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The impact of the sanctions policy on the logistics of medicines

Harold Vlasov, NC Logistic

Harold Vlasov, Managing Director of the specialized 3PL operator NC Logistic, analyzed the situation in the pharmaceutical logistics market and predicted the changes that will occur in the industry in 2022.

The sanctions policy has significantly affected the entire supply chain from the supplier to the end consumer. At the same time, changes in the pharmaceutical sector are developing at an accelerated pace.

Today, we are at the end of the first quarter, which all manufacturers, distributors, pharmacy chains have long planned and even successfully implemented. Many, if not all, market participants have exceeded sales targets until July 2022. By the end of the first quarter of almost every year, analysts note an active surge in sales of pharmaceutical products, but this year the market has shown record highs.

I'm sure the demand will not be endless. In April, panic buying by the population of medicines for future use will stop. In May, due to a regular seasonal decline, the demand curve will creep down.

It is necessary to reassure consumers and explain that many Western companies have produced drugs with planned deliveries until the end of 2022.

At the moment, manufacturers who have declared their readiness to continue working on the Russian market are building alternative logistics in the new realities. Companies are looking for solutions for both economically justified and safe transport logistics, and an economically justified continuation of their activities on the territory of the Russian Federation as a whole. Profitability implies a reduction in costs, the number of personnel. Perhaps, for some, an effective solution would be to switch to the supply and sale of manufactured products through “agents”. The role of agents can be performed by logistics operators who, under the contract, manage the goods (import, storage, sale).

Regardless of the efforts made to optimize costs, transportation tariffs will increase. The reason for this is not only a two-fold increase in fuel prices in the European Union, but also an increase in insurance rates, an additional leverage for air transportation and difficulties in transshipment of cargo in ports. But despite all the restrictions, the manufactured drugs will be delivered to Russia. My conclusions are based on the active shipments of our foreign customers - the import of pharmaceutical products does not stop.

As for domestic pharmaceutical companies, they are looking for ways and opportunities to purchase substances, auxiliary and packaging materials to ensure stable production growth. The formation of stocks of raw materials and auxiliary materials from the production side can increase the need for organizing centralized raw production warehouses. Such a request to NC Logistic has already been received during the pandemic. I predict that this service will become relevant again. This will inevitably lead to an increase in demand for remote production quarantine warehouses for products not released into civilian circulation.

It is important to note the key role of the public sector in the current situation. The departments will take mandatory measures to form stocks of medicines from both foreign and domestic manufacturers. The regulator will prevent speculation and the creation of a shortage of vital drugs.

Summarizing the above, I believe that over the next two quarters, all participants in the commodity distribution chain will be busy purchasing raw materials, substances, and auxiliary materials to increase production. Distributors and pharmacy chains - the purchase of finished medicines to provide the consumer with an assortment of medicines.

The task of a specialized logistics operator is to provide a platform that meets the GDP standards for the pharmaceutical group of goods to create stocks of medicines. Ensure high-quality and timely delivery of medicines to all regions of the Russian Federation. What we are actively doing.


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