Pharmaceutical Sector 'Leading Indicator' for Wholesale Distribution - Modern Distribution Management

Pharmaceutical Sector ‘Leading Indicator’ for Wholesale Distribution

Fein: VMI, vending were pioneered in the sector.

The pharmaceutical distribution sector can be a leading indicator of future changes in the wholesale distribution environment, says Adam Fein, CEO of the Drug Channels Institute. "I've always felt they were 10-15 years ahead of everyone else in terms of business development, and I think they remain that way."

"(Pharmaceutical) wholesalers have broadened the scope of services and activities they provide in the health care system," Fein says, "ranging from third-party logistics for manufacturers, fee-based services for pharmacies, business consulting services for manufacturers, and in some cases, fee-based patient assistance programs for manufacturers." Pharmaceutical wholesalers, he says, offer great case studies for how to develop new sources of revenue from existing suppliers and customers.

Some distribution services today, such as warehouse automation and vendor-managed inventory, were pioneered in the pharmaceutical industry before spilling over into other industries, Fein says. This also seems to be the case with vending. According to a 2013 industrial vending report from Wunderlich Securities: "The hospital industry is seemingly vending friendly already, as the industry has rapidly adopted medication dispensing systems/cabinets in their facilities." (Read more about vending in the MDM Special Report: The Industrial Vending Boom.)


Although the pharmaceutical industry is quite different than other industries, Fein says, distributors in general can look to the sector for inspiration. "It's useful to look at these kinds of industries and think, 'How could I apply the strategies and tactics being used by very forward-thinking distributors in the pharmaceutical industry and apply them to my business?'"

For current trends and new developments in the pharmaceutical industry, see the Drug Channels Institute’s 2013–14 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. For corporate access to the report, click here. For team access, click here. And to purchase a single-user report, click here.

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