Pharma distributors as a key element in drug supplies

In his presentation, Andrey Telyatnikov, FC Grand Capital's Director for Public Procurement Development, pointed out the key role distributors play in the drug supplies system.
"Today, distributors win auctions in the overwhelming majority of cases. Those are companies that have to ensure medicinal drugs are available for patients and provide uninterrupted supplies. The system cannot exist without that link." Mr. Telyatnikov said.
Today, there are over 500 distributors at the market, providing drugs for the public sector; however, according to Mr. Telyatnikov, not every organization from among that pool can guarantee quality supplies.
"A company that operates at the public procurement market should have three main components: experience, technologies and a team that would guarantee that patients get products they need, provide manufacturers with stable contracts and make the government confident that the state program is going to be implemented successfully. Many companies at the market have no such capabilities."
New regulations introduced recently have made filing bidding documents more challenging, driving corporate costs related to staff expansion and payroll up; together with more expensive loans, which leads to the drug delivery logistics becoming more expensive.
According to Andrey Telyatnikov, the drug distribution market will inevitably gravitate toward major players. That is, first of all, due to the fact that they have resources, technologies and teams that can ensure quality supplies, including their logistics capabilities.
"What if a distributor under a contract has to provide 10,000 shipments within a short timeframe, instead of 100? Does every company have the ability to do that? I do not think so. A large distributor would have easier time making shipments like that, because they work in other sectors as well, making 60,00 - 70,000 shipments per day, so that extra number would not be such a challenge for them."
The market trend favoring large distributors is confirmed by FC Grand Capital's results in the public procurement sector: in 2023, those sales had accounted for the 9.9% of the company's turnover, but in Q1 2024, they exceeded 10%.
The problem is that many manufacturers still partner with small distributors and that, due to the latter lacking the necessary resources, affects delivery times and therefore, has an adverse effect on the government program implementation.
Therefore, while causing some extra challenges, the government regulation of distributors' operations is an unavoidable part of the public procurement market concentrating around major players that makes all supply chain participants improve their competences and be more vigilant about choosing who to partner with.
"I want to wish all participants of the public procurement sectors to focus more on the experience, technologies and teams distributor companies have and use distributors more broadly in their fight for patients' rights on the manufacturers' side by trusting supplies of their products to companies that have resources for that".