[#306-Appendix] US Pharma Direct-to-Consumer Order Volume Estimation

Welcome to “Supply Chain in Numbers”. This newsletter tracks significant numbers from the supply chain world. Primarily, this newsletter publishes five prominent numbers every Monday. In this “Appendix” post (published on Thursday), one of the numbers from the week is used to illustrate more interesting points.

In this week’s Supply Chain in Numbers newsletter, I covered this announcement from Cardinal Health:

230,000 sqft pharma DC

Cardinal Health is constructing a flagship pharmaceutical distribution center in Indianapolis to meet the growing demands of its customer base and the evolving needs of pharmaceutical companies. The planned 230,000 square-foot plant is the healthcare company’s latest step in a 10-year plan to modernize and expand its distribution network. Pharmaceutical distribution remains Cardinal’s most lucrative business, and it is continuing to gain customers. Cardinal is aiming to enhance the efficiency and versatility of its pharmaceutical and specialty distribution business, which handles more than 70,000 drug deliveries daily. Drug companies require more specialized storage and shipping services from companies like Cardinal, as they increasingly sell complex drugs, such as cell and gene therapies. [WSJ]

It is hard not to connect this news with frenzied Direct-to-Consumer (DTC) announcements from many big pharma companies in the US. It would then be fair to say that Cardinal is expecting its volume to increase, and hence, they have announced a new DC. However, in reality, Cardinal would have begun working on this business case long before any of these announcements from pharmaceutical companies.

Regardless of whether a connection exists or not, I wondered if these DTC announcements would create a supply-demand imbalance for 3PL capacity. Especially in the short term (i.e., next 6 to 8 months). That is the main idea behind this post—my attempt to estimate DTC order volume from all the pharma DTC announcements. The 3PL capacity bottleneck is often in the number of orders per day.

My first step was to examine nine pharmaceutical companies with an active DTC channel or one that was about to be launched soon. Each of the announcements has included which drugs will be offered via this channel. Using different publicly available sources (thanks to Perplexity Deep Research mode), here are estimates based on total US patient populations, typical dosing schedules, public prescription data, and DTC penetration rates, which typically range from 5% to 20%, depending on the drug and indication. These penetration rates may increase over time if ...