10.30.2013

Improving the efficiency of the supply chain of medicines

Data of McKinsey company shows that the average period of stocks storage of medicinal products is 258 days versus 72 days in the FMCG industry, that is in 2-4 times less. Their losses from sales of 3.1% versus 0.5% in the FMCG industry, which is below in 6 times. Terms of drug production are 120-180 days versus 7.3 days of production in the FMCG industry, which is 25-40 times faster. ¹

These data indicates a significant potential for cost reduction in channel of drugs promotion in the pharmaceutical industry to be able to increase its availability by retaining and lower prices for consumers in Ukraine.

In order to fulfill the tasks of implementation the best practices for working with FMCG stocks, a number of conditions must be performed:

- understanding the potential of such changes and work plan;

- an effective system of exchange of information among all market participants;

- personnel, that is able to work in the new standards.

Training of the personnel

At present, TOP-management understands the importance of the issue of increasing turnover and reducing of inventory. In the Ukrainian pharmaceutical market evolution of data exchange process helps to make the right decisions. Manufacturers, both foreign and domestic, are actively investing in new flexible production. But at the same time, difficult to prepare and grow frames that can operate in a new industry standards FMCG in a short time. The pharmaceutical business in Ukraine, feeling the shortage of its own personnel, ready to work in the limitations and standards of FMCG industry, given the duration of their training, are increasingly invited to work successful marketers and logistics specialists with experience in the FMCG, but without medical education. Are there any risks when taking a team of specialists and whether it is favorably for company?

Of course, there are always risks. But it should be noted that the preparation of a doctor or pharmacist - is a long-term and expensive process. Analysis of the education of foreign experts in pharmaceutical marketing and logistics shows that the majority did not receive a medical education, but they also work successfully and perform the assigned tasks. Any expert must know the goods, its characteristics, storage and transport, organization of production processes. According to Igor Vovkodav, head and owner of company Farm-ROST: "We must remember that successful employee can’t always rely on basic education in their work nowadays. The informational revolution gave access to most of knowledge that enables employees in marketing and logistics constantly working to improve the level of their knowledge."

Another argument - is the continuing transformation of retail pharmacies primarily in the retail banking network, which uses the FMCG standards. Such a transformation has already resulted in the pharmacy network of professionals with experience in fast turnover goods (FMCG). As a result, more and more new marketing tools were introduced to the work of pharmacies. For example, the use of "the open shelf" at the pharmacy requires the use of merchandising. Today, most merchandisers, some medical representatives who work with OTC drugs, mostly don’t have medical education, many of them started their career in FMCG.

Thus, companies should not be afraid, but increasingly attract into its team successful professionals from other sectors. In parallel, company have to help employees from the FMCG industry learn pharmaceutical products through special training programs, mentoring, and promoting the formation of the principles of teamwork. The lack of any specialized knowledge can be compensated by a professional with medical or pharmaceutical education.

How to reduce the costs on promotion

Market operators are increasingly using video presentations, video meetings with doctors, as well as e-mailing in order to inform the professionals who are interested in it. As well, more and more opportunities for communication provide specialized forums, webinars and teleconferences with the use of Skype technology. Video content, which previously had access only to a narrow circle of specialists and doctors become available, such as video on the technique of action of drugs.

In 2013, the trend of active use of outsourcing, which is caused by the desire to reduce the cost on promotion, to be present in areas where mono promotion is more expensive for companies. For example, the Western region of Ukraine during planning often has a lower impact on costs. At the same time co-promotion in the region allows to reduce the costs of promotion and get a good result in the case of attracting independent outsourcing company.

In the new economic conditions, there is a sufficient number of features to enhance the effectiveness of the medical companies. Personnel from other industries, new forms and channels of information, outsourcing services - these are good right decisions with limited resources.

Analytical service of Farm-ROST 

1 Source: Strengthening health care's supply chain: A five-step plan / www.mckinsey.com / September 2013