Transcript Document

www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Supply Chains for Pharma Products.
Time to Penetrate for 3PL-Operators?
1. Major Trends in European and Ukrainian Pharmaceutical Sectors (a
3PL-Operator’s viewpoint)
2. Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s
viewpoint)
3. What a ‘Classical’ 3PL-Operator Offers to Pharma-Sector? (case study)
Oleg Kalensky
Director for Strategic Marketing & Sales
UVK
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Major Trends in European and Ukrainian Pharmaceutical Sectors (a
3PL-Operator’s Viewpoint)
European Pharma-Market
Ukrainian Pharma-Market
Globalization
Consolidation (of retail)
Diversification (with value-added services
to increase their share)
Coping with risks (currency exchange rate),
crisis and state’s improper regulation
Innovations and new products
Re-structuring of product portfolios (nonmedicine categories to increase their share)
Development of information-exchange
platform to connect manufacturers and
customers
Setting-up of direct relations between
manufacturers and retailers
High cost of penetration in pharma retail
market (crisis of development)
System marketing to increase its role
Objective: to impact on pharmamanufacturers, timely responding to
customers’ changing demand
Objective: to save business
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s
viewpoint)
FMCG Market
Pharmaceutical Market
Turnover = UAH 150 bln (2008)
Turnover = UAH 12 bln (2008)
Structure of retail: modern trade
(supermarkets), street retail, HoReCa
Structure of retail: drugstore chains,
wholesalers, hospitals
# of stores (total) = 75,000
# of stores (total) = 25,000
Consolidation = low level (30 biggest
retailers hold 20% of the market)
Consolidation = high level (5 biggest
distributors hold over 50% of the market)
Dynamics = +15%-30%, like-to-like (2000-2007)
In crisis = -12%-60% (Q4 2008)
Distribution (pref.) = direct
(manufacturer -> retail, 60% share)
Distribution (pref.) = indirect
(thru distributors, 75% share)
Decrease of customer’s purchasing capabilities, risks (exchange rates, customs duties),
‘manual’ procurement planning, optimization (incl. category management), outsourcing of
non-core activities
Decrease of cap rate of retailers, re-structuring of retail, financing problems, opportunities
to acquire competitive advantages (thru M&A)
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s
viewpoint)
Pharma-logistics vs. FMCG-logisitcs:
Common
Different
SCM concept
Right first time. Every time principle
Operations in all temperature regimes
Special regimes (gas, hazardous goods)
Direct (FTL) and indirect (LTL) supplies
(Often) small shipments per store
Picking units = pallet, carton, items
High level of IT integration
Developed cross-docking & reverse logistics
System of KPIs and tools to daily control
(optimize) operational costs
Necessity to have enhanced distribution
logisitcs system
Count by FIFO, FEFO, batch
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s
viewpoint)
Flows in Pharmaceutical Market:
Goods (logisitcs)
Distributor
Cash (finances)
3PL-Operator
Customer
Manufacturer
Distributor
Customer
Drugstore
Deals (sales)
Manufacturer
Marketing
Distributor
Distributor
Customer
Customer
Manufacturer
Drugstore
Drugstore
Manufacturer
Agency
Drugstore
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s
viewpoint)
Scopes of Interests of Key Players in Pharmaceutical Market:
Customer:
1) Low price
2) Best quality
3) Availability
4) Consultations
Manufacturer:
1) Guaranteed deliveries
2) Guaranteed CF
Distributor:
1) Maximal margin on trade
2) Minimal costs
3) Merchandising
Drugstore:
1) Delay in payment
2) Assortment
3) Customers’ loyalty
4) Timely supplies
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s
viewpoint)
Distributor’s Risks:
1)
3)
5)
7)
9)
11)
Own costs
Regional Distribution
Innovations
Product’s Quality
Merchandizing
Customs duties
2)
4)
6)
8)
10)
12)
Credits
‘Landed’ prices
Exclusivity
Accounts payable
Currency rate
Logistics
Distributor’s Tasks:
Internal
1) Optimization of sales channels
2) Revision of development plans
3) Strategy correction
4) Crediting solutions
5) Risk management
External
1) CF effective management
2) Price and market control
3) Strengthening of market advantages
4) Control of primary / secondary
distribution
5) Innovative marketing
6) Development / extra revenues
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s
viewpoint)
‘In crisis the one who is not changing is the one who’s going to die’ (Ichak Adizes, public
lecture, March 31st, 2009, Kiev)
Analysis and decision-making regarding change – from a Client:
Customer -> Agency
Customer -> Drugstore
Agency -> Manufacturer
Manufacturer -> Distributor
Change in demands (Customer)
->
Change in the structure of activities by adapting and strengthening competitive
advantages (Manufacturer, Distributor, Drugstore)
->
Change of the format and essence of relations
(Manufacturer, Distributor, Drugstore, ?)
->
Timely satisfaction of demands (Manufacturer, Customer)
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s
viewpoint)
There are too many open questions, but…
1)
2)
3)
4)
Will economy be forecastible on a macro-level?
To which extent will the state regulate the market?
How fast will Ukraine integrate in the global economic society?
…
5) How come will distribution transform? (vertical integration vs. disintegration;
consolidation of allied merchandize categories vs. specialization by products, regions,
functions, niche)
6) How swiftly will new forces (players) penetrate the market (traders, 3PL-operators,
consultants)?
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
What a ‘Classical’ 3PL-Operator Offers to Pharma-Sector? (case
study)
To Manufacturer
To Distributor
To Retailer
Professional stock management
Provision of single information platform
Customization of logisitcs services
Sharing of business risks
Platform for expansion
Guaranteed availability in
retail
Consolidation of stock
Discounts from
manufacturers due to direct
supplies to DC
Centralized quality control
Developed network of regional warehouses
Cutting of logisitcs costs
Balanced trade channels for
deliveries to FMCG-retail
Increase of turnover
Optimization of stock at
stores
Focus on core business
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
What a ‘Classical’ 3PL-Operator Offers to Pharma-Sector? (case
study)
Ops inputs:
1)
2)
3)
4)
1 cont. HC (30 plm), 1 plm = 60 cartons, 1 carton = 40 packages, price (1 package) = $2, gross margin =
50%)
Inbound = 50% by mono-plm (15 plm), 50% by cartons (900 cartons)
Storage & warehousing = turnover 1:1, 50% picking by item + stickering (Ukrainian labels), 50% picking by
cartons
Outbound = w/h-door delivery system, 50% by mono-plm, 50% by cartons
Pre-quotation:
1)
2)
3)
4)
5)
6)
…
Unloading & acceptance = 15 UAH / 1 plm (mono), 1.5 UAH / carton
Storage & warehousing:
i.
Storage = 2 UAH / 1 plm / day
ii.
Picking by item = 0.25 UAH / 1 package; picking by carton = 1.5 UAH / 1 carton
iii.
Stickering = 0.15 UAH / sticker
Loading = 15 UAH / 1 plm (consolidated)
D2D delivery = 300 UAH / 1 plm, 40 plm / 1 carton (average for Ukraine)
+ extra services (returns, documents return, insurance, FEFO, crediting etc.)
Total (invoice idea) = 56,000 UAH, or
Inbound-Ukraine logistics costs = 4.04% of on-shelf price