The difficulties of the logistics of hospital products

The pharmaceutical sector is highly regulated in Brazil. ANVISA requires registration and license for products and also production processes, such as production batch size, imports, etc., which take more than 1 year to obtain and need to be periodically renewed. Which is very good from the consumer's point of view, as the agency carries out the controls at its disposal to guarantee the lowest risk of out-of-specification products. On the other hand, too much regulation increases the need for operational control and costs for the industry, being a barrier to new entrants.

The sector also suffers from high taxation of around 31%, compared to the world average of 6,3%, and from the current Brazilian legislation that determines that medicines can only be readjusted once a year.

Given the implicit costs of the aforementioned characteristics, industries manufacturing hospital products need to be efficient in transport and inventory management to be competitive, making logistics management complex. In addition, there is a strong demand for the level of service by the sector's main customers: hospitals. In the National Register of Health Establishments (CNES) of the Ministry of Health, in August of this year, there were 6.806 hospitals in Brazil (specialized, general and day hospitals), 35% of which are in the Southeast Region.

One of the most purchased products by hospitals are parenteral solutions (known as “serum bags”), a bulky product with low added value. According to the Brazilian Association of Parenteral Solutions Producers (ABRASP), in 2016, more than 15 billion parenteral solutions were sold by associated companies (around 1,1 manufacturers), which may contain only water for injection or other solutions such as sodium chloride, glucose, glycerin etc.

Hospitals need large amounts of “serum bags”, but have an extremely small storage area, as all available space in hospitals is reverted primarily to their core activity, which are the beds. In this way, manufacturers of this type of product and the like need to have a high level of security in stock, as their products are of an emergency nature for their customers and have little differentiation. If there is a stockout, the competitor gains space. According to the survey carried out by ILOS with large companies in the Health sector, the inventory coverage of industries in the health sector, manufacturers of related products (non-medicines) is on average at 39 days, reaching 180 days in some cases.

Figure 1 – Average stock coverage in manufacturers of related products (non-drugs)

Source: Panorama ILOS – Health Sector Supply Chain 2017

The service requirement of these customers is high, with small orders and short delivery times, which makes the manufacturers also have a complexity in transport management. In this way, it is common in the sector to observe the performance of distributors, who form a larger product mix and position themselves closer to the consumer market. They are more evident for smaller products, which are more difficult to load on a truck.

When there are no distributors, the most advantageous alternative for the industry in terms of cost and capillarity is transport through carriers with a wide national coverage, as they have cross-docking points and advanced distribution centers that allow the consolidation of orders in larger vehicles. . However, to ensure high product availability, the manufacturer is still hostage to advanced stock points, either own or at the facilities of carriers.

The high regulation of the health sector and the restrictions of space for storage in hospitals mean that the best way out for companies that operate in this segment is to invest in good management and control of their processes and logistics, with the support of technology. In addition, it is essential to always be close to customers, understanding their real needs, and adapting the operation so that there is no loss of sales or unnecessary costs.

References:

Panorama ILOS - Supply Chain of the Health Sector 2017
abrasp
Datasus
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