Antecedents to buyer-supplier coordination in the pharmaceutical supply chain

Purpose: The purpose of this study is to understand the antecedents that influence supply chain coordination in the pharmaceutical supply chain using the transaction cost analysis framework. Design/methodology/approach: Data from 156 retail pharmacies on their relationship with the pharmaceutical wholesalers are used to test the hypotheses. Findings: The findings of this paper show the importance of antecedents that are based on the transactional cost theory, such as asset specificity and environmental uncertainty. These antecedents impact the supply chain process coordination at different levels – transactional, operational and strategic. Research limitations/implications: Future research may investigate additional antecedents using other theoretical lenses. Practical implications: Pharmaceutical wholesalers are dependent on pharmaceutical manufacturers for the supply of products and face intense competition that results in lower profit margins. Given that the pharmaceutical industry is strictly regulated, the wholesaler facilitates regulatory compliance of the manufacturers in the distribution process by coordinating with them. But the wholesalers do also face a constant threat from the manufacturers, who could potentially bypass the wholesalers (disintermediation) and go directly to the pharmacies. To counterbalance the dependence, the wholesalers strive to achieve loyalty with the retail pharmacies. Through supply chain coordination, the wholesalers achieve efficiency in procurement for the pharmacies, thus reducing cost and improving their competitive advantage. Social implications: Supply chain coordination in the pharmaceutical supply chain improves the safety and security of the pharmaceutical distribution system. Originality/value: This paper contributes to the supply chain coordination stream of literature. To the best of the authors’ knowledge, this is the first study to develop the three levels of process coordination in the pharmaceutical supply chain context. This paper shows how process coordination can be achieved between the dyad without vertical integration.