When you can’t move the mountain: distribution in Chile
Although Chile is a relatively small market, with only 17 million inhabitants, its geography makes it a challenging environment for logistics and distribution services. Chile stretches over 4,300 km along the southwest coast of South America, a distance roughly the same as that from San Francisco to New York. At the same time, its width never exceeds 240 km, making the country more than eighteen times longer than its widest point. It goes without saying that Chile’s harsh geography, typified by the Andes mountain range, is one of the major challenges for the distribution of drugs.
“Reaching the outlying regions for private laboratories is very complicated to achieve,” says Edgardo Díaz Navarrete, Director of CENABAST, the public purchasing entity and distributor for all public hospitals and clinics, and Chile’s de facto largest purchaser. “We reach the whole country, either through own distribution system or that of a logistics operator,” says Navarrete.
Those third parties must go to great lengths to ensure that they can cover the entire country, in order to remain competitive. “We have managed to expand our reach by establishing great partnerships with third parties that allow us to conduct our services uninterrupted,” explains Raúl Sánchez, general manager of Peri Logistics. This means hiring private planes to fly medicine to remote communities during the country’s annual vaccination drive, Sánchez explains.
The distribution market is competitive because there are only a limited number of companies in Chile to distribute for. “The pharmaceutical market is characterized by the vertical integration and dominance of three major pharmacy chains in the country, which together control 92 percent of the market,” Sánchez explains, “This is something you don’t see anywhere else in the world.”
Sánchez believes that a focus on cold chain innovation will improve their competitiveness going forwards: the company has recently partnered with a division of the University of Chile to lower the temperature of their main storage facility without the use of air conditioning. It has been a success, he reports.
To read more articles and interviews from Chile, and to download the latest free report on the country, click here.