Understanding the Pharmaceutical Supply Chain

The pharmaceutical supply chain is the system consumers rely on to receive their prescription and over-the-counter medications. To patients, it might seem as simple as having the doctor call in a prescription at the pharmacy and picking it up, but those pharmaceuticals must travel a long way through a complex system to get to their final destination.

Supply chains involve several players, such as government agencies (the FDA), clinics, hospitals, manufacturers, primary and secondary pharmaceutical distributors, pharmacies, and research organizations. Together, they are responsible for creating, distributing, and dispersing prescription drugs, OTC medications, generics, and biologics, all with different handling needs and purposes.

The regulatory nature of the process and differing business objectives involved increases the complexity of managing the supply chain, but together, key players can ensure that providers – and patients – have access to the pharmaceuticals they need, when they need them.

Key Players

The three key players involved in the pharmaceutical supply chain are manufacturers, distributors/wholesalers, and providers.

Manufacturers

Manufacturers are the source of the drugs, and this category is made up of brand-name and generic manufacturers, with a few participating in both. Branded manufacturers must devote a large portion of expenses to research and development, while generics don’t need to fund this research since they create generic compounds that directly compete with the original branded drug.

Distributors/Wholesalers

Wholesale distributors then purchase large orders of pharmaceuticals from the manufacturers and serve either as the primary or secondary pharmaceutical distributors to providers, including pharmacies, medical facilities, and hospitals. Some distributors and wholesalers sell to all of these providers, while others specialize in certain products or delivering to specific providers.

Traditional distributors simply serve as the link between drug manufacturers and providers, but today many offer often a variety of specialized services like repackaging, electronic order services, drug buy-back programs, and reimbursement management.

Providers

The providers make up the final step in the supply chain, handling the pharmaceuticals just before they reach the consumer. These providers, including retail, specialty, and mail-order pharmacies and hospitals, then store and dispense to consumers appropriately.

Retail pharmacies are our valued customers like Walgreens and Rite-Aid, among many others providing a wide range of prescription and over-the-counter pharmaceuticals to patients/consumers. Specialty pharmacies dispense high-cost biotechnology drugs for patients with chronic disease, typically administering drug therapy by infusion or injection for conditions such as cancer and multiple sclerosis. Mail-order pharmacies deliver prescribed drugs via mail to the consumer, a helpful option for the treatment of chronic conditions or the aging population.

The Three Main Steps of the Pharmaceutical Supply Chain

From manufacturing to dispensing, every medication moves through three main steps of the pharmaceutical supply chain. 

1. Pharmaceuticals are manufactured.

The drugs are first made by branded, generic, and specialty manufacturers. Manufacturers must ensure that drug inventory will be available when needed, so they use historical shipment data and market intelligence to create forecasts and, once distributors place drug orders, ship their product to distributor warehouses.

2. Pharmaceuticals are transferred to wholesalers and distributing partners.

The pharmaceuticals are then moved to wholesalers and distributing partners, which may serve as a provider’s primary source for inventory, or as a secondary pharmaceutical distributor to supplement additional needed inventory. Distributors store the medications using inventory tracking systems and send manufacturers back reports to provide transparency for better forecasting in the future. When they receive purchase orders from providers, they prepare and ship the products once more.

3. Pharmaceuticals are passed to providers.

In the case of direct-to-provider supply chains, pharmaceuticals are passed directly from manufacturers to the retail and pharmacy providers, bypassing distributors. 

In the traditional supply chain model, however, they are first sent to distributors, who then ship the pharmaceuticals to providers, including pharmacies, hospitals, and specialty medical facilities. 

There, the products are stocked, managed, and safely dispensed by the pharmacy team and ultimately taken by patients.

Westminster Pharmaceuticals’ Role in Streamlining the Supply Chain

While this three-step process may seem simple, there are many moving parts and involved parties, all with different business objectives. Insurance companies, pharmacy benefits managers, healthcare management organizations, and research firms all get involved at various points in the chain. These players, along with the evolving pharmaceutical marketplace, can cause delays, price adjustments, inventory shortages, and other common challenges. 

Working with a partner like Westminster Pharmaceuticals helps simplify the process and puts partners at an advantage. We’re proud to be an experienced manufacturer at the top of the pharmaceutical supply chain. We serve as a primary and sometimes secondary supplier for wholesalers with a robust inventory. Our partners gain our competitive advantage of full-service sales and marketing, access to our extensive relationships, supply chain efficiencies, and trusted partners for warehousing, distribution, and fulfillment strategies. 

If you are looking for a credible and quality pharmaceuticals partner to streamline your supply chain – get in touch with Westminster Pharmaceuticals today to learn more about what we offer.