Regional Market Outlook on Pharmaceutical Distribution in Europe
Pharma Distribution: Austria
Industry is expected to have low bargain and negotiation power, as the pricing mechanism is regulated (average margin of 10 percent) and a consolidated supply market (the top three wholesaler’s share is about 77 percent).General practice is to engage with a single wholesaler; however, international manufacturers deal with more than one wholesaler, based on the product portfolio.
- Single wholesaler for pharmaceutical products is usually adopted
- Majority of the pharmaceutical distribution is through the channel of full-line wholesalers
- Fee for service is the prevalent pricing model
- Pharmaceutical companies are charged on a fixed commission basis by pharmaceutical wholesalers
- The average margin for wholesalers is 10 percent
- Non-monetary incentives include training and business education
Pharma Distribution: The Netherlands
Industry is expected to have medium bargain and negotiation power, as the pricing mechanism is negotiable by wholesalers (average margin of 8–12 percent), with a fragmented supply market (the top two wholesaler’s share is 40–45 percent).Distribution to hospitals happens through either wholesalers or directly by manufacturers. For direct distribution to hospitals, pharmaceutical companies use wholesaler as logistics service providers.
- Manufacturers engage with one to two full-line wholesalers for the distribution of products, and the minimum contract period of engagement is three years
- Wholesalers act as a pre-wholesaling distribution partner for direct DTP and hospitals
- Fee for service is the preferred pricing model
- Wholesaler’s margin is unregulated and has no statutory markups on wholesale level, like other EU countries. Wholesalers have entered into a private negotiation with manufacturers
- Wholesaler’s margin is 8.5–11.8 percent.
- Sales incentives paid to wholesalers is around 10–15 percent of the sales volume