Institutions are a minor distribution channel for the AdvaCare Pharma pharmaceutical product range in terms of a percentage of our total pharmaceutical sales, but can be strategically important. Institutions have many options for pharmaceutical suppliers, many of which are manufacturers, which makes it more difficult for us to compete on a price basis. But we also have some advantages for our pharmaceutical range including our USA brand and a wider product range than manufacturers.
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PHARMACEUTICALS FOR INSTITUTIONS |
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ADVANTAGES |
DISADVANTAGES |
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Our ability to get orders from Institutions, either by winning tenders or by direct order, largely depends on our distributor’s capability and relationship with the Institution. A major deciding factor in our ability to submit for a tender depends if the tendered pharmaceutical products require registration in the importing country or not. If so, then we would have to have our products already registered as there would not be enough time to complete the registration process. Otherwise, some tenders might not require product registration, but in this case it is more likely that such tenders would be issued by the government health agency as they would have the power to do so.
Our entire pharmaceutical range is positioned for institutional orders, meaning we can cover most of the products that would be included in a tender or private order. Institutions can issue a tender for any pharmaceutical products, but given that most of the products tendered will be for the hospital channel, the dosage forms aligned for this channel are more likely. It is not to say that it is impossible that tendered products would be distributed through other channels, but rather most will be distributed through public hospitals. For example, pharmacies are retail points of sale and almost always privately owned, unless the pharmacy is inside the hospital.
See:
Pharmaceuticals: Hospitals/Clinics > Product Range: Which products apply to this channel and why?
As institutional orders, especially for pharmaceuticals, will usually be submitted through our distributors, our distributors are our customers. However, the terms of every tender or private order will dictate the payment arrangement, meaning our distributor will most likely be the buyer of our products and then deliver to the institution, or in some cases the terms might dictate that the institution is the buyer and in such a case would have to provide a commission to the distributor, but this case is rare. Regardless, our distributor, given their role in between us and the institution, will be the primary target audience.
See:
Distribution Channels: An Overview > Distributors
The government health agency, which goes by varying names depending on the country MOH (Ministry of Health), FDA (Food & Drug Administration), DOH (Department of Health), etc., whom our distributors sell our pharmaceuticals to, are the secondary target audience - a later stage in the supply chain. The decision makers of the government health agency decide which suppliers get awarded which products in the tenders, unless it is a direct order given without tendering which does occur in some countries.
In order of importance, the deciding factors for winning government tenders are:
IGOs are international or national government-related organizations that have a budget for health initiatives in lower income countries. The larger IGOs that regularly issue tenders for pharmaceuticals include UNICEF, WHO, World Bank, etc. Such organizations can be more difficult to work with given their oversight, and therefore we rely on our distributor to have the necessary connections to facilitate such tenders.
In order of importance, the deciding factors for winning IGO tenders are:
NGOs are usually international organizations that focus health initiatives on lower income countries. These institutions are the smallest and least likely to issue tenders given budgets are smaller than IGOs and government institutions.
Patients are the end users of our pharmaceutical products. These people are usually given the prescribed medication by a doctor in the hospital channel or could be given the medication through a pharmacy. Branding awareness and messaging are less important, but still relevant if the same people come to trust our products, they might buy the same or other AdvaCare brands in the future from the pharmacy channel.
Institutions are the third to last stage in the supply chain before the product is distributed to a hospital or pharmacy and ultimately used by a patient or consumer:
API Manufacturer > Finished Manufacturer > AdvaCare > Distributor/Importer > Institution > Hospital/Clinic OR Pharmacy > End Consumer (patient/consumer)
See:
Distribution Channels: Introduction > Understanding Supply Chains
Institutions do not advertise specific brands or products as they are not in the business of selling specific brands, but rather best allocating an assigned budget to secure pre-determined pharmaceuticals that address specific health objectives that are inline with a health initiative.
The kind of promotional materials we produce for our distributors to provide to hospitals should be based on materials that can be provided to:
The promotional materials we provide for institutions, and by proxy hospitals, must meet the intended purpose:
See:
Pharmaceuticals: Hospitals/Clinics > Promotional Materials: Which materials apply to this channel and why?
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