Challenges and opportunities for pharmaceutical wholesalers in 2023

In the past year, we have witnessed several unexpected developments that have essentially determined the operating environment for the stakeholders in the Hungarian medicines supply sector. Some of these are likely to remain with us in 2023, while trends towards higher level of services will continue. Two members of the Presidency of the Hungarian Association of Pharmaceutical Wholesalers, Dr Antal Feller, President, and Tamás Kaló, Vice President, were asked about the outlook for the pharmaceutical wholesale sector this year.

The macroeconomic trends and geopolitical tensions affecting the pharmaceutical market are already visible at the beginning of the year.What kind of year can pharmaceutical wholesalers expect this year?

Dr Antal Feller: Recent years have thoroughly taught us that unpredictable events can upset even the most careful planning. But it is precisely in a changing and challenging environment that the resilience and flexibility of businesses becomes important, and this can only be achieved by consciously taking account of and preparing for the processes that affect business. In all likelihood, pharmaceutical wholesalers will have to contend this year with the same macroeconomic conditions that characterised 2022, namely double-digit inflation, wage pressure, high energy prices and higher interest costs than in previous years. High inflation is having an impact on the consumption of medicines, and therefore on the turnover of medicines, and this effect will be probably stronger this year than last year. It would create a very bad situation if patients were to decide for themselves which prescription or over-the-counter medicines to stop taking, or which vitamins and nutritional supplements to stop taking. It is important to be aware of the risks - only experts, pharmacists and doctors can advise on these issues, so that a responsible decision can be made. However, I am confident that only a few patients will have to make similar decisions.

To what extent might the supply side also be affected by these adverse developments?

Tamás Kaló: In recent months, both the actors of the pharmaceutical supply chain and the patients concerned have experienced that some medicines are temporarily unavailable or less available than usual in the country. It is very important to address this issue, even though the problem concerns a small group of marketed medicines, many of which can be substituted by other products. The same can be observed all over Europe, and fortunately Hungary is one of the countries where missing products have perhaps less impact on the therapies started than elsewhere. Indeed, the shortage is largely due to the reasons outlined above, the war and high inflation have disrupted worldwide the production of pharmaceuticals, making some pharmaceutical raw materials and packaging materials more difficult or significantly more expensive to obtain. In such cases, pharmaceutical manufacturers try to change their sourcing routes and production plans so they can meet the demand for their products in all countries. I am confident that in the spring and summer months we will see an improvement in the situation and that the products in demand will arrive in Hungary. It is very important that the issue of shortages of medicines, or perhaps more appropriate to say product shortages, is discussed objectively and not in a way that encourages unjustified procurement of medicines. In this respect the leaders and actors in the pharmaceutical supply chain have a particular responsibility. In addition, I find it regrettable that the Presidency of the Hungarian Chamber of Pharmacists is even using this issue in its communications to position itself against wholesalers. It would be important that, at least on this sensitive issue, they, like us, work towards a solution and not towards dividing the actors in the pharmaceutical supply chain. Wholesalers are also helping to mitigate shortages by finding alternative and secure sources of supply. We will continue to take this task very seriously, in cooperation with the OGYÉI, the National Institute of Pharmacy and Nutrition and other authorities.

Dr Antal Feller: The resulting risks are well managed by pharmaceutical wholesalers, but the search for new sources and the identification of medicines involves considerable extra work. It is, of course, still a basic requirement that from wholesalers to pharmacies no counterfeit medicines or medicines delivered under inappropriate conditions are allowed to enter the market, and we will continue to comply with this. It remains unjustified and, in any case, not recommended to obtain medicines from unverified sources, such as the internet (except, of course, from authorised, i.e. legal sources).

How favourable will the economic environment be for development this year?

Tamás Kaló: We are in the process of digital switchover, as are practically all sectors. In the short term, this could lead to unprecedented efficiency and safety in the supply of medicines, so it would be important that the pace of digital development and modernisation does not slow down this year, despite the difficult external environment. To do this, pharmaceutical wholesalers and pharmacies will need to have sufficient resources, but these are likely to be used up by high rising costs in 2023. There is therefore an urgent need for the margins on subsidised products to be valorised in both sectors, so that they provide a sufficient level of resources for the development of wholesalers and pharmacies.

Dr Antal Feller: There is also a place for digitalisation at the stage when patients in need receive their medicines. So-called tele-pharmacy is gaining more and more space around in the world. Today, when a patient goes to a pharmacy, they can only collect their prescription if there is a pharmacist in the pharmacy. The possible solution offered by tele-pharmacy, whereby a pharmacist would provide professional supervision in several pharmacies at the same time via online channels, is not allowed by the current legislation. This definitely has the effect of making it more expensive to run a pharmacy and therefore fewer pharmacies are able to operate. Pharmacies are already under such economic pressure that there is a realistic possibility of pharmacies (mainly branch pharmacies) closing in 2023. These may include pharmacies in smaller villages, the closure of which will further reduce the supply of medicines to small communities. 

Tamás Kaló: These difficulties put even more focus on strengthening cooperation between actors in the pharmaceutical supply chain. Together, supporting each other, we are stronger than alone. We can take more aspects into account in our decisions, and we are more sensitive to the views of other actors in the supply chain. This is why the Pharmaceutical Consultative Forum, established last summer, is very important to support the work of the health government by discussing policy issues and preparing consensus proposals. But at an operational level, cooperation between wholesalers and pharmacies is also important, as the two sectors work in a highly interdependent way. Wholesalers can support the maintenance of pharmacies' competitiveness with efficient logistics, sales and marketing solutions, to which most pharmacies are open. One of our priorities in 2023 will be to further develop these opportunities and programmes.