Strategic Channel Approaches for the Distribution of Specialty Pharmaceuticals

Adam J. Fein, PhD, discussed how wholesaler strategies must change in order to navigate an evolving drug channel infrastructure at the recent 8th Annual Trade and Channel Strategies Conference.

In a keynote address at the recent 8th Annual Trade and Channel Strategies Conference, Adam J. Fein, PhD, president of Pembroke Consulting, addressed the ways in which the wholesaler’s strategy must change in order to navigate an evolving drug channel infrastructure.

In the coming years, Dr. Fein predicts that buy and bill and generic models will be challenges for wholesalers. In 2017, specialty drugs will account for 45% of manufacturing sales, and in the next 5 years, 7 of 10 of the industry’s best-selling drugs will fall into the specialty category.

Manufacturers must understand a few things when dealing with specialty drugs, according to Dr. Fein. First, the wholesale channel is financially strong, and there is little indication that these wholesalers will be dislodged from the channel anytime soon. Wholesalers care most about generics and specialty drugs, and to understand trading partner motivations, manufacturers must think in terms of price, not basis points.

In order to be successful, wholesalers should sustain smaller, higher margin customers. Dr. Fein said wholesalers could also benefit from an increase in small customer compliance with generic drug formularies. In addition, wholesalers should use strong balance sheets to profitably service self-warehousing chains and larger mail-order pharmacies. Lastly, Dr. Fein advised wholesalers to maximize the value of fee-for-service agreements with brand-name manufacturers.