High expectations of pharmaceutical manufacturers on the dynamics of sales in the Russian retail market led to the excess of some distributors’ trade stocks in early 2018. This situation is being solved in different ways: someone tries to convince manufacturers to adjust the sales plan, someone interchanges bonuses and volume.
According to the estimate of the General Director of RNC Pharma Nicholay Bespalov, "a significant amount" of stock has accumulated at different stages of the distribution chain.
The average turnover of commodity stock slowed down, and as a result the market is overloaded with goods on average for two-three months ahead, the commercial Director of CV Protek Boris Popov admits.
While a few years ago, the average stock was sold within 21-27 days, now it takes 35 days, confirms the development Director of FC Pulse Sergey Eskin. "The pressure of the commodity mass on the market has increased, and the market has shrunk," he concludes.
Over-production of pharmaceutical products has resulted in overstocking. It’s happened as a result of high expectations of the growth of the Russian pharmaceutical market. In fact, the pharmaceutical market is stagnating due to lower purchasing power and the average cost of packaging, lists Popov. According to him many manufacturers, had a double-digit growth target for 2018, and expenses on promotion were budgeted for them.
The commodity stock of Protek rose at the end of 2017 on the expectations of seasonal sales growth and was consistently decreasing during the first quarter of 2018, Popov says. Now the stock balance of Protek is exceeded for individual seasonal groups of goods. "But we find with most manufacturers a solution to reduce stocks and/or prolong the payment terms in case of a slowdown in sales in the market," Popov said.
At the beginning of 2018, Pharmcomplekt had a problem with excess stock, now it is not that urgent, the company says.
The stock of Pulse is not critical, according to Eskin.
Takeda and Sanofi officially deny the growth of stocks of their distributors.
But on condition of anonymity information is different: distributors of Sandoz and Zeldis-Pharma have accumulated three, four-month stocks of products.
The representatives of Sandoz (generic division of Novartis) don’t comment on the situation, Zeldis-Farma didn’t answer the request of Vademecum.
Considering these conditions, now it is unprofitable to take on additional volumes and bonuses for them. Pharmcomplekt, according to the co-owner of the company Yuri Gaisinsky, since the beginning of 2018, is trying not to take extra volumes from manufacturers, which has helped to unload warehouses.
"Distributors are becoming increasingly reluctant to agree to increased trade balances, and some are trying to abandon such practices even for a very large discount – admits Andrey Obruchnikov, Director for Commerce and logistics of Takeda. – This revitalizes the situation, but during new products release or seasonal demand it can add to difficulties even for reasonable manufacturers." Under these circumstances, Takeda has established relations with non-network retail.
"Due to the unpredictability of demand in retail, it is necessary to settle accounts with the manufacturer in advance for the goods haven’t been sold with the help of Bank loans. While the products, kept in the warehouse is getting old", – complains Sergey Eskin from Pulse.
Protek warns that overproduction and overstocking entail " spillover "[wholesale resale of goods by pharmacy chains. - Vademecum] and may lead to a series of severe bankruptcies of the participants of the commodity chain.
In January 2018, at the request of creditors the court introduced a monitoring procedure in CJSC Rosta: previously, the company confidently occupied the top positions in the ratings of pharmaceutical distributors, owned its own production and pharmacy chains.
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