The pharmaceutical sector is a dynamic, research-intensive industry that is fundamentally

influenced by a web of regulations designed to a) promote research and innovation in the

design and production of drugs, b) protect consumers from potentially harmful effects of
drugs, and c) control public and private expenditure on drugs. These objectives are
sometimes in conflict and may require balancing the interests of producers and consumers.
Since most consumers have some form of health insurance, their incentives to control their
purchases of pharmaceuticals or to purchase from the most efficient pharmacist are limited.

2.0 Stakeholders and activities in the pharma value chain

The entire supply chain management process for a pharmaceutical company is shown in the
above figure. The process starts with acquiring raw materials, which undergo manufacturing
to form the desired product, which is then delivered to the customer. The pharma value
chain points to many organizational, operational, functional, and value-adding activities
involved in developing, delivering, and distributing pharmaceutical products to market. Its
stakeholders include:
 Pharmaceutical manufacturers research, analyze, design, and produce drugs.
 Contract development, manufacturing, and packaging organizations involved in
these services are outsourced.
 Wholesalers purchase large quantities of narcotics and distribute these drugs from
manufacturers to dispensers.
 Dispensers, or retail pharmacies and non-retail dispensers, provide medications to
patients and consumers.
 Consumers who use medicines to treat their illnesses and other health conditions.