Direct distribution catching on in emerging markets, says DHL

 26-Jan-15, DHL Supply Chain Matters

Manufacturers of pharmaceuticals and medical devices have long tied their success to the development of innovative products. Now they’re under pressure to take the same bold approach to service.

Image: Supply Chain Matter / DHL

Under the traditional go-to-market strategy, manufacturers have depended on distributors or wholesalers to get product into the hands of customers, whether hospitals, physicians, pharmacies, or even patients. Producers have concentrated on research and development (R&D) and on brand marketing aimed at caregivers.

This model has functioned well for many years. But new market pressures, coupled with growing concerns over quality and security, are forcing a reconsideration of the status quo. 

One solution to these challenges is to eliminate the middleman. Healthcare manufacturers are considering a new direct distribution model that comes in two versions: direct to market (D2M), serving pharmacies, healthcare institutions, and other providers, and direct to patient (D2P), covering both home care and e-commerce orders.

This allows manufacturers to maintain control over their products throughout the supply chain. They can build direct relationships with customers, speed delivery, and influence buying and dispensing decisions. At the same time, they can improve their margins by cutting out a major source of cost.

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