Tài liệu Build and develop distribution system of domesco

the time they had to spend to answer my questions. I would like to extend my gratitude to DOMESCO’s sales team as well as Ho Chi Minh city Health Department, other pharmacists in companies that help me to complete the questionnaires and all respondents who spent their value time to complete the questionnaires. My deepest gratefulness goes to Prof. Dr. Bui Thanh Trang, lecturer of the University of Economics and also my tutor, who advises me on choosing the topic, gave his idea and enthusiastically helped me from project outline until to project finishing. Last but not least, I would also like to thanks Mr. Serge Bywaski and Ms. Nguyen Thi Mong Thuy, our helpful coordinators, who have been with us throughout the course, for their enthusiastic connection between the class and Solvay professors. CONTENTS Page 1 Executive summary 1 2. Introduction 2 2.1. Objective 2 2.2. Scope of study 2 2.3. Methods of research 2 2.4. Structure of project 3 3. Chapter 1: Literature overview 3 3.1. Concept of distribution system 3 3.2. Management of distribution system 4 3.3. Conflicts of distribution system 4 4. Chapter 2: Design of research 4 4.1. Framework of research 4 4.2. Information need 5 4.2.a Secondary data 5 4.2.b Primary data 6 4.3. Method of research 6 4.3.a Qualitative research 6 4.3.b Quantitative research 6 5. Chapter 3: Analysis of distribution system of DOMESCO 6 5.1 Situation analysis 6 5.1.a Overview about DOMESCO company 6 5.1.b SWOT analysis 8 5.2 Competitor analysis 12 5.3 Finding of research 13 5.3.a Result from research 13 5.3.b Concluding from finding 17 5.4. Factors influence 18 5.4.a Product portfolio 18 5.4.b Promotion 18 5.4.c Build more branches get GDP certificate 19 5.4.d Quality of distribution: make good service 21 5.4.e The innovation of distribution system 22 6. Chapter 4: Conclusion and recommendation 23 6.1 Conclusion 23 6.2 Recommendation 23 6.2.a Product portfolio 23 6.2.b Right promotion 23 6.2.c Building more branches apply GDP certificate 24 6.2.d Good quality of distribution 24 6.2.e Apply the innovation of the distribution system 24 Reference Appendix 1 1. Executive summary: Distribution system of DOMESCO was established in 19 years ago. It began to distribute in Dong Thap province where its office was there. Until now, there are eight branches are presenting in national wide and they distribute to almost provinces of Vietnam from the North to the South. Similar to other local pharmaceutical companies, DOMESCO is also a distributor and manufacturer. His products are sold to everyone who need. That has many problems about take care customer, control quality of product, and reasonable time to deliver product to pharmacy. In this present way, the end-user, pharmacy, private clinic, hospital, wholesaler can buy product from DOMESCO company. So that it is difficult to focus on right customer and have good service to them. In addition, the quality of product is so difficult to control when there are many intermediaries. Distribution still has not professional yet, that cause time delivery long to reach the customers. Therefore, the number of customer and sales volume are not increase as DOMESCO expected. DOMESCO want to increase the image in pharmacy industry and attract more customers, they must have to right policy to become a professional leader Vietnamese company. To carry out this policy, DOMESCO should be aware of this situation and improve their distribution system more professional to be able to compete with other competitors. Plan to meet the set goals: - Analysis distribution system of DOMESCO, and aim to: - Build more branches get GDP (Good distribution practice) certificate. This makes the distribution system becomes a professional, delivery time to customers quickly and pharmacies will receive the best service with reasonable price. - Develop right product portfolio. - Have good quality of service. 2 2. Introduction: 2.1 Objective: Objective of the project: based on the analysis of pharmaceutical market situation, competitors, DOMESCO situation as well as market research and finding problem analysis to find factors influences in order to build and develop distribution system. 2.2. Scope of study: This study focuses on pharmacies where products are sole to end users. Pharmacies buy medicine from distributor, wholesaler, company, other pharmacies… Market analysis has been carried out in the following developed markets: Ho Chi Minh city, Dong Thap province. 2.3. Methods of research: To obtain data for the research, an array of tools is structured interview of pharmacist who work on health office interview and pharmacist who work at pharmacy were utilized. The primary research and secondary information serve to identify {1} Analysis distribution system of DOMESCO [2] Build distribution system get GDP certificate [3] Develop right product portfolio [4] Have good quality of service. Information was also sought thought public and non-public documents as below: - www.domesco.com - www.vnr500.com.vn - www.dav.gov.vn For the study the following approach was adopted, key players include sellers and buyers. The questionnaire and direct interviews to provide qualitative and quantitative information on traded volumes and values, for example, differed significantly between the contacted persons. Finally, the information obtained from market operators was analyzed, processed and checked again information obtained from literature and other sources. 2.4. Structure of project: - Chapter 1: Literature overview: I mention in this chapter about the concept of distribution system according to Philip Kotler and according to World Health Organization (WHO); management of distribution system and these conflicts of distribution system. 3 - Chapter 2: Design of research: I show the framework of research and information need for research: secondary data and primary data. - Chapter 3: Analysis of distribution system of DOMESCO: this chapter raises distribution system presently, analysis competitor situation and market research. - Chapter 4: Conclusion and Recommendation 3. Chapter 1: Literature overview: 3.1. Concept of distribution system: - According to Philip Kotler: Distribution (or placement) is one of the four aspects (4 Ps) of marketing. A distributor is the intermediary between the manufacturer and retailer. After a product is manufactured, it may be warehouse or shipped to the next echelon in the supply chain, typically a distributor, retailer or consumer. The other three parts of the marketing mix are product management, pricing, and promotion. Frequently three parts may be a chain of intermediaries; each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the “distribution chain”. Each of the elements in the chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user. - About the Good Distribution Practice (GDP) according to World Health Organization: GDP deals with the guidelines for the proper distribution of medicinal products for human use. GDP is a quality warranty system, which includes requirements for purchase, receiving, storage and export of drugs intended for human consumption. GDP regulates the division and movement of pharmaceutical products from the premises of the manufacturer of medicinal products, or another central point, to the end user thereof, or to an intermediate point by means of various transport methods, via various storage and/or health establishments. 3.2. Management of distribution system: Distribution management is overseeing the movement of goods from supplier or manufacturer to point of sale. It is also an overarching term that refers to numerous activities and processes such as packaging, inventory, warehousing, supply chain and logistics. 4 It facilitates coordination of sales work and management in a best possible way, by simplify and management each phase of the distribution chain from customers, ordering, delivery, payment, inventory, and right through to services management. 3.3. Conflicts of distribution system: The conflict of distribution system is a kind of conflict between distributors and manufacturers and members of distribution channels, which rise mainly from four factors including channels structural factors, communication factors, economic factors and channel design. The problems between manufactures and channels partners require to give up the previous channel design ideas of shared values, then understand and operate the relationship from view of team building, value-added chain, and shared value in order to apply channel integration, vendor alliances and capital penetrations and so on. Provide valuable service with communication, cooperation and win-win for channel partners. Then set up a good relationship-based, collaborative model of channel relationship. Thus improve the overall quality and efficiency of marketing channels and achieve win-win marketing strategy. 5 4. Chapter 2: Design of research 4.1. Framework of research: Identify the problem Review Literature overview Qualitative research Quantitative research 4.2. Information need: Analysis a) Secondary data: Information of distribution system has been collected by DOMESCO company’s report and Conclusion and document. solutions 6 b) Primary data: From the problem above and distribution situation presently, questionnaires are established an interview directly to generate ideas of customers (pharmacies) about product, price, distribution and promotion of DOMESCO in appendix (1). 4.3. Method of research a) Qualitative research: Interview 10 Pharmacists’ work in health official: Pharmacist Pham Khanh Phong Lan (Ho Chi Minh city Health Department), Phar. Nguyen Van Hung (Vimedimex company-a distributor), Phar. Gary Girish (Megalifescience company) and other managers of distributors in Viet Nam. b) Quantitative research Samples are 100 pharmacists who work on GPP pharmacies. The information of sample is selected random from source of the web site of Ho Chi Minh city Health Department, Dong Thap province. Data and information collected by research below. 5. Chapter 3: Analysis of distribution system of DOMESCO: 5.1. Situation analysis: a) Overview about DOMESCO Company: DOMESCO MEDICAL IMPORT EXPORT JSC (DMC) is a pharmaceutical company; scope of activities is producing, distributing, trading, import & export medicine. DMC produce pharmaceutical products and sell these products in Viet Nam nation wide by own distribution system. DMC is a top 10 Vietnamese pharmaceutical company. They are a manufacturer and a distributor. There are eight branches presented in Viet Nam network that spread from The North to the South: Dong Thap province, Can Tho city, Ho Chi Minh city, Dong Nai city, Da Nang city, Vinh city, Ha Noi city , Hai Duong city. There are two area warehouses were built in Dong Thap province where factories located and one remaining was in Ho Chi Minh city where distribute products to other provinces in southeast and centre. In near future, there are two area warehouses in Da Nang (centre of Viet 7 Nam) and Ha Noi city, these warehouses will have duty to distribute to the Central and the North provinces. In each branch of DOMESCO, they have own small warehouse that distribute to neighboring province of branch’s location. About customer and turnover in three last years: In 2007, there are around 9.652 customers with total turnover is 45 million USD. In 2008, number of customer is around 7.430 with sales is 50 million USD. In 2009, customer increased only a little with 7.500 number, sales is 53 million USD. 100% 90% 80% 70% 60% %sale increase 50% Sales (Million USD) 40% Number of customer 30% 20% 10% 0% Year-2007 Year-2008 Year-2009 Figure 5.1 – Customer, sale in 2007, 2008, 2009 Source: DOMESCO company Distribution system presently: DOMESCO is a manufacturer and a distributor. They sell their products to end-user by many channels: Agent/wholesaler, distributor, pharmacies, hospital, healthcare service, private clinic, and even end-user.Distribution channel of DOMESCO: 8 Manufacturer 25% BRANCH 7% 10% Distributor 1 Agent/wholesaler Distributor 2 Hospital 57% % Pharmacy 1% Patient /end -user Figure 5.2 – Distribution channel Source: DOMESCO company b). SWOT analysis: Strength: - DOMESCO is a leader in pharmaceutical market. In 2009, DOMESCO is top five pharmaceutical companies about turnover. - Its distribution system was established in long time ago from the year 1991. - There are many branches in nation wide and faithful human resource with over 400 sale force staffs. - Wide range product portfolio about ethical and OTC product, which supply enough to hospital, pharmacy. 9 - Price of product is set up at average for all class of people. - DOMESCO is applying new technology EPR software for management whole system, it is useful to control financial, stock in warehouse. Weak: - Many channels of distribution. - Control of quality product in market: In this pathway of distribution, the wholesaler in distribution centers can bring medicine directly to pharmacies, hospitals, other agents as well as the other distributors. Agents and pharmacies sell medicine to end users. Hence, there are many intermediaries; many stages in the pathway of medical distribution go to patients. Therefore, quality of product is so difficult to control. In addition, price increase when product comes to end-user. - Time of delivery: Allocation of branches is not reasonable yet. Warehouse is often far from the central of city because it needs wide land, but price of land is so high especially in big cities such as Ho Chi Minh city and Ha Noi city. In addition, branch usually located near warehouse where issue the invoice and storage product. Therefore, that it is so difficult delivering and taking care customer. Time of delivery is long from 24 hours to 48 hours when receiving the order of customers. Presently, two area warehouses: one is in Dong Thap province and other is in Ho Chi Minh city. This does not cover enough for whole Viet Nam nation wide. However, each branch has their own warehouse, which can supply to some provinces around them. - Professional service: there is not stable training program for sale staff. - Human recourse: There is around 400 people work on sales force among 1.196 employees total in DOMESCO Company. This quantity of human resource seems to be reasonable. However, this is still not enough people in this system compare to other distributor companies in Viet Nam market. Allocation for sales force is not yet reasonable: Sales force – manufacturing – office department have rate 35-35-30, it is perfect for the rate: 40-35-25. Therefore, DOMESCO products distribute just only 4.330 pharmacies/ 14.900 pharmacies total in Viet Nam (29%); 870 hospitals /1.204 total Hospitals (72%), and health care Center: 1.442/2.440 (59%). 10 Opportunities: - Vietnam pharmaceutical market is high growth in recent years, Vietnam is attractive market for sale and distribution medicine. - The total value of drug use from U.S. $ 1.114 million in 2007 increased to U.S. $ 1.921 million in 2009 (IMS source) about 5.1% GDP. Market share is 3.82% (DOMESCO’s source). DOMESCO has opportunity to increase market share. 3.82% 96.18% Figure 5.3 – Market share Source: DOMESCO company - Vietnam population is around 85 million of people. Customer of DOMESCO is around 7.430 in 2008 (DOMESCO’s source). DOMESCO will have opportunity to increase its customers. 11 THREAT: - Government policy: there is still not strict policy in pharmaceutical distribution system yet. Therefore, many agents, pharmacies can become distributors. There is many “trade centre pharmaceutical and cosmetic” or “medicine market” in big city such as Ho Chi Minh city, Ha Noi city. Each “medicine market” has around two hundreds stalls that sell most of medicine that gets visa number or even no visa number (this is not legal). Customers can buy products here, including ethical medicine without prescription, as well as sales invoices. - More competition: There are about 800 companies registered pharmaceutical business functions in the Vietnam market, including about 370 foreign companies to provide medicines, mainly works in the form of representative offices. STRENGTH WEAK - Leader pharmaceutical company. - A complex distribution. - Long term of experience about - Difficult to control product. distribution. - Not yet stable time of delivery. - Wide branches in Vietnam network - Not reasonable in allocation of - Wide range of portfolio product with reasonable price. - Applying human resource. - new technology Not professional service. EPR software. OPPORTUNITY - High growth THREAT in pharmaceutical - Have not yet strictly policy from market. government about management of - Increasing market share. distribution system. - Opportunity in attractiveness customer. Table 5.1- SWOT analysis 5.2. Competitors analysis: - More competition. 12 There are about 800 companies as distributors in Viet Nam pharmaceutical market, including about 370 foreign enterprises operating mainly in the form of representative offices. Some countries: Korea, India, France have the most register companies. Ten big local pharmaceutical companies in this market: 1. F.T. PHARMA 2. DHG PHARMA 3. IMEXPHARM 4. DOMESCO 5. MEKOPHARM 6. VIDIPHA 7. PHARMEDIC 8. OPC 9. HATAPHAR 10. PHARBACO However three main competitors is F.T Pharma, DHG Pharma, IMEXPHARM COMPANY F.T.PHARMA STRENGTH WEAK - Long term reputation. -Weak product brand - Location in Ho Chi Minh city reputation. where consume biggest medicine in - Medium quality product DHG PHARMA Viet Nam. - The human resource is - Good service. elderly one who works for long - High promotion program. time in this company. - Good network: Many branches, - High price of product. subsidiary company. - Family management. - Company established long time - There is no special ethical ago which main core manufacturing. - Good relationship with customer. - High promotion program. is products. 13 IMEXPHARM - Competitor and flexible pricing - Low market cover. approach. - High price. - Reputation company for long time - Low product portfolio. ago. - Their company have foundation from Viet Nam pharmaceutical Corporation which invested much in infrastructure. Table 5.2 – Competitor analysis 5.3. Finding of research: a) Result from research: - According to Pharmacist Pham Khanh Phong Lan, who is vice director of Ho Chi Minh City Health Department, good service is the best important factor of making decision from pharmacy. Nowadays, pharmaceutical distribution system is so complex. There are many intermediaries, the price of medicine increase when it comes to the end user, and it is so difficult to control the quality. There are around 95% GPP pharmacies decided to buy directly medicine from company or distributor. This is quite reasonable way because Vietnam Ministry of Health recommend all pharmacies will apply GPP standard in the end of 2011. Therefore, GPP pharmacies pay attention on GDP certificate of company which ensure good quality of medicine same to storage condition from company’s warehouse. Pharmacist in pharmacy will consult patient about using and choosing medicine. So good promotion and service from company will encourage pharmacy make order. - Result of the interview with other nine pharmacists is similar to the above from Pharmacist Pham Khanh Phong Lan. All of pharmacies will be complying with the rule of Ministry of Health about GPP. Distributors have to get GDP certificate in 2011. That will make distribution system more professional in industrial pharmacy of Viet Nam. - The ratio of product in pharmacy: OTC is the best one, secondary is ethical product. 14 B est Sal e 1% 10% 0% OT C E t hi cal Or i ent al medi ci ne Funct i onal Food 89% Figure 5.4 – ratio of product - About Ethical product: 60% 50% 1 Not yet 40% 2 Li ttl e 30% 3 Average 20% 4 M oderatel y good 5 M any 10% 0% Brand name Import product generi c Local product DOM ESCO product Figure 5.5 – Ethical product Almost pharmacies sell brand name product from big foreign company occupy (42%), generic products is including import product and local product is average rate, DOMESCO product is sold at average rate (52%) - OTC product 15 60% 50% Not yet 40% Little 30% Average 20% M oderately good M any 10% 0% Brand name Import product generic Local product DOM ESCO product Figure 5.6 – OTC product DOMESCO product is present in pharmacy at average to moderately good rate. Other local product and brand name product from foreign company have big sale of OTC product. They remark quality of DOMESCO product is good. - Price of DOMESCO product Percentage 80% 60% 40% Percentage 20% 0% £ Expensi ve £ Reasonabl e £ Cheap Figure 5.7 –price of DOMESCO product Almost respondents evaluate that DOMESCO product has reasonable price. - Promotion 16 50% Don’ t care 40% Not good 30% Normal 20% Good 10% Excellent 0% Cost of call Discount in to order Service Af ter-sales order Figure 5.8 – Promotion of DOMESCO product The ideas of pharmacists about promotion of DOMESCO such as service and after service are just normal. Some of pharmacists do not care about cost of call to make order. However, many ideas evaluate this item is just normal. Almost ideas think that service and after service of DOMESCO are normal. - Other factors influence of buying product 70% 60% 50% Don’t care 40% Not important Normal Important 30% Very important 20% 10% 0% Famous company Price of product Convenient of delivery Promotion Profession Good service Figure 5.9 – Other factors influence of buying product + Price of product is the main idea of decision buying product from company. + Convenient of delivery, famous company are also important factors. + In addition, good service, promotion and profession of company are also influence on making decision on buying product. b) Concluding from findings: 17 Distribution system of DOMESCO is evaluated at average rate. Customer find out that promotion of DOMESCO are average rate including cost of calling to make order, discount in each order, service and after-service of distribution system. Price of product is quite reasonable. Quality of product is normal rate. In GPP pharmacies, almost OTC is best sale of product, and then ethical product is second. Pharmacist is owner who sells medicine directly to patients or customers. For this reason, pharmacist in pharmacy as well as doctor in hospital should be take care careful. About ethical product, GPP pharmacies sell moderately well and many brand name of foreign company. Some factors such as promotion, convenient of delivery, good service are important factors of buying products. 5.4. Factors influence: a) Product portfolio: Target on ethical and OTC (over the counter) product. Ethical product is prescribed in hospital; OTC product is sold in all pharmacies. Description: On ethical product group, we focus on cardiovascular product, which is prescribed by Doctors in Hospital. Patient will buy them from pharmacy and use them on their life. They bring this prescription to buy medicine from pharmacy. So, the name of product will remember in long term. DOMESCO is focusing on cardiovascular manufacturing and transferring new technology for Research and Development Department. Business department try to win tender in target cardiovascular hospital, this will make sure stable sales and reminder of product. OTC product in pharmaceutical market is often occupying 70% turnover. DOMESCO have a product line for baby tonic: Dobenzic, vitamin, … hold 60% of total sales. b) Promotion: - Program: promotion program should be have in each quarter and special ceremony day such as February 27th (Doctor Day), September 29th (Cardiovascular Day), June 01st (Children Day), the end of the year (Tet Holiday)…