GSK UK has announced forthcoming changes to its medicine distribution service, which has prompted concerns among community pharmacy representatives.

From 1 November 2008, GSK UK, which is part of the world's second largest pharmaceutical company, will partner with two of its current logistics service providers (AAH Pharmaceuticals Ltd and UniChem Ltd) to deliver its prescription medicines to customers in the UK.

The move is part of the new GSK strategy recently announced to shareholders by CEO Andrew Witty. Witty set out three new strategic priorities that aim to increase growth, reduce risk and improve GSK’s long-term financial performance. These are to grow a diversified global business; deliver more products of value; and simplify GSK’s operating model. The intention of changing medicines distribution arrangements sits mainly in the last category, though costs will also be an issue.

Margin issues
GSK CEO Andrew Witty outlined to shareholders the context for the agreement: “In the next few years the pharmaceutical industry will face immense challenges as an unprecedented number of products lose patent protection. This will be set against a backdrop of payors searching for ever more cost-effective healthcare and escalating patient demand for new and better medicines.

“We are seeking to release value and improve GSK’s efficiency in a different way. Traditionally, we have focussed on delivering cost savings through our business functions. Now, we are also adopting a pan-business approach to cost saving opportunities by making cross-business processes and structures simpler and more cost-efficient”.

Raising concerns
This move may hit the community pharmacy trade, as the change will reduce supply routes and could affect their profit margins. The National Pharmacy Association, the trade association for the UK’s community pharmacy owners which has virtually all community pharmacies in voluntary membership, responded with a statement from NPA chief executive, John Turk.

Mr Turk said: “The NPA board will discuss urgently the implications of this new development for our members. We want to drill into the specifics of the GSK deal itself, and also consider the effect on the supply chain overall. Choice and vibrant competition within the wholesale market allows pharmacists to seek out the best service levels and prices available. That is a matter of importance at all times, but especially at this time when our members are experiencing mounting cost pressures – something our Board will have at the front of mind as we examine this matter.”