Distributors sit at the heart of the pharmaceutical supply chain, connecting 180,000 healthcare providers and pharmacies with 1,300 drug manufacturers. Through their partnerships across the industry, pharmaceutical distributors provide the more than 180 million patients who regularly take prescription medicines with safe, quick and low-cost access to more than 4 billion prescription medicines each year.
In a constantly evolving healthcare ecosystem, however, distributors must continuously innovate to maximize value to patients and their supply chain partners. While distributors’ work centers around safely and efficiently delivering medications, streamlining inventory management and managing financial risk, their future role will be influenced by a variety of factors, including the continued growth of specialty drugs and that of value-added services.
Growth of specialty pharmaceuticals
In addition to more traditional branded and generic drugs, the pharmaceutical market includes specialty products, which are typically more expensive and developed to treat complex health issues affecting smaller patient populations.
As manufacturers continue to develop innovative treatments for the most complex and pressing healthcare problems, the importance and prevalence of these lifesaving medications will only increase. While specialty drugs accounted for 33 percent of pharmacy industry revenues in 2017, this share is expected to increase to 47 percent by 2022.
The rise of speciality pharmacies provides new supply chain challenges that distributors are uniquely suited to meet. Distributors’ ability to offer both full-line and speciality products has the potential to significantly increase efficiency throughout the ecosystem by allowing providers to consolidate orders rather than requiring separate distributors.
Rise of value-added services
Distributors currently offer a range of programs beyond core distribution services to their manufacturer and pharmacy partners that help them improve efficiency and reliability to maximize value to patients. Moving forward, distributors have the opportunity to expand their portfolio of value-added services for manufacturers and providers, while continuing to provide more direct-to-patient offerings.
One of the most exciting potential growth areas is the ability to provide expanded data access and insights. With their unique position at the center of the supply chain, distributors have access to data from both upstream and downstream partners at their fingertips. The potential to leverage this position and expand enhanced data capabilities empowers distributors to develop an even deeper customer understanding and provide more meaningful insights to increase efficiency, lower costs and benefit the overall healthcare system.
Evolving healthcare landscape
The evolving healthcare landscape could dramatically impact distributors and the broader pharmaceutical supply chain. In particular, there are four potential scenarios through which distributors could leverage their logistics expertise to take on an even greater role in delivering value to industry partners and supporting patients.
- A potential overhaul of the pharmaceutical pricing infrastructure might put distributors in a unique position to expand their role as industry intermediaries.
- Technology advances leading to an increase in personalized medicines may threaten distributors’ ability to aggregate orders but might also offer an opportunity for the industry to expand its delivery capabilities and offer additional third-party services.
- The emergence of innovative last-mile delivery services could allow distributors, as logistics experts, to strengthen their bonds with pharmacy customers by creating patient delivery systems with extra precision.
- As more data flow throughout the pharmaceutical supply chain — for example, unprecedented amounts will be exchanged by the time the Drug Supply Chain Security Act (DSCSA) is fully implemented in 2023 —distributors could create further efficiencies in the healthcare system by serving as “stewards” of these data.
While the future is uncertain, distributors will continue to evolve to address marketplace challenges and meet the needs of manufacturers, providers and the patients they serve.
For additional information on the future role of pharmaceutical distributors, read the Healthcare Distribution Alliance’s recent report: The Role of Distributors in the US Health Care Industry.