A Qualitative Assessment of the Private Sector Antimalarial Distribution Chain in Cambodia, 2009

In Cambodia, as in many low‐income countries, private commercial providers play an important role in the treatment of malaria.  To design effective interventions for improved access to accurate diagnosis and effective malaria treatment, there is a need to understand retailers' behaviour and identify the factors that influence their stocking and pricing decisions.  Private commercial retailers are the last link in a chain of manufacturers, importers and wholesalers, and their supply sources are likely to have an important influence on the price and quality of malaria treatment that consumers can access.  However, there is limited rigorous evidence on the structure and operation of the distribution chain for antimalarial drugs that serves the retail sector. The ACTwatch Supply Chain Study, one of the ACTwatch project components, aims to address this gap by conducting quantitative and qualitative studies on distribution chains for antimalarials in the ACTwatch countries (Cambodia, Benin, the Democratic Republic of Congo, Madagascar, Nigeria, Uganda and Zambia).   This report presents the results from qualitative interviews with antimalarial drug wholesalers, retailers and other key stakeholders conducted in Cambodia between April and November 2009. A summary of the key findings is given below.  To provide a complete description of the supply chain for antimalarial drugs, this report should be read in conjunction with the report on the results of the structured supply chain survey also conducted as part of this study [1], available at www.actwatch.info. • As the bulk of antimalarial treatment is manufactured outside of the country, pharmaceutical importers, including PSI/Cambodia, constitute a critical component of Cambodia’s private sector distribution chain for antimalarials by ensuring a regular national supply of antimalarials and also by facilitating their distribution throughout the country. Non‐importing wholesalers also play a role in distributing antimalarials, particularly to more remote areas and to retail outlet types not targeted by importers, including more informal types such as drug shops, grocery stores, etc.   • The degree of competition varied by level in the distribution chain: at import level, competition was restrained by sole distributor and like agreements between foreign manufacturers and domestic importers, and also by a number of barriers to entry, including the costs of importing, the limited size of the overall market and lack of access to capital. Competition was less restrained at lower levels of the chain where the key barrier in theory to market entry was the difficulty of securing a license to operate, though many believed it was a barrier easily circumvented. • Commodities for malaria treatment, including ACTs and RDTs, were perceived to be generally available in the private sector distribution chain; however, availability of ACTs and RDTs at lower levels of the chain was poorer. At both wholesale and retail levels, stocking decisions were driven by perceived drug quality, which was in turn affected by factors such as media promotion and social marketing targeting wholesalers, retailers and consumers, as in the case of Malarine (the ACT brand socially marketed by PSI/Cambodia). However, supplier stock outs of Malarine combined with its perceived side effects led some providers to continue stocking alternatives treatments, including artemisinin monotherapies, even though they were aware that sales of such products were prohibited.   • Most wholesalers and retailers purchased new stock from either one or two suppliers. When choosing a supplier, factors considered were supplier selling prices, availability of delivery services, and perceived knowledge/expertise of the supplier in the treatment of malaria. Offering credit facilities was also cited as a strategy to attract custom, but access to supplier credit was perceived to be restricted to customers known to suppliers. 2 • Retailers and wholesalers had similar price setting behaviours. Providers reported setting their price on the basis of antimalarial purchase price and their price mark‐ups on the basis of transport costs. At the top of the chain, importers considered a broader range of costs when setting prices, including overhead and promotion costs among others. In addition, most providers admitted seeking profits, although many argued that their pricing decision was constrained by the price set by other shops. Second and third‐ degree price discrimination strategies were commonly reported by both retailers and wholesalers who varied prices on the basis of volume purchased and customer characteristics. • Retailers employed a wide range of tactics to gain competitive advantage over other businesses, attract consumers and generate demand. A retailer’s reputation for delivering high quality treatment, reflected in their length of operation in a market, positive consumer experiences, and through the provision of ‘cocktail’ therapies, was viewed as crucial to achieving this; however, providing added value services, such as of blood diagnostic testing, was not. Nevertheless, RDTs were available from many outlets and were perceived to be easy to use, although less precise than microscopy for confirming malaria infection.