distribution model is realistic.
The standard distribution chain was being analyzed and measured in how far other options are
feasible and possible in the complex pharmaceutical environment.
This work demonstrates the advantages of a direct to pharmacy model as well as a direct mail order
pharmacy. The importance of going a direct process chain was clearly shown.
B) Marketing contribution
The work and examples presented in this thesis are the result of a careful marketing analysis.
Present marketing models are the base for the understanding and the foundation for the empirical
assessment.
The mail order pharmacy model is a constant development of the direct to patient relationship and a
similarity to consumer marketing where direct distribution models are already established since a
long time.
C) Further directions for Research
The thesis is based on an intensive empirical research which out of which a distribution model was
developed. These potential trends need to be examined in the day to day environment. Especially
the forecast that local mail order pharmacies and drugstores are directly being served by the
wholesaler need to be analyzed closer. The further this direct distribution model is being developed,
the more classical wholesalers will be forced to look for new business models.
This would consequently establish a long arm for the manufactures in future with a potential direct
relationship to the pharmacy or eventually to the patient. This relationship would be a basis for new
marketing models since a DTP (Direct to Patient relationship is established). Moreover the classical
field force approach visiting the doctor could be challenged, since it will be also important visiting
the pharmacy to promote new products or in the long run going for patient events where new
medicines will be introduced and side effects directly presented to the patient.
To fully realize these marketing strategies over the longer term and then sustain this strategy by
addressing anticipated future changes in the marketplace. The marketers will consequently work
with scientific and clinical teams in the pharmaceutical company to plan further clinical
42
development studies on the product to be able to explain this to patients being the customer for the
pharmaceutical industry.
The promotional strategy is the communication platform. It will be promoted to doctors as being
highly effective and it will have less side effects than current competitors. The new process we will
see over the time is that the promotional strategy flow might now be conveyed to the customers
(patients) based on a direct relationship. These will include more specific statements surrounding its
efficacy. Promotional objectives are the goals the marketer sets for acceptance of the product in the
mind of the customer, or in the minds of customer groups.
The described effects are already realized within consumer marketing where a DTC (Direct to
Consumer) model is state of the art. Thomas Jacobsen with his actual publication - hinting to this
effect - might be a chance for future research.22
ILLUSTRATIONS OVERVIEW
Figure 1: Evolution of global pharmaceutical sales compared with the relative annual growth of
global markets 1999 - 2007
Figure 2: Global cardiovascular forecast by disease class 2007 - 2015
Figure 3: Worldwide pharmaceutical sales/profits of leading pharmaceutical companies
Figure 4: Global pharmaceutical top markets in % of Sales share
Figure 5: Worldwide revenue of cardiovascular diagnostics drugs and devices 2005 – 2012
Figure 6: Romania – Health expenditure; Total (% of GDP)
Figure 7: Romanian real GDP growth rate during 2003 -2010 (year 2010 data only estimate
Figure 8: Real annual growth in health expenditure and GDP
Figure 9: Health expenditure per capita, US$ PPP, 2008
Figure 10 : Total unaudited and audited Global Pharmaceutical Market 2002 - 2009
Figure 11: Leading Pharmaceutical Innovation - Trends and Drivers for Growth in the
Pharmaceutical Industry
Figure 12: The influence of the key stakeholders within the pharmaceutical industry
Figure 13: Overview over the top 3 distribution channels
Figure 14: Pharmaceutical distribution landscape is influenced by the illustrated key trends
Figure 15: Top pharmacy customer segments
Figure 16: Portfolio of the pharmacist based model
Figure 17: Drug industry consolidation 1993 – 2010
Figure 18: German cost containment law implications 2005 in Germany
Figure 19: Key cost containment measures in Europe
Figure 20: Comparison of prescriptions and over the counter drugs
Figure 21: Overview of retailers pricing structure
Figure 22: European commission working group results
Figure 23: Member states implanting different cost containment measures
Figure 24: Discussion points of the European Committee; 2007
Figure 25: Wholesaler concentration process
Figure 26: Sales development of the worldwide largest pharmaceutical markets
Figure 27: Five pillars of successful marketing and sales organizations
Figure 28: Successful innovations in the pharmaceutical industry 2008 in %
Figure 29: Pharmaceutical marketing levers
22
See Thomas M Jacobsen (2010), S. 221
43
Figure 30: Process ineffectiveness causes within the pharmaceutical industry
Figure 31: Industry lifecycle analysis
Figure 32: Principles of Marketing
Figure 33: R&D expenditures in Europe, Japan and USA
Figure 34: Social marketing initiatives
Figure 35: Integrated Customer Marketing (ICM)
Figure 36: Direct to consumer spending mix analysis
Figure 37: Promotional mix for a world wide operating company
Figure 38: Principles and Practice of Pharmaceutical
Figure 39: Sales and product shares of top pharmaceutical companies
Figure 40: Pharmaceutical markets by region and forecast
Figure 41: The Managerial Grid
Figure 42: WCF-model
Figure 43: Relationship between Salesperson Performance and Understanding of Customer
Decision Making
Figure 44: Forecast model for the behaviour of sales persons
Figure 45: Integrative behaviour oriented sales model
Figure 46: One dimension sales model for straight purchasing processes
Figure 47: Pharmacy trend as part of the consolidation process within pharmaceuticals
Figure 48: Pharmaceutical distribution outlook
Figure 49: Trends within the pharmaceutical distribution landscape
Figure 50: External pressure from wholesales and pharmacies towards pharmaceutical companies
Figure 51: Alternative distribution models under evaluation
Figure 52: Three core phase model for a new distribution model
Figure 53: Relationship between system changes and cost reductions
Figure 54: Importance of central cost factors along the process chain
Figure 56: Single versus several product group-specific storage depots
Figure 57: Allowance of re-imports and local mail order pharmacies will significantly change the
distribution process for pharmaceutical products
Figure 58: A maximum three day delivery period is the key need of the patients
Figure 59: Target groups for mail order pharmacies
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48
Curriculum Vitae
Informatii personale:
Nume, Prenume:
Data si locul nasterii:
Stare civila:
Adresa de resedinta:
Educatie:
Scoala primara:
Scoala gimnaziala:
Exchange program:
Liceu:
Hafemeister, Thiemo
May 2nd, 1967 in Kiel
Casatorit; 1 copil
Stindestrasse 18, 12167 Berlin
August 1973 – July 1977
August 1977 – July 1984
84 -85 Fort Worth Texas; diploma de absolvire
Absolvirea liceului Max Planck School, Kiel 1988 (Abitur)
Indeplinirea cerintelor pentru admiterea la universitate
Facultate:
Admitere
octombrie 1989, Christian-Albrechts-Universität, Kiel
Sectia
Administrarea afacerii
Specializare Finante si Organizare
Lucrarea de absolvire – Abordarea organizational a conceptului de
pensionare in Germania - schimari, provocari si solutii
Absolvire
decembrie 1994 (Diploma de Economist)
Media generala 2,2
Master in Administrarea Afacerii, Schiller International University, absolvit in iulie 2000
Program de management avansat, Universitatea Mannheim, absolvit in mai 2004
Stagiu militar:
Perioada:
July 1988 – September 1989
Responsabilitati:
Navigator pe o nava antimina in Marea Nordului
Limbi straine:
Engleza si franceza, fluent, scris si vorbit
Locuri de munca in cadrul companiei Pfizer:
2007 – prezent
Director de achizitii cu statul German
2002 – 2007:
Manager de proiect:
♦ Dezvoltarea si implementarea initiativelor strategice in
Germania si cu Europa
♦ Activitati conexe
♦ Externalizarea si initiative de optimizare
2000 – 2002
Manager financiar la divizia germana de farmaceutice din cadrul
firmei Pfizer:
♦ Coordonator de rezultate in termini de vanzari si profit
la sediul european pentru raportare si planuri de
operare/previziuni
♦ Coordonator de taxe si documente legale la
departamentul de taxe si documente legale, dar si cu
consultati externi
♦ Imbunatatirea managementului contabilitatii
2000
Pfizer & Warner Lambert – responsabil cu fuzionarea (merger) –
aflata pana atunci in sediul german Pfizer
1998 -2000
Manager financiar in OTC (over-the-counter market) pentru Warner
Lambert, responsabil pentru Germania, Austria, Elvetia and estul
Europei (Polonia, Cehia/ Slovacia, Ungaria, EE)
♦ Dezvolatrea planurilor de operare, stabilirea masurilor
pentru atingerea tintelor de profit
♦ Actualitate vs. Planificare - comparatii
♦ Raport lunar, semestrial si anual de operare si obiective
statutare
♦ Coordonator raportare statutara cu auditorii
49
♦
♦
1997
1996
1995 -1996
Analize de investitii si control
Activitati de joint-venture
Analist la departmental de costuri de contabilitate in principal cu
proiectele de imbunatatire a productiei
Experienta international de lucru la sediul din New Jersey
Trainer financiar la Warner Lambert, Freiburg, Germany
Curriculum Vitae
Personal Information:
Name, First Name: Hafemeister, Thiemo
Date of Birth/ Place: May 2nd, 1967 in Kiel
Father:
Leader of the finance department
Marital Status:
Not married
Residence:
Oberwaldstr. 23
D 76227 Karlsruhe
Education:
Elementary School: August 1973 – July 1977
High School Germany:
August 1977 – July 1984
Exchange Program: 84 -85 Fort Worth Texas; US High School degree
High School Germany:
Graduation Max Planck School, Kiel 1988 (Abitur)
Requirement to university admission met
Army:
Duration:
July 1988 – September 1989
Responsibility:
Navigator on a mine sweeper in the North Sea
University:
Start:
October 1989
University Kiel:
Christian-Albrechts-Universität Kiel
Study field:
Business Administration
Majors:
Finance and Organization
6 month thesis:
Organizational approach of the German retirement concept –
changes, challenges issues and solutions
Graduation:
December 1994 (Diplom Kaufmann)
Grad Point Average:
2,2
Schiller International
University:
Graduation:
Master of Business Administration
in International Business
July 2000
University Mannheim:
Advanced Management Program
Successfully terminated in May 2004
Languages:
English & French fluent in word and written
Employment with Pfizer (current first):
2002 – today:
Working as international Project Manager:
♦ Development & implementation of strategic initiatives
in Germany and within Europe
♦ Merger activities
♦ Outsourcing & optimization initiatives
50
2000 – 2002
2000
1998 -2000
1997
1996
1995 -1996
Working as Finance Manager within the German
pharmaceutical sector for Pfizer:
♦ Co-ordination of results in terms of Sales, profit with
European Headquarter for actual reporting and
Operating Plans/ Forecasts
♦ Co-ordination of tax and legal issues with internal tax
and legal department and external consultants
♦ Improvement of Management Accounting
Pfizer & Warner Lambert Merger - located since then in the
German Pfizer Headquarter
Working as Finance Manager in the OTC business for Warner
Lambert with responsibility for the Germany, Austria,
Switzerland and East Europe (Poland, Czech/ Slovak,
Hungary, EE)
♦ Development of Operating Plans, agree measures to
ensure targeted profit
♦ Actual vs. Plan comparisons
♦ Monthly, quarterly and year-end reporting for
operating & statutory purposes
♦ Co-ordinate statutory reporting with auditors
♦ Investment analysis and control
♦ Joint Venture Activities
Working as analyst in the Cost accounting department mainly
within production improvement projects
Working experience in the world wide headquarters New
Jersey
Starting as Finance Trainee for Warner Lambert in Freiburg,
Germany
Academic Life – publications (current first):
2005: Internet pharmacies – a constant threat or an opportunity for pharmacists – Pfizer paper
2004: Radical changes within the pharmaceutical environment in Europe – Pfizer paper
2001: Euro – what are the main challenges of the new currency – Pfizer paper
2000: Various case studies and analysis within the MBA program which were part of the regular
studies, but not officially published
2000: Shareholder value – a Management concept for the future - MBA paper
2000: International Monetary and Banking System – Research Project – MBA paper
1999: Internal publication for year 2000 activities, key issues and solutions – Pfizer paper
1999: Selected problems of International Economics – Monetary and fiscal policy – MBA paper
1996: EVA – a new monthly key performance indicator Warner Lambert publication
1995: Retirement alternatives and challenges from a psychological perspective as Co Author for
Prof. Martin Kleinmann
1993: Publication of Retirement challenges, implications from an organizational perspective;
thesis paper 150 pages for the Kiel University
Academic Life – major activities (current first):
2003 -2004 Advanced Management Program initiated and conducted by the University of
Mannheim composed of 6 modules:
♦ Marketing and Sales - Prof. Homburg
♦ Business Finance
- Prof. Franz
♦ Marketing and Sales - Prof. Homburg
♦ Organizational Change - Prof. Stock
♦ Corporate Strategy
- Prof. Perlitz
51
♦
2003
2000
Mangerial Dec. Making - Prof. Weber
Certificate in International Accounting (CINA) certified by Prof. Leibfried Head of
Academy for International Accounting Standards
Graduation from Schiller International University with the degree MBA. The
program consists of 15 modules, which all have to be successfully terminated:
♦ Organizational Behavior
♦ Managerial Accounting
♦ Managerial Finance
♦ International Marketing
♦ Multinational Business Management
♦ Production and Operations Management
♦ International Monetary and Banking Systems
♦ Business, Government and International Economy
♦ Comprehensive Business Management Seminar
♦ Human Resource Management
♦ Selected Problems of International Economics
♦ International Business Law
♦ Managerial Statistics and Quantitative Methods
♦ Recent Trends in Information Technology
♦ Methods of Research and Analysis
52