Rafael Barbòn Romero
Director General
Exfarma
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View from the Top

Integrated Services Transforming the Distribution Network

Wed, 09/09/2015 - 11:26

Q: How did Exfarma start and what opportunities did you identify in the market?

A: I established Exfarma after working as a consultant for major consulting firms leading the Latin America pharmaceutical practice and heading the pharmacy chain “Grupo Farmacos Especializados.” During my tenure as a consultant I identified a huge opportunity for generics. Working in Latin America, I learned about the market evolution in other countries and saw that Mexico had a lower penetration in comparison. Since its creation in 2006, Exfarma has had a predominant position in the generics market distribution and has continuously adapted its strategy to expand and explore new opportunities. During that time we saw an opportunity to participate in the government and institutional sector. Today, Exfarma business is structured at 55% public and 45% private sector. We also have a consulting division focused on restructuring and business development for major pharmacy chains and retailers. We focus on three mayor core business areas. The first is distribution, the second is the private label segment, and finally, we have developed an integrated supply and administration platform to fulfill public institution needs.

Q: In what other ways do integrated solutions benefit the public sector?

A: Exfarma also focuses on providing integrated services for drug supply and dispensation. Our solution has been to contract assorted prescriptions, which places the responsibility with the supplier to deliver required pharmaceuticals. We have implemented a new model with a unique technological platform designed specifically to support this way of stocking and ordering pharmaceuticals. The platform makes it easier for the administrators and medical staff to monitor and control their budgets as well as having the doctor, patient, and prescription information integrated in a single platform. Our system and the way the information is consolidated derive from our previous experience supplying multiple private health providers. We believe the future is in integrated supply solution for health institutions.

Q: How do you ensure you offer a safe and reasonablypriced service to your final clients?

A: The market has evolved, demanding high-quality products and at the same time competitive prices. As generic manufacturers are acquiring certifications, the competition is becoming more intense. Currently we have two different business models. The first is the integration of the entire private label strategy, and the second is to supply an extensive line of generics to pharmacy chains and large retailers. We have established strategic alliances with pharmaceutical companies focused on the demand planning, distribution, and private label integration, so they can focus on manufacturing. Private label integration has been a success in the market as clients have better prices on certified products and pharmacies have better margins, benefiting both parties and reducing out-of-pocket expenditure. During the last five years, the private label market has grown at double digit rate for large pharmacy chains and retailers. This, coupled with the fact that the industry is working with equal or better quality standards than the international market, means patients benefit from the same effectiveness at a better price. In addition, the private label division generates better margins to retailers.

Q: What changes have you detected in the distribution sector?

A: Traditionally the pharmacy market has been attended by large wholesalers and local players that do daily deliveries. In the case of private labels, they are mainly targeted to pharmacy chains due to volume restrictions. These companies have their own distribution center, that reach final points of sale. In the private distribution market, some laboratories deal directly with pharmacy chains, taking away some direct distribution. In the OTC market direct sales are almost the norm. The prescription market is divided between direct sales and distributors. There is no distribution leader in generics, as the market is fragmented and distributors are reaching out for the traditional pharmacy. The result is that branded generics have a growing participation level. A considerable change for the players in the distribution sector happened when Saba went out of business, and the direct access between laboratories and pharmacy chains begun. Another area of change is the growth of private labels sold in pharmacy chains, and generics medication penetration in traditional pharmacies.