What is Distribution Channel? How to develop strong delivery, distribution channel and supply network ?

Building good Distribution Channel is most important aspect of any business. Distribution channel also known as Distribution Chain. All sales effort become zero if company don’t have good distribution channel. Timely availability of products at required place is prime motive of any distribution channel.

As we have discussed in previous article about marketing sales types in pharma industry. Now we will discuss about how to establish and build a strong distribution network? Market survey is most important thing before start. It will help in creating strong network.

For building strong distribution channel for pharmaceutical marketing, we need to understand how can we distribute our products in simple and effective way. Try to make it short and simple. Involvement of less persons will be prevent cost of product and time & chances of mistakes will be lesser as compare to bigger distribution channel.

What is Distribution Channel?

A Distribution Channel may be defines as a chain of individuals/groups/firms/companies involved into delivery a product from manufacturing unit to its actual consumer.

Parts of Distribution Channel:

Parts of distribution channel are

In prescription marketing, we can also involve doctors in distribution channel, without prescription, its not possible to deliver a medicine to patient but we don’t consider a doctor in distribution channel.

A Distribution channel chart flow is shown into image below.

Distribution Channel?

A strong distribution channel plays key role in success of any business. For building strong distribution channel, good knowledge of market at ground level is necessary. A distribution channel is like blood veins. Its must for providing proper supply at exact time at required place. If there is any blockage or restriction in supply, it will affect supply and directly affect sale of organization. Distribution channel should be simple and short to prevent error and mistakes. Parts of distribution channel is mentioned above. Top most part is Company, then c&f, Stockist, Distributor and retailer. customer. If a customer will need a product, he will approach to a retailer. Retailer should have that product at time of demand. Either retailer will replace it with similar product or mention not available or convince customer for procurement at time period. May be retailer convince customer to make available that product till tomorrow. This commitment will be at the basis of one thing and that is retailer should know the distributor or availability means of product. Here covering and reputation of distributor makes the difference. Mean while retailer don’t know about the product’s distributor. He will call to his known distributor and will ask about from where he can procure the product. In that condition, distributor should know stockist of that product and will make available product to retailer. Next situation, distributor also don’t know about stockist of product. He will ask from known stockist about this and chain will continue. As we go upper side in distribution channel, it build rectangular shape as show in image below:


Retailers are more in numbers as compare to distributors, Stockists is less than distributors and same is follow-up. 
How to Build a Strong Distribution Channel?

Prescription Marketing:

Doctors are the main source of business, so should concentrate at doctors,hospitals and nearby retailers/chemist.
Conduct survey about-

  • Number of Doctors located in territory. Divide them according to their speciality e.g physician, Gynaecology, surgeon etc 
  • Number of Hospitals present in area 
  • Number of chemists present and chemists present nearby hospitals to whom prescription can reach 
  • Number of Distributors & stockists and their supply chain capacity and network 

Appoint C&F for a region or particular state.
Then appoint Stockist at particular number of distributors for product’s supply to these distributors. Appoint Distributors at particular number of chemists or hospitals or regions etc.

Generic Marketing:

Retailers/chemists are the main source of business. Other than these, hospitals are also provide good business.
Conduct Survey about-

  • Number of Chemists/retailers/pharmacies present in location 
  • Number of Hospitals present in location 
  • Number of Distributors & stockists and their supply chain capacity and network 

Appoint C&F for a region or particular state.
Then appoint Stockist at particular number of distributors for product’s supply to these distributors. Appoint Distributors at particular number of chemists or hospitals or regions etc.

Pcd Pharma/Pharma Franchise Marketing:

Pcd pharma distributors are the main source of business. For pcd pharma companies, development of strong distribution network, method is different from above two methods. In this marketing type, one need to have high number of queries that are searching for own marketing. Companies has to compete with other companies to finalized the deal with this query. Company having better opportunities gets the deal.
For pcd pharma distributors, they can develop their distribution network further like mentioned in ethical/Branded marketing.

OTC marketing:

In OTC marketing customers are main source of business but chemists and distributors/stockists also play important role. Other than this, Doctor’s recommendation also provide great support.
Conduct survey about:

  • Number of Chemists/retailers/pharmacies present in locations 
  • Number of Distributors & stockists and their supply chain capacity and network 

Appoint C&F for a region or particular state.
Then appoint Stockist at particular number of distributors for product’s supply to these distributors. Appoint Distributors at particular number of chemists or regions etc.

Surgical And Medical Devices Marketing:

Read below query to understand distribution channel for surgical and medical device marketing.
Query:
Need advice on appointment of distributors for regions/states across India for imported medical device

Response:
You should search for distributors who work mainly work of surgical and medical device products. Pharma Distributors will not help you most. For regions and states you can appoint c&f and for 2 to 3 districts you can appoint one stockist. If possible, district wise you can appoint distributors.
Appointment of stockists and distributors and area you will given to them at sale of products. If sale is huge then you can divide it district wise. If sale is comparatively low then appointing distributor or stockist for 2 to 3 district will be enough.
We will recommend following steps:

Conduct survey about-

  • Number of Hospital who have indoor facility available in area you want to cover (Area may be district/state/region/country)
  • Specialty of Hospitals i.e. Surgeon, Gynae, pediatric etc.
  • Number of Devices used in that hospitals

On Basis of Above Facts, you can choose area, that could be covered by one distributor.
You can read our article : How to develop strong delivery, distribution and supply network ? In This Article we have discussed all marketing types in pharma. It can helpful to you…

Hope above information was useful to you…

For any suggestion and query mail us at pharmafranchiseehelp@gmail.com

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12 Replies to “What is Distribution Channel? How to develop strong delivery, distribution channel and supply network ?”

  1. Hi, Thank You for such a one-stop blog for all matters related to all sides of Pharma business.

    What all licenses i need to have to start a pharmaceutical, OTC and medical device warehouse (no trading) – say for example at Delhi NCR or at Bangalore?
    Is it different from state to state?

    Is obtaining these licenses from govt authorities much difficult – how many licenses in total i should have for this venture?

  2. If you are going to store/stock or warehouse any of pharmaceutical and medicinal related products, you need drug license from state drug authority at district level where your warehouse is located.
    General requirements are same as per drug and cosmetic act for all states but difficulty in getting license is vary state to state.

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