Drugstore Supply Channel of Bangladesh and Other Countries of the World Essay Example for Free

Drugstore Supply Channel of Bangladesh and Other Countries of the World Essay The pharmaceutical industry of Bangladesh is at a matured stage with strong companies like Square, Beximco, Incepta etc. Drug stores have emerged in a good amount as well. Lazz Pharma once was the only good place to buy medicines which is not the current condition of the market. This is mostly because of the new technological additions to maintain an effective supply chain in the business. As the market got developed, competition rose as well. Hence, companies tried to adapt new technologies and advancement to hold a stronger position than their competitors. In addition, most of the intermediaries in the channel are owned by the companies. Therefore, the control is more on their side which helps them to maintain such good flow. However, the system is still unsuitable for further development as most of the supply is done by the manufacturers. It does not encourage the different levels in the supply chain to get enhanced than their current condition. Supply Channel of Pharmaceutical Industry in Bangladesh As mentioned earlier in the introduction, most of the level of supply chain is owned by the manufacturers. Most of the pharmaceutical companies have their own distributors. Unlike the most, few companies like Novo Nordisk uses Transcom, the only distributing company in this sector, to deliver their product to the next level of supply chain. The figure 1 shows the supply channel of the industry. Each level of the channel is discussed below. Production: This is the level where the drugs are manufactured. At this level, drugs are kept open and ready to handover to the next level. Quarantined Warehouse: This is the level where product-quality is got checked. Also, to get the permission of market the product governmental approval is acquired here as well. After being tested here, taxes are paid and the products move to the next level. Central DPG Duty Paid Warehouse: After being tested the products are moved to Central DPG where they call it the â€Å"Finished Goods†. Then the goods are moved to Duty Paid Warehouse. Deports: Deports are very important level in the channel. These deports are established in different places in the country to meet the demands of a specific region. Depending on the sales average of recent past and the reports from the medical representatives and sales representatives, these deport stock goods which can fulfill on an average 10 days’ demand. Most of the big companies use SAP (System analysis and program development) software to make a database of the demands so that deports can store the goods accordingly. Medical/Sales Representative (MR SR): These are the agents, assigned by the manufacturing companies. They are responsible to gather information of demands for different drugs within a given area. They use devices that are connected with the main database. Through these devices they pass relevant information and invoices to regional deport. Till this level, the manufacturing companies own the intermediaries. Under the supervision of MR and SR, the goods are delivered through a pre-designed route to the different customers of these companies. Retail Drugstore: Retail drugstores are the most convenient places for the direct consumers of medicines. These retail shops get 2% discount on the medicines provided by the manufacturers. Wholesalers: Wholesalers take orders in bulk from the manufacturers and sell them to the retailers. The companies give 3% discount on the medicines for them. Potential Retailers: Big names of retail stores like Lazz Pharma get extra attention to the manufacturing companies. They also get 3% discount. Doctors: Many doctors have their own dispensary and they are one of the customers for the pharmaceutical companies. They get 3% discount as well. Hospital/Clinics: These places need more types of medicine than the others. For the medicines that need to be injected, they get up to 10% discount. Government/tender: These are special orders which happen occasionally. Delivery Company: The only distributing company in this sector at Bangladesh is Transcom which delivers drugs to different retail shops, hospitals etc after taking them from manufacturing company. International Distribution: Bangladeshi pharmaceutical companies export medicines mostly in Africa and the distribution is done by local distributing companies. Other Relevant Information: VAT(Value Added Tax) is added twice. The first time is done at the beginning of the production which 15%. After that 1. 5% VATable Amount is added. Finally, another 15% VAT is added on the trade price to retailers. Figure 1: The Supply Channel of Pharmaceutical Industry in Bangladesh Recent Trends in the Drugstore Channels of Other Countries Unlike Bangladesh, other countries have more competitive market for having intense competition in the levels of marketing channels. Most of the countries have different distribution system than Bangladesh. Even our neighbor country India has a different channel system in this field. As mentioned in the journal of Kellar and Langer (2008), the supply channel of drugs in India looks like figure 2. Figure 2: Current distribution chain in India In such system, manufacturing companies assign CFA(clearing and forwarding agents) who clears and forwards the medicines to stockists who are independent intermediaries. Through the stokists the drugs go to the consumers. In India, retail pharmacy chain is also introduced which is still unknown to us in Bangladesh. According to Kellar and Langer (2008), â€Å"The first retail Pharmacy chain was started by the Subiksha Retail Services Pvt Ltd. The Medicine Shoppe, one of the largest retail drug stores in the US, opened two retail outlets in Mumbai and has franchised three more in Mumbai, Calcutta, and Baroda. Others have also entered the field including Health Glow, Pills Powders, and Reliance that US and EU, the expenditure on SCM alone is perhaps 2%, whereas in India it averages 4–6% of total sales. Also, this multi-layered system got more improved as India adopts IT in this sector. In the United States, the market is hugely developed. They have introduced new technologies and innovations long before us. They are introducing new techniques and packaging system as well to make the product more user-friendly to deliver it to the consumers. As the different levels of supply channel adapt new enhancement every day, the competition arises. In the writing of Gabler (2005), he mentioned about new packaging and delivery system that was brought up by Target Corp. and PrairieStone Pharmacy of USA. Target Corp. developed a new bottle called ClearRx, flat-paneled bottles that fit larger-print labels, color-coded rings to distinguish medicine between family members and user-friendly liquid dispensers for administering medicine to children. On the other hand, PrairieStone Pharmacy took a different approach. According to Gabler (2005), â€Å"With Daily Dose, PrairieStone will package customers medications in individual pouches according to the time of day and day of the week it needs to be taken. For example, each packet in the 30-day supply is labeled Morning, Afternoon or Evening with Dinner. For USA, most of the intermediaries are independent. Intermediaries are so well-developed, the independent pharmacies find it very difficult to sustain in the market. In the writing of Lehman (2008), she mentioned about declining number of independent pharmacies in USA. In addition she mentioned Miami-Luken Inc which began buying independent pharmacies to as their customer base was comprised entirely of privately owned drugstores. In the writing, Lehman (2008) also described, â€Å"Miami-Luken cannot compete with supply-chain drugstores, such as Walgreens and CVS, because it could not handle the product demands. So guaranteeing its customer base of independents became a top priority. † USA also found it very important to use technologies for record keeping. Medicines are very sophisticated things to consume. And when it comes to a patient who is suffering from a disease that needs extra attention, a wrong medication could put the person in grave danger. Robertson (2008) mentioned in her writing about such incident for which California law announced to apply a electronic record for medicines in the supply chain. At 2004 such decision was taken for which it was required to keep record of medicines electronically at every steps from manufacture to retail. Comparison of Bangladesh with Other Countries Bangladeshi industry in this particular sector is still using a supply channel that was once practiced in developed countries a long time ago. For not having multi-layered supply channel, the industry is not being able to provide more developed delivery. The adaption of technology is still not taken by all the pharmaceutical companies. To improve the competition as well as the quality of supply, the industry needs drugstore chain and independent intermediaries like Transcom so that the manufacturer can concentrate more on developing the drugs and others can worry about the distribution. In this way, every level of supply channel would become self-efficient and well-developed. Innovation on the other hand will start to come as well. The probable trend of drugstore channel in Bangladesh is yet to be foreseen. As there is no indication of change in the current system, one cannot expect multi-layered supply channel in the near future. Moreover, the system has just started to developed. To become something like the other developed countries, it will take at least another decade. Conclusion To conclude, I would want to make a few suggestions regarding the development of supply chain of pharmaceutical industry in Bangladesh. This system needs to enhance with competition. The quality of drugs is good enough but the delivery system is not. Hence, more independent intermediaries should be encouraged to enter the market and thus make channel a competitive and developed one.