Pharmaceutical and healthcare product distributor Zuellig Pharma is extending its already con¬siderable lead over its rivals in Asia Pacific. Over the next two years new distribution centres (DCs) will be built in Malaysia and Singapore to complement existing ones it has across East and South-east Asia, except Japan.

Warehouse Manager of Zuellig Pharma Taiwan Janus Yuan said the expansion underscores the strength of its business model. Unlike other third party logistics providers, Zuellig Pharma handles pharmaceutical and healthcare products exclusively, providing principals with its cutting-edge lo­gistics services including inventory management, warehousing, distribution and customer order management. In addition, Zuellig Pharma is also providing services like collection of account re­ceivables, sales and promotion, product management, and management information. The com­pany’s proven ability to be even-handed has fostered confidence amongst its expanding client base, some of which are direct competitors.

Formed in the Philippines nearly 70 years ago, the company now has over 150 principals, which provide supplies to over 120,000 customers including hospitals, clinics, doctors and pharmacies in over 12 countries. This is more than four times the size of it closest competitor in the region.

Taiwan is a key constituent in Zuellig Pharma’s network. Since it began operation in 1988 on the back of Eli Lilly & Co. and Sterling Healthcare contracts, the Taiwan office has established a customer base of over 30 international pharmaceutical and healthcare companies.

Growth is in healthy double-digits in spite of the harsh business environment. “Currently in Tai­wan the environment is rather difficult; the NHI (National Health Insurance) is on the verge of bankruptcy! In November 2006 BNHI therefore carried out another price cut covering a wide range of pharmaceutical healthcare products, which directly impacts on our business results. We try to compensate this by increasing our business by expanding our principal & customer base as well as increasing the sales volume of existing customers,” said Logistics Manager Stephan Lemmenmeier.

The most visible expression of this growth is in the increase in the size of its DC. “This is our third facility. The first was at Linkou, then Haihu and now Dayuan,” Mr Lemmenmeier added.

At 27,000 sq metres, the Dayuan Distribution Center is four times that of Haihu. Completed in November 2005, it is the first to be built from ground up, and the company has every reason to be pleased with the final result. Not only is it functional, efficient and user friendly, as all good DCs should be, it is also aesthetically pleasing, which earned it a place in the local magazine, the Tai­wan Architect.

“We have the best warehouse in Taiwan for pharmaceuticals, and one of the biggest and best managed cool rooms,” said Warehouse Manager Janus Yuan. “The company is confident about the market.” 

As temperature control is key, the distribution centre is fully equipped to accommodate the wide temperature variation for pharmaceutical products, from ambient temperature to the ultra low –80 degrees C. 

Taking pride of place is the cool room, which has a temperature range of 2 to 8 degrees C. Equipped with temperature control and temperature monitoring instruments, it is one of the best managed for pharmaceuticals in the Asia-Pacific region. Should the temperature go beyond the predetermined ranges, alarm will be triggered off and the security alerted to forestall possible damage to the cold chain products like vaccines or diagnostics stored within.

The entire DC is equipped with Schaefer racks. For stowage under ambient, air-condition and cool temperature conditions, the Selective Pallet Racking System was installed to provide a total of 16,914 locations. Because of Taiwan’s geographical location, the racks were strengthened with bracings to withstand earthquake pressure. Smaller parts were stored on a Regal 3000, a two-tier system that provides 492 bays with fast moving items on the ground level and slow moving items in the mezzanine.

In the pick area is a four-high, six-deep KDR carton live storage with 5,040 boxes for an easy pick operation. Based on the principle of first expiry first out, it ensures a trouble free operational se­quence.

“The racking is in white and blue colour, which looks very nice and makes the interior of the facil­ity very bright. This will help us to make a good impression on our customers. The Zuellig Pharma Taiwan distribution centre is the flagship facility throughout the region and is key to grow our business,” Mr Lemmenmeier remarked.

The business is seasonable. There is usually a spike in September with the onset of flu and eases off by the end of the first quarter of the following year. At the end of 2006, there were some 10,000 SKUs managed by Zuellig Pharma, of which 7,000 were active and 3,000 inactive, though this is expected to increase as more principals come on board.

Locations for the storage area are randomly assigned by the warehouse management system. “Most principals hope that logistics companies can have a dedicated area for them. For the logis­tic companies this is rather inefficient and difficult to manage,” said Mr Yuan. Zuellig Pharma has been able to convince its principals that randomly assigned storage locations work for the benefit of all.

But for the pick module, the location is determined by an EIQ analysis - E (Entry of Order), I (Item) and Q (Quantity).

The operators work in two shifts: The first is involved in receiving and replenishment and the sec­ond, picking. As the product batch and lot numbers are vital in pharmaceuticals, the company has equipped operators with handheld scanners to ensure the right pick. After picking, the items are put in totes and placed on the conveyor system for dispatch. All orders are double-checked by the content check department before being sent out to prevent any possible errors.

The company also offers value added services such as product-repackaging, -labelling and -stickering in a dedicated and physically segregated area. In order to being permitted to carry out such kind of activities the operation will have to be audited by the DOH (Department of Health) against GMP (Goods Manufacturing Practises) standards. If you pass this kind of audit the com­pany will be certified and subject to reoccurring compliance audits every two years.

As quality is extremely important when handling pharmaceutical products, Zuellig Pharma has implemented its own in-house quality guidelines called GSDP (Zuellig Pharma Goods Storage and Distribution Practices). Compliance will be ensured by yearly independent audits carried out by Geneva based SGS.

With its fleet of trucks coloured in the cheerful corporate pink, Zuellig Pharma ensures 100% next day delivery throughout the country.

Should demand for its services increase, the company can easily expand its storage capacity by adding more racks under a phase two programme. Zuellig Pharma’s executives are confident that it will. With its current market share of 25%, there’s still plenty of room for the company to grow.