Eli Lilly yesterday became the third large drugs company to confirm that it was considering a wide-ranging shake-up of its UK supply chain.

The company said that it was having a “general rethink” about its supply and warehousing arrangements.

A spokesman for the US company said: “We are looking at a full range of options about how we distribute and warehouse our medicines.”

He said that “informal discussions” were already under way with distributors, although no formal decisions were likely to be taken until next year.

The announcement from Eli Lilly follows earlier steps taken by Pfizer and AstraZeneca to review their UK supply chain arrangements. In September, Pfizer selected UniChem, the wholesaling arm of Alliance Boots, to act as the sole UK distributor of its products.

Pfizer’s decision has triggered opposition from pharmaceutical wholesalers, who are concerned about a loss of business. In addition, MPs have expressed concern about the impact on the NHS and the possibility of drug shortages or delays in deliveries if companies rely on a single supplier.

Forty-five MPs across all three main parties have signed a Commons early day motion aimed at blocking the Pfizer deal. The Office of Fair Trading, which has been examining the Pfizer proposals, is expected to announce a decision shortly as to whether it will investigate the deal on competition grounds.

AstraZeneca has acknowledged that it is considering a variety of options designed to simplify its UK supply network. These may include handling UK distribution of its products on its own, with the assistance of a handful of distributor companies.

AstraZeneca issued an invitation to tender to a variety of potential partners earlier this month but has said that no final decisions have been taken.

The new arrangements among drugs companies will affect the way in which pharmaceuticals are supplied to hundreds of hospitals, more than 12,000 chemists and thousands of dispensing doctors across the UK.

At present, pharmaceutical companies sell their drugs to wholesalers, which then compete against one another to sell drugs to retailers, hospitals and doctors.

Under the new systems that have already been struck or are under consideration, drug companies themselves will play a much more powerful role in the supply chain.

Big business

Biggest-selling UK-produced drugs are Pfizer’s Lipitor (anti- cholesterol), GSK’s Seretide (asthma) and Wyeth’s Zoton (indigestion)

Source: Association of the British Pharmaceutical Industry

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