Deregulation Effects on the Swedish Pharmaceutical Distribution Network

Abstract

On July 1st 2009, the government-controlled monopoly on pharmaceutical retailing in Sweden was eliminated, and the subsequent pharmacy sell-out resulted in the existence of five pharmacy groups in the retailer stage of the supply chain, instead of the previous Apoteket AB; however, practically all distribution of pharmaceutical products still occur through the two logistics providers Tamro and KD Pharma. This thesis addresses how the deregulation of the pharmaceutical market affect the manufacturers’ distribution channels, how a manufacturer can benefit from possible changes in the distribution stage of the supply chain, and what opportunities and threats regarding distribution that may arise as a result of the deregulation? The investigation is disposed as a case study performed from the biotech developer and manufacturer Genzyme’s point of view, and it is conducted through several in-depth interviews with Genzyme, as well as representatives from both the distribution and retail companies. The empirical results are analyzed in the light of a theoretical framework consisting of relevant supply chain theories. The study concludes that the deregulation effects on pharmaceutical distribution depend on the allocation of power within the supply chain, where two scenarios exist; a supplier dominance situation with small changes in the current One-Channel-Solution, or a retailer dominance situation that may result in a distribution alternative with more integration between the retailer and distributor stage, where most negotiations take place between the retailer and manufacturer directly; requiring manufacturers to collaborate with multiple distributors, which could lead to an increase in resource consumption and costs. Therefore, pharmaceutical manufacturers need to prepare for a new scenario and stay proactive in order to find the most beneficial future solutions.