Pharmaceutical wholesalers maintain high quality of service in 2022

At the beginning of the year, it is time to evaluate the previous year and draw lessons - and this is the case for pharmaceutical wholesalers too. We asked Dr Antal Feller, President of the Hungarian Association of Pharmaceutical Wholesalers and Tamás Kaló, Vice President of the Association about the developments of the past year.

2022 will be remembered by many people as a year of shocking change.The dramatic change in macroeconomic conditions has put whole sectors in difficulty.How has this affected Hungarian pharmaceutical wholesalers and how has the sector performed overall?

Dr Antal Feller: The first and most important thing we can say is that pharmaceutical wholesalers have maintained their service level in the face of unpredictable and uncertain circumstances in 2022, contributing significantly to the safety of medicine supply in Hungary. All the necessary therapies were available to patients and no fake medicines entered the wholesalers' system, and through them into pharmacies.

But, as the question pointed out, there have been several negative developments that have made difficult the life for wholesalers. The sudden surge in energy prices and fuel supply disruptions posed challenges that could not be solved by relying on the routine of the previous years. To cover the increased energy costs, resources had to be diverted from other areas, and there were some weeks when the medicine delivery vans had to search for petrol stations where they could get the fuel they needed to complete their daily routes. In many cases, this was only possible after working hours, in the evening, and the drivers could often only fill up with premium fuel. But the wholesalers fulfilled always, all deliveries.

Tamás Kaló: The past year has tested the resilience of wholesalers thoroughly. In addition to increased energy and fuel costs, the sector has been and continues to be challenged by rising personnel costs and interest expenses. Our interest costs, for example, have practically increased tenfold during 2022, which has increased the sector's inventory costs by billions of Hungarian forints per year. And for us, this is a significant item, because in the pharmaceutical supply system, warehousing and stocking is mainly the responsibility of wholesalers. The rise in interest expenditure has also been reflected in investment, as companies in the sector started to make a number of investments before the sharp rise in interest rates, but a significant part of these investments were made in the more expensive interest rate environment and at much higher costs.

Having such difficulties, how have investment and development in the sector developed?

Dr Antal Feller: The continuous improvement is essential in the pharmaceutical wholesale sector, and important investment projects have been completed or started in 2022. After the Covid pandemic receded, the actors had to think about how to make their operations even safer and more reliable. Construction of new large warehouses has been started to increase storage capacity, advanced warehousing technologies have been installed in some logistics centres and preparations for the integration of alternative energy sources have continued. This is important not only to reduce the carbon footprint, but also to increase energy security and reduce energy dependency. 

Tamás Kaló: In the field of environmentally conscious operation we have to mention, that the first electric van for transporting medicines went into operation in Hungary at the end of last year. This has not only symbolic but also practical significance. The use of electric cars in logistics is still in its initial stages, and there are no international standards. These vehicles must meet the same strict quality standards for transporting medicines (e.g., maintaining the right temperature during transport) as conventionally powered vans - we look forward to hearing the first experiences of using it.

Last year the Pharmaceutical Consultative Forum was re-established, of which the Hungarian Association of Pharmaceutical Wholesalers is also a member.What is the role of pharmaceutical wholesalers in the cooperation between the actors of medicine supply? 

Dr Antal Feller: Our association was one of the founding members of the Pharmaceutical Consultative Forum, together with the National Association of Private Pharmacists (MOSZ) and the Association of Network Pharmacies (HGYSZ). The aim of the Forum is to support the work of the health government, thus strengthening the high quality of the Hungarian medicine supply. In the framework of the Forum, we have prepared a comprehensive assessment of the situation of medicine supply in Hungary, which can serve as a basis for our recommendations to health policy makers. 

Pharmaceutical wholesalers, by their position, must always play a significant role in the development of medicine supply, in solving problems that arise and, of course, in the coordination between the various players. For example, the fact that there has been no shortage of medicines in Hungary as a result of the war in our neighbouring country is also thanks to our close cooperation with the National Institute of Pharmacy and Nutrition (OGYÉI). In the context of the war, I have to mention that the pharmaceutical wholesalers had their part to play in mitigating the damage of the war. We supported the victims of the war through international and national aid organisations and, in addition to our own donations, we also distributed donations from pharmacies and pharmaceutical manufacturers to those in need. 

Tamás Kaló: An important role for wholesalers is, in addition to logistical support, to develop services that help the operation of pharmacies. Examples include cooperation programs in which pharmaceutical wholesalers provide, among other things, purchasing and marketing services to partner pharmacies. Partner programs increase the competitiveness and resilience of pharmacies, make the operation of the whole vertical more efficient and open new opportunities for digitalisation. Pharmaceutical wholesalers and pharmacies operate in a highly interdependent way, so that working together they can better cope with the challenges of the external environment.