Pharmaceutical Distribution in Japan. A study on how external factors affect the Japanese pharmaceutical wholesale industry

Abstract

The number of wholesalers in Japan has been decreasing. This has led to changes for wholesalers as they have gone from being dependent on manufacturers to independent. Wholesalers focus have changed from local to regional, and in some cases national. As consolidations have taken place at the same time as governmental affects, the margins in the wholesale industry in Japan have been lowered a lot. Wholesalers are entering into new relationships and are trying to find alternative businesses to their core business in order to become more efficient and competitive. Alternative business strategies have appeared to complement the core business of distribution and warehousing. Added value is a way for wholesalers to cope with the low margins. Four big wholesale groups who cover around 90 percent of the market have different strategies when implementing added values in their operations. They are either focusing on low cost operations, or high added value. The need of efficiency in the Japanese wholesale business is crucial today. The already low cost structure in the industry is becoming even lower through the use of Information Communication Technology (ICT). ICT makes it possible for wholesalers to lower operating costs, shift from speculative to postponement inventory management, and increase control.