These slides describe marketing topic place channel of drug distribution. I hope students get more benefits about it.

1. PLACE - CHANNELS OF
DRUG DISTRIBUTION
DR. ALI AKHTAR
PHARM.D
MS (CLINICAL PHARMACY)
PHD (CLINICAL PHARMACY)

2. Place in marketing mix stands for the channels of drug distribution.
Distribution is transferring a drug from a producer to the ultimate consumers
needing it. Thus, distribution is reaching the product to its target market successfully.
A channel is a medium or route that carries the product from the producer to the
final consumer. The channel of distribution is a mean that closes the gap
between producers and consumers and thus, also referred to as middleman. A
middleman is a setup that renders services directly related to the purchase and/or sales
of a product as it flows from producer to the consumers. The middleman usually takes
physical possession of product and facilitates actively in transferring of ownership of
the product.

3. MEMBERS OF DISTRIBTUION CHANNEL
A distribution channels consists of the set of intermediaries involved in the
flow of drug from producer to the final consumer. A distribution channel typically
includes the producer, wholesaler, retailers and the consumer. All these members are
essentially involved in the purchase or sale.

4. Producer
A producer produces and then distributes its products with varying
distribution intensities. Intensive distribution is delivering of products through
every reasonable outlet in the market. Selective distribution is supplying of
products through multiple, but not all available outlets in the market. The
exclusive distribution is supply of drugs through a single wholesaler and/or
retailer in the market. Some pharmaceutical manufacturers use multiple
wholesaling parties.

5. Wholesaler
Wholesaler is an intermediary party involved in buying of products for the
purpose of resale. In wholesaling, a firm may sale in bulk to any customer except to an
ultimate consumer who buys products for personal and non-business use. Wholesaler is
involved in the distribution of drugs on the behalf of some producers or even its
own. Therefore, a wholesaler sometimes also called distributor.

6. Wholesalers can be categorized as independent full-service, Limited
function and manufacturer-owned wholesalers. Independent full-service wholesaler is
an establishment that acts as an intermediary for numerous pharmaceutical firms.
Limited function wholesaler is narrow in scope and works for a few of producers only.
The manufacturer-owned wholesaler is managed and operated by a single producer and
is dedicated for the sale of only a specific producer's products. Some producers,
instead of owning a wholesaler, enter into a contractual agreement with party for
dedicated distribution. This is termed as contractual distribution.
Another classification of the distributors is local or national wide
wholesalers. Muller and Philips (M&:P'), united distribution limited (UDLJ, Spenser,
Vikor, and few others are the distributor having national wide coverage in Pakistan.

7. Retailer
A retailer links the producer to the final consumer. Contrary to a wholesaler, the
retailer sales drugs to a final consumer for one's personal use only. The wholesale and of
retail sale thus, can be distinguished by the intention of the purchase. Obviously, this sale
would be in small quantities and not for resale. In this perspective, purchase of bulk
quantities for personal use by a final consumer will not be wholesaling.

8. Consumer
The consumer is the last member in a distribution chain who
buys the products for personal and non-business use. In pharmaceutical
market, the final consumer is the patient.

9. IMPORTANCE OF MARKETING CHANNELS
Direct transfer of a product from a producer to the consumer would be the shortest and
simplest distribution channel. But it is not always possible practically for a manufacturer and final
consumer to deal directly with each other. Usually, multiple drugs are prescribed to a patient. The
drugs of only a single producer have not been prescribed to a patient coupled with it, large
number of producer and patient has been at hundreds of miles away from each other. Thus, making
it impossible for a patient to deal with produces for purchase of drugs. However, a market channel
makes it possible for patients to get drugs of multiple sources from one site.

11. VARIOUS CHANNELS OF DISTRIBUTION
Producer- consumer
This is a direct route for reaching a consumer. This is the simplest and shortest
distribution channel but not practicable as mentioned before. When considering this channel
at industrial level, it is non-existent. However, highly perishable pharmaceuticals prepared
in hospital settings are directly dispensed to the patients (consumers). The total parenteral
nutrition (TPN) prepared in the clinics (producers) assumes this way to reach to the patients'
hands. Similarly, the delivery of a dispensing item prepared by a dispensing pharmacy to a
patient does not involve the intermediary party.

12. Producer- Retailer- Consumer
Some larger retailers buy directly from the manufacturers
and sale the products to the ultimate consumers. This is not a very
common channel of distribution in pharmaceutical market. However,
the chain drug stores are usually involved in this practice.

13. Producer- > Clinical setting- Consumer
A clinical setting like a hospital is sometimes the intermediary for
the distribution of specialized items to the ultimate consumers.
Wholesalers or the retailers are avoided in this channel because of
associated health hazards, special precautions even during transportation
and the constraints and associated health hazards. This channel is
used for delivery of radiopharmaceuticals and highly perishable drugs
directly to the clinical setting for consumers due to possible radiation
hazards and very short shelf life, respectively.

14. Producer- Wholesaler- Retailer- Consumer
This channel is a traditional and common distribution system for
supply of drugs to the ultimate consumers. Most of the pharmaceutical
producers follow this route of drug transfer to the consumers.

15. SELECTION OF A CHANNEL
Product Characteristics
The product characteristics taken into account in the selection of
distribution channel include the product nature, unit value, product
perishability, and product technicality.

16. Product nature
The placing of prescription drugs is pre-decided since, these are
'directed goods' and their sales result from the derived demand. A
traditional distribution channel such as 'producer-- wholesaler- retailer
-> consumer' is appropriate for such drugs.
Product unit value
A channel with least intermediaries is sought for the products with
higher unit value. Sometimes it is through a direct channel (i.e.,
without a single channel intermediaries). This is because of the
availability of more funds for the products.

17. Products Perishability
The highly perishable drug products sought a more direct channel such as
'producer-> consumer'. This is not usually practicable and thus an intermediary
is needed for delivery of product to the patent. For this, e.g; the route adopted is;
'producer-> clinical setting- consumer’.
The total parenteral nutrition requires a more direct channel, i.e., from
'producer (hospital pharmacy department) -> consumer'. Similarly, a medicament prepared
by a dispensing pharmacy is delivered directly to the consumer.

18. Product Technically
When special instructions for any reason after sale or administration of a
product are required, the tendency of a firm is towards the direct selling.
Use of a distribution channel for the supply of radiopharmaceuticals can
be cited as an example. The administration of a radiopharmaceutical need's
instructions to the patients for the purpose of radiation protection and for
this, 'producer- clinical setting- consumer' route is adopted.

19. Degree of market acceptance
If there is less degree of market demand for some
products when the company or its products are not
well known, the use of middleman is indicated. Channel
of 'producer wholesaler-> retailer- consumer' is a suitable
choice for such products.

20. Market Characteristics
The market characteristics that influence the decision of
distribution channel selection include product user, market size,
and geographic distribution.

21. Product user
This channel is selected on the basis of the product users.
For example, if the product is useful only in the hospitals, it
may be feasible to sell directly to the hospitals.
Market size
The smaller the market size, the less feasible it becomes
to sell with a direct channel. In this situation, a traditional
distribution channel mentioned above is an appropriate choice.

22. Geographic Distribution
More direct channel is used if the market for the product is
geographically concentrated. On the other hand, market
dispersion requires the help of an intermediary for an efficient
distribution.

23. Manufacturer’s Characteristics
The characteristics of manufacturer affecting selection of distribution
channel include manufacturer's financial capabilities, reputation, and
polices.
Financial Capabilities
The financial capability is one of the major determinants for decision of a
distribution channel. Direct selling for example, is costly so much that even
though a producer may desire to do so, it may find it impossible because of
high financial involvement

24. Reputation
The ability to obtain effective distribution directly/indirectly depends on the
producer's reputation for integrity and fair dealing.
Manufacturer’s policies
Clear-cut policies are needed by the firms as they relate to channels of
distribution. In some cases, these policies are so strong that they become dominated
considerations regarding channel decisions.

25. Availability
A middleman preferred by a firm may not be available because of some reasons. It may
be carrying competitive products and do not want to add another product line. Else the best
middleman is in a contractual agreement with some other producer and due to its contractual
agreement, is not available.
Compatibility of policies
Sometimes the firm's choice for channel is limited because of incompatibility of their
marketing policies.