Divisions - UPD Specialised Distribution

NEW UPD’s foray into third party distribution began as a tentative support agreement for wholesale client, Pasteur Merieux Connaught (PMC) – now Aventis Pasteur – in December 1999.

The sole distribution agreement involved warehousing and bulk distribution by UPD to government facilities, wholesalers and retailers, of approximately 100 lines of PMC product (which comprised highly specialised goods, primarily vaccines) at an approximate value of R50-million per annum. This came at a time when pharmaceutical manufacturers were increasingly acknowledging that distribution was not their core competency and had begun considering specialised outsourcing options. By 2005 the company’s distribution business had grown so substantially that New UPD established a dedicated distribution division to cater for the specialised requirements of manufacturers that require third party logistics services, warehousing and a range of expert distribution services.

“we maintain some flexibility in terms of the type of business models we offer our distribution clients.”

The division has subsequently grown to service more than 15 clients and achieves an annual turnover of more than R1.5-billion. Its primary focus is the bulk distribution of branded and generic pharmaceuticals to hospitals, clinics, dispensing doctors and retail pharmacies. The division also carries out the distribution on behalf of a number of neutraceutical manufacturers, and distributes surgicals into hospitals, private label into Clicks, and home health monitoring products into pharmacy and chain stores. In terms of the distributor arrangement, unlike its wholesaling arm, the New UPD distribution division operates as the distribution agent for its clients. It does not take ownership of the product, nor does it usually play a role in the marketing activities or pricing decisions of these products.

These activities generally remain the responsibility of the manufacturer, while the distribution division receives orders, processes these through its highly effective picking and packing procedures, and delivers the product. Although we very clearly differentiate the activities of our distribution and wholesaling divisions, we maintain some flexibility in terms of the type of business models we offer our distribution clients. Our experience and expertise in pharmaceuticals, our national infrastructure, and the sophistication of our systems give us the advantage of presenting our distribution clients with custom-designed solutions, according to their exact requirements. In addition, each client can decide which of their front-end operations they would like to retain and what they would like to outsource to us.’

Standard facilities to ensure that its services achieve the high level of quality assurance that is demanded by the pharmaceutical industry, include meticulous batch tracking, compliance, quarantining facilities and security of product, stringent temperature control, precise picking and packing, and quick delivery. Moreover, New UPD’s preferred service wholesale relationships with some of South Africa’s major hospital groups give its distribution division the edge in terms of supplying these organisations. Our wholesale division’s arrangements with hospitals provides for extremely high service levels into this sector, including two deliveries each day, and is designed to ensure that hospitals can minimise their stockholding and incidences of out-of-stock product. As an extension of these arrangements, the distribution division has the opportunity to introduce distribution of selected lines to hospitals, provide distributors with increased and more effective outlets and hospitals with attractive pre-wholesale options where required.

The benefits to the Distribution client of our wholesale infrastructure, shareholding and strategic partnerships

As a result of our extensive wholesale infrastructure, UPD is also able to design distribution solutions which involve pre-wholesale or bulk distribution to wholesalers and large pharmacy chains or buying groups through our Distribution Division. Fine Distribution is then handled directly through our Wholesale Division to smaller retailers. Our Wholesale Division provides two, and in some cases, three deliveries per day to most independent pharmacies, pharmacy groups, doctors, hospitals and clinics. A 24-hour emergency service is also offered to large hospital groups. We are thus able, within the Distribution Division, to capitalize on this infrastructure to provide high levels of service should this be the requirement.

UPD is wholly-owned by Clicks Group. We supply all Clicks’ Ethical products directly into their retail pharmacies. In addition, we distribute nutraceuticals and other healthcare products into the Clicks Distribution Centres on behalf of our distribution clients.

We also have preferred provider relationships with 2 (Two) of the large hospital groups and are thus able to offer high service levels (including our emergency service) into these hospitals