Five football pitches full of medication – and one system for emergencies

Some of this reserve is located in Burgdorf, in a warehouse the size of five football pitches. Responsible for this is Bernhard Megert, who heads up Alloga Ltd., a pharmaceutical logistics company within the Galenica Group, on an interim basis. Alloga stores and manages medications here for around 100 pharma companies. Around 100 million packs leave the warehouse every year – half of all medicines sold in Switzerland.

Some of these belong to the statutory compulsory stock: pharma companies are currently required to stock 120 active substances, ranging from antibiotics and painkillers to cancer treatments. The list has been growing for years due to increasing supply bottlenecks. Compulsory stock is not automatically released: the federal government only releases the reserve when the market is unable to cope with a disruption itself.

Many people imagine compulsory stock as a separate reserve gathering dust somewhere. Megert sets the record straight: “Here, compulsory stocks aren’t just supplies sitting somewhere waiting to be used. They are part of our day-to-day business.” Specifically, this means: Alloga does not store compulsory stock goods separately, but in the middle of the normal warehouse. The system always dispatches the goods with the shortest expiry date first, new batches follow. As a result, the stock is regularly replenished.

If a pharma company notifies Alloga of a compulsory stock quantity, Alloga records it in the system. If the stock drops to this quantity, the system automatically blocks any further orders. In this way, the reserve remains protected without anyone having to monitor it manually.
Helvecura, the compulsory stock organisation of the pharmaceutical industry, organises the compulsory stockholding system for therapeutic products. It concludes the necessary contracts with the obligated pharma companies and monitors stock levels. Alloga ensures that the reported compulsory stock levels are correctly managed, protected and ready for inspection in day-to-day business. However, it is not Alloga or Helvecura that decides to release the stock, but the federal government. “We are never the owners of the medicines,” emphasises Megert. His team assumes operational responsibility: It stores the medications, documents the stock levels and ensures that the stocks are ready for inspection.

“As part of the Galenica Group, we benefit from greater crisis management, a strong IT infrastructure and experts from a wide range of fields,” says Megert. In an emergency, Alloga is therefore not alone, but is embedded in a network that includes other Galenica companies.

Sudden peaks in demand, such as during a strong flu epidemic, show just how resilient the system is. Then the demand for fever-reducing painkillers increases rapidly and the available supplies need to get to the right locations quickly and precisely. According to Megert, however, the real test often only begins afterwards: “At times like this, orders often start to pile up at our end. When the supply is restarted and the first deliveries arrive, we have to work through the backlog of orders in addition to our day-to-day business. That requires capacity.”

The question of costs, however, remains unresolved: Because the federal government sets drug prices, the pharmaceutical industry cannot pass on the costs of compulsory stocks through higher prices like other industries. Today, it largely bears these costs itself. The revised National Economic Supply Act could provide some relief here in the future, as it opens the way for new financing solutions. This offers a ray of hope for the industry: Broader cost support would help to keep the compulsory stockholding system viable in the long term.

According to Megert, security of supply is not something that is created only when a crisis hits. “It is created every day through people, processes and systems that work together reliably.” The federal government, Helvecura, pharma companies and the Galenica network: it is only their interaction that makes a system strong enough to be able to make a difference for months to come in an emergency.