From Stuffing to Streamlining: Pharmaceutical Distribution

This case uses the streamlining of pharmaceutical distribution to explore supply-chain coordination. For years, supply-chain inventory information had been opaque. Then in the early 2000s, pharmaceutical manufacturers and distributors were forced to shift from investment buying to inventory service agreements. Information sharing among channel partners regarding customer demand and inventories was believed to lead to better decision-making, improved inventory turns, and ultimately, better profit margins. The case material provides data for students to assess the impact of shifting away from investment buying. Excerpt UVA-F-1859 Apr. 22, 2019 From Stuffing to Streamlining: Pharmaceutical Distribution One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States. That is why I have directed my administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down. —President Donald Trump During the summer of 2018, Melissa Monaco, the COO of a major North American pharmaceutical company, was preparing for a board meeting about whether the company should move forward with an annual price hike for brand-name drugs. In light of the Trump administration's pressure to keep prices the same and the president's Twitter flogging of the runaway manufacturer prices in January 2017, which sent stock prices downward, many in the industry were concerned about raising prices in 2018. . . .