Novartis·Boehringer reportedly restructureing sales rights for blockbuster items

Novartis is reportedly reorganizing joint sales and distribution strategies for several products

Boehringer Ingelheim is anticipated to restructure its sales rights as current contracts expire

Wholesalers said, “potential changes in contract terms for margin and return”…concerns about difficulties in managing existing pharmacy inventory

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As reports emerge that Novartis and Boehringer Ingelheim are pursuing business reorganizations to transfer the sales rights of major products in South Korea to local pharmaceutical companies or change their distribution partners, the pharmaceutical distribution industry is closely monitoring.

​It is reported that new distributors have been selected for certain products, or that negotiations are in their final stages, with the expectation that sales rights will transition sequentially as current contracts expire. However, the companies have yet to issue official statements.

​According to distribution industry sources on July 23, Novartis is reviewing measures to reorganize its sales strategies for several prescription drugs.

Following its co-promotion of Gleevec with Yuhan, co-promotion models with domestic companies are also reportedly under consideration for products such as the lung cancer treatment Tasigna, the immune thrombocytopenia treatment Revolade, and the iron overload treatment Exjade.

Recently, Novartis also signed a partnership agreement transferring the promotional and supply rights for its cardiovascular products, Diovan and Exforge, to DKSH Korea.

​Multiple industry sources said, "We understand that directions have already been set to some extent for certain items, while various candidate companies are being reviewed for the remaining products."

It is being reported in the industry that Boehringer Ingelheim is pursuing a similar reorganization of its sales strategy.

​Industry reports indicate that for some products currently co-promoted with Yuhan, discussions are underway to transfer sales rights to other distributors upon contract expiration, with direction already effectively finalized for certain items.

​In particular, new distributors have reportedly been selected for around five items, including the inhaler Atrovent, and it has been raised that some items currently distributed by Yuhan will also undergo sequential distributor changes as contracts expire.

​In some quarters, the possibility of structural changes in sales for the diabetes treatment Jardiance is also being discussed.

Wholesalers "closely monitoring margin changes"... Pharmacies "return issues could recur"

The wholesale industry is reacting most sensitively to these rumored transfers of sales rights. This is because a change in distributor frequently accompanies changes not only to transaction terms, but also to margin structures and return criteria.

​Given that Novartis and Boehringer Ingelheim hold numerous high-volume products in the domestic market, business partners are closely monitoring potential changes in contract terms.

​Pharmacies are also expected to face difficulties in managing existing inventory if suppliers change. In the past, pharmacies experienced confusion during sales rights transitions as outgoing and incoming distributors repeatedly shifted responsibility for inventory returns to each other.

However, industry analysts suggest that since most of the items involved are high-volume, frequently prescribed products with fast inventory turnover at pharmacies, the actual impact on the field could be limited.

​The industry views this rights reorganization as having a significant impact on distribution structures and commercial terms beyond a simple change of sales partners. As both Novartis and Boehringer Ingelheim hold substantial market share in major products in the domestic prescription market, wholesalers and pharmacies alike are closely watching for official announcements and contract progress.

​An industry insider stated, "When sales rights change, the distribution structure ultimately changes as well. The most sensitive aspects are margins and commercial terms from the wholesalers' perspective, and existing inventory management and return standards from the pharmacies' perspective. Although official announcements have not been made yet, the entire industry is keeping a close eye on these developments because the products involved hold such significant influence."

​Another industry official anticipated, "Because these products have high turnover rates, major chaos at pharmacies may not result. However, if inventory return standards or supply criteria change during the transfer of rights, both distributors and pharmacies could be considerably affected, making the final contract details crucial."