Alessandro de Luca Senior Vice President MERCK Group Improving Access to Health Supply Chain & Delivery Addressing the Last Mile Challenge Alessandro de Luca Senior Vice President MERCK Group Title of the powerpoint

AGENDA Access to Health and Supply Chain Challenges Industry approach Beyond a single company? LUMA

Many constraints to global access to quality medicines Barriers to Global Access within the BoP as identified by the WHO Unaffordable Prices Medicines account for 25% to 70% of overall healthcare expenditure in developing countries compared to less than 15% in most high-income countries because of price levels Unfair Health Financing Leaves households responsible for the cost of essential medicines, placing the heaviest burden on the poor and sick who are least able to pay One-third of WHO Member States have either no regulatory authority or only limited capacity to regulate the medicines market Recent assessments by WHO shows 50% to 90% of samples of anti-malarial drugs failed quality control tests and more than half of ARVs assessed did not meet international standards Poor Quality Medicines Unreliable Supply Inefficient procurement systems have been found to lead to payments of up to twice the global market price for essential medicines and lead to unnecessary waste of resources Irrational Use Estimates show that half of all medicines are inappropriately prescribed, dispensed or sold Lack of New Medicines Only 1% of medicines developed over the past 25 years were for tropical diseases and TB, which together account for >11% of global disease burden Over 90% of R&D is focused on diseases for the richest 20% Supply Chain presentation_ Brussels/ September 2013

The Supply Chain Objectives Balance Supply & Demand Ensure there is a sufficient supply available to meet demand Provide consistent uninterrupted supply. Cost Minimize company cost and cost implications to countries and patients Quality & Safety supply of quality medicines till the final patient Ensure drug safety in each step of the supply chain To deliver the 3 of them is definitively a challenge in developing countries

Typical Pharma Distribution Channels and… …Distribution Systems

The distribution challenge in Developing Countries: The differences in the regulatory structure and distribution systems of medicines between developing income countries is significant when compared with high income countries . Factor OECD countries Developing counries Regulatory structure Strong well-defined laws and overall good ability to enforce regulations. Weak fragmented regulatory structures, ill-defined laws in some instances, and poor ability to enforce regulations. Distribution systems Few large distributors with nationwide coverage Relatively low markups in distribution Very fragmented distribution market Few or none with nationwide coverage High markups in distribution Supply Chain presentation_ Brussels/ September 2013

Number of intermediaries in the channel DEVELOPING COUNTRIES DEVELOPED COUNTRIES Source: ACT Watch

“People will tell you that delivering to Africa is impossible “People will tell you that delivering to Africa is impossible. Please don’t worry because that isn’t true. 8

We can and will always find a way. “People will tell you that delivering to Africa is impossible. Please don’t worry because that isn’t true. We can and will always find a way. But just don’t expect it to be the way you think or are used to in Europe.” Global Logistics Provider, June 2013 9

AGENDA Access to Health and Supply Chain Challenges Industry contribution: Some examples Beyond a single company? LUMA

MERCK Example: Logistics for Praziquantel WHO-Merck Donation Partnership to eliminate Schistosomiasis THE LAST MILE CHALLENGE Registration Manufacturing Shipping Clearing at country Airport Delivery to Central Warehouse Delivery to Patient Yesterday MoH, NGO… PZQ Merck Serono WHO The Last Mile, who is accountable? 11

Today MERCK Example: Logistics for Praziquantel WHO-Merck Donation Partnership to eliminate Schistosomiasis THE LAST MILE CHALLENGE Registration Manufacturing Shipping Clearing at country Airport Delivery to Central Warehouse Delivery to Patient Yesterday MoH, NGO… PZQ Merck Serono WHO Today The Last Mile, who is accountable? PZQ Merck Serono 12

Last Mile Alliance Partners (LUMA ?) MERCK Example: Logistics for Praziquantel WHO-Merck Donation Partnership to eliminate Schistosomiasis THE LAST MILE CHALLENGE Registration Manufacturing Shipping Clearing at country Airport Delivery to Central Warehouse Delivery to Patient Yesterday MoH, NGO… PZQ Merck Serono WHO Today The Last Mile, who is accountable? PZQ Merck Serono Tomorrow ? Last Mile Alliance Partners (LUMA ?) 13

Sanofi Train the Trainer Program Inter-University Degree in pharmaceutical supply chain management Objective: improve supply chain management of medicines and other commodities for HIV/aids, malaria and tuberculosis Inter-University degree from Ouagadougou (Burkina Faso), Auvergne and Lyon (France) Universities Target audience : certified pharmacists working in sub-Saharan Africa Results (2011-2013): approx. 120 students from 14 countries

AGENDA Access to Health and Supply Chain Challenges Industry approach Beyond a single company, towards collective action? LUMA

Strengthening Supply Chain: Last United Mile for Africa (LUMA) LUMA is a partnership currently under development to strengthen the supply chain in Africa. The goal of the alliance is to: expand access, secure supply, improve health and support development Supply Chain presentation_ Brussels/ September 2013

Thank you! Supply Chain presentation_ Brussels/ September 2013