Present situation and development trend of domestic pharmaceutical logistics

      1. A feature of China's pharmaceutical logistics industry is that it is still in the single step of supply chain optimization phase. China’s medicine logistics started later than other countries with a fast GDP growth. It rarely involves on upstream drug production factory and suppliers, and downstream drug wholesale retail enterprise, hospital integration, which can’t be fundamental to solve the repeat transport. This prevents cattle whip effect and inventory backlog, a phenomenon that leads to supply chain efficiency, drug distribution cost to increase, a drug price raise and a not reasonable series of integrated syndrome.

     2. Two trends in the future China's pharmaceutical logistics industry is deemed significant: First, the logistics integration rises to height for enterprise strategy management. The second is separate from the main business of logistics services, the implementation of professional management. The reasons are the following:

     (1) Logistics integration rose to enterprise strategy management with heightened modern medicine logistics operation different from traditional of wholesale mode to supply chain management mode development, to Logistics Center for platform, and manufacturer and to the other suppliers (upstream Enterprise). Drug retailers and the other points pin business (downstream enterprise) established a oriented market of supply system, improve drug points pin efficiency, and formed relative stable of sales Union network. In this transformation process, the logistics management in many companies already control height rises to the level of the enterprise strategic management, was as important to pay attention to the development strategy. Formed this a trend of reasons has two a: first is medicine industry restructuring, and integration of process in the, enterprise scale constantly expanded, and logistics network is guarantees enterprise business resources can effective integration, formed scale advantage of fundamental; second is medicine industry into "profit times" Hou, through strengthened logistics management achieved reduction this increased effect, to in fierce of competition in the achieved itself of cost advantage.

     (2) Logistics services separate from the main business and professional management of China medicine logistics profit margin of only 0.6%-0.7%; expense ratio remains high at around 10%, the reason for this is because the traditional mode of logistics costs are too high, so many large pharmaceutical companies, such as Shanghai Sinopharm medicine, Nanjing, and Shanghai pharmaceutical, its logistics business, stripping or managed assets personnel to a third-party logistics companies and third-party logistics company independent settlement, appraisal. This trend mainly for two reasons: first, the specialized operation of third party logistics companies can effectively improve service levels, reduce logistics costs, creating considerable economic benefits for the mother; second, third party logistics company providing logistics services for the mother can also make use of the remaining resources at the same time as other companies offering similar product distribution and services in the community.

      This initial investment large pharmaceutical logistics projects, can greatly improve the return on investment in projects and intensive operation. Foreseen are: medical logistics more and more attention in the future, we will see more and more of these main and secondary, specialized operation and management mode. 3, three mistakes:

      (1) Unnecessary and cannot integrate logistics and small scale enterprises, according to industry statistics, the current national drug wholesale enterprises 1.650,000, nearly 140,000 retail enterprises, national retail pharmacy total more than 120,000, more than 6,300 pharmaceutical manufacturing enterprises. 95% per cent of these businesses are small and medium sized pharmaceutical enterprise; at the same time don't think small and medium size pharmaceutical enterprises need not pursue logistics integration is China's medicine logistics in the development of a major misunderstanding. Although small and medium sized pharmaceutical enterprises in the input cannot be compared with large enterprises, cannot become a leader in supply chain integration, but as a part of the pharmaceutical supply system in force, any supply chain optimization projects are inseparable from this link. In China's pharmaceutical supply chain integration and gradually be taken seriously in the future, any member of the supply chain but also such strategic partners participating in the project, in order to explore the road of success. In fact, small pharmaceutical companies in logistics integration can be carried out on two levels, to improve service levels, reduce logistics costs. A was on the operational level, optimize internal processes to improve efficiency and customer service levels, and exploration and cooperation model of third party logistics enterprises to achieve cost reduction; second, active participation at the strategic level to large enterprises lead to supply chain integration, from upstream and downstream segment achieved cost reduction and service improvement.

       (2) Equipment and technology decisions competition ability to think logistics equipment, technology, the advanced to strengthen the competitiveness of enterprises, the better it can attract customers and strategic partners, brought in logistics projects construction technologically advanced publicity, despise the coherence in the application of the system, is another misunderstanding of the current domestic pharmaceutical logistics investments. The direct consequences of this misunderstanding are the logistics systematization, information, automation, not for their own "tailored" does not match with the existing scale of business and management. In fact, as a systems engineering, logistics efficiency and service level does not depend on the strongest part of the system as a whole, but rather depend on the weakest link.

        A single technology high requirements, high input does not significantly improve the performance of the logistics system. From strategic investors, business partners, or downstream customer's perspective, focusing more on the whole logistics system reliability, integrity, and the level of logistics as a whole, rather than the sophistication of logistics equipment and technology. China's pharmaceutical logistics up to the traditional extensive information to modern change, there are policies and regulations, business processes, business models, concepts, software development and personnel that several obstacles, the main problem is not solved, advanced equipment and technology are also useless.

      (3) Automation at lower automation cost reducing logistics costs are reflected in two aspects: one is the direct labor cost increases reduces efficiency, second is to reduce the error rate after the indirect activity cost reduced. At present, the high enthusiasm of enterprises to invest in automated logistics centers around, declared the project less the investment of tens of millions of Yuan, up to hundreds of millions of Yuan. But the country's current situation: the enterprise under the State-owned system on the one hand it is difficult to staff reductions, and lower labor costs, on the other hand automation equipment on the horse produces tens of thousands of Yuan a day after energy costs. What is more, due to the relationship of the domestic electricity supply, many automation equipment can only be in a production State, cannot scale to reduce costs. Therefore, many enterprises are faced with the dilemma that automated logistics center after the horse, logistics costs did not fall but rose. This is the cause of China's pharmaceutical enterprises to automate a one-sided understanding. An advanced mechanical equipment operating system can function effectively, with Enterprise Informationization, information technology management has great relevance, but many enterprises on the blind information, logistics and mechanization, does not take into account is not really suitable for your business needs. In fact, China's pharmaceutical warehouse do not need automatic storage equipment, realizes the entire automated abroad because their labor costs are high, and second, because their other environment supporting: policy, human resources, business processes to achieve this level. These two conditions at present, China does not at present exist, so this kind of logistics equipment, "armed" should be a gradual process, according to own actual situation at present into the appropriate device is sufficient. 4, four issue

      (1) Supporting the policies and standards are not in place for the third party logistics enterprise's system is still unclear. Currently in Jiangsu, Zhejiang and other 11 regions established policies on discount loan support from the pharmaceutical logistics center. These corrective medicine is a corollary of third party logistics enterprises spun off from the original pharmaceutical wholesale companies, once the split face these new qualifications of third party logistics companies examination and assessment of the problem. But States that there has been a new examination and assessment system, while existing GSP certification for pharmaceutical distribution business, for the third party logistics enterprise GSPMany contents are no longer applied.

      The formulation of a new system of evaluation, evaluation is around the corner. In addition, the country has not introduced a uniform drug code. Unicode can set up a system of tracking and accountability for the quality of medicines, but for a long time, since there are more varieties of drugs, countries do not have Unicode, complex drug name, Chinese name, commodity name, English name, Latin name, and so on. This gives manufacturers, hospitals, in particular, brings a lot of trouble to large chain pharmacies. This self-contained code, cannot share information in the flow of information, is not conducive to drug administration, resulting in a tremendous waste of resources. Logistics standards are not unified has become China's pharmaceutical logistics standardization and a major obstacle to efficient and in line with international standards. Pharmaceutical logistics container, packaging boxes, medicine storage tray, such as the lack of uniform standards. Therefore necessary to speed up the construction of pharmaceutical logistics standardization. Meanwhile, adjust the licensing of pharmaceutical logistics distribution center system and the business scope, should be in line with international standards, establishing strict license distribution center system, establishment of distribution centers distribution center license under the filing system.

      (2) Investment overheating, and lack of effective integration since July 2002 Beijing pharmaceutical shares with the international famous design manufacturer Siemens Dematic logistics signed cooperation after the establishment of modern pharmaceutical logistics distribution center all localities set off upsurge of construction of a large logistics centre. Domestic sales of largest pharmaceutical group in Kyushu group limited, Shanghai Pharma AG, respectively, per cent of total pharmaceutical sales and marketing 3%~5About Meanwhile pharmaceutical logistics in logistics in the construction of individual enterprises as the mainstay, rendered, large scale, investment conditions.

       Design size is often the company's existing business 3 to 5 times, frequently demanded that can support tens of billions of Yuan of sales. However, because the domestic supply chain integration of environment in the pharmaceutical industry have not yet formed, third-party logistics is not mature, and repeated investment results in each are not getting enough to eat, it is difficult to scale effect. With the United States than average distribution centers to support consumption, United States 11.75% distribution center able to support sales per square metre, only United States 40%; average distribution centers to support SKU varieties of different specifications, only United States of 24% and average operating costs single orders, China was United States 2.78 times.

       Due to the sales of small, inefficient, so business will be in a difficult position. Some time ago in Wuhan, nine provinces, and four have been built and under construction of pharmaceutical logistics center, one of the Logistics Centre has been a significant lack of business into a loss-making predicament. 


       (3) Premature due to the split of the third party logistics logistics companies without going through a third-party logistics enterprise's development process, there are a lot of third party logistics capability deficiencies. First, the distribution network of a single distribution network from a previous drug routes and nodes, sales evolution, distribution is not rational, not from the perspective of third party logistics system planning of distribution network design. Second, low information capacity, medical logistics informatization backward, there is no information of a mature domestic market.

        Many enterprises lack the capacity to use information technology to improve efficiency. Thirdly, pharmaceutical logistics is accumulation of warehouses, vehicles and personnel, achieved mainly by artificial storage and transportation of goods, quality is not high, when faced with a greater degree of product throughput, efficiency, speed, accuracy and cost and other factors have an impact on development. According to statistics, currently the pharmaceutical business of average logistics costs as a percentage of sales is more than 10%, while United States pharmaceutical wholesalers that only 2.6%; business net profit margin of only 0.72%, pharmaceutical wholesaler margin of 1.55% across the United States. Logistics means compared with developed countries, there is a large gap.

       (4) Lack of professional management personnel currently, industry experts estimate, it will be called medicine senior logistics talents of more than hundred people only. China needed advanced medical talents 2,000 people, that is to say at present less than total demand for logistics talents in the community of 1/20, as well as logistics continues to heat up, the gap would be lopsided. Main reasons causing the lack of logistics professionals in three aspects: first, because a lot of pharmaceutical enterprises ' awareness of logistics still remain in the shallow layers of fuzzy concepts that many management are considered medical logistics only medical transport and storage the sum. In this view, under the guidance of these itself with a smattering of knowledge of logistics executives were mistaken: hire medical personnel might as well find more warehouse and cargo transport, so many of the so-called logistics personnel is really just some operator.

      This will cause supply to be false to expand, which in the true sense, complex logistics personnel, strategic talent needs are not as strong as it was, this is not conducive to pharmaceutical logistics talents training. Second, in the talent management process as a whole, there are still some gaps, leading logistics personnel have direct or indirect losses, such as traditional medicine logistics has little incentive, employee training programs could not or but do not mature, and so on. Third, the sector is not complete. Coordination of logistics as a production and marketing services, strategic decisions are made by its members for the several departments of the enterprise, so logistics staff motivation depends to a large extent coordination and cooperation throughout the organization.