Ordering direct from the manufacturer: reading the terms with a calculator: Minimum order, volume discount and payment terms: when it really pays

What it is

Besides the wholesaler, some products are bought directly from the manufacturer or its distributor: health products, dermocosmetics, own-label ranges, some over-the-counter medicines. The terms usually include a minimum order, a discount (sometimes by volume or range), payment dates and sometimes gifts or free units.

The sales rep presents the whole as an offer. What you have to do is turn it into a calculation: how much you have to buy, how much you sell per month, how long it takes to sell and how much money is tied up until then.

The questions before accepting

Before signing a direct order:

HOW MUCH DO I SELL PER MONTH of this? If the minimum order equals six months of sales, it is not an offer: it is tying up money.
WHEN DOES IT EXPIRE? A product that expires in nine months with twelve months of sales does not pay, however big the discount.
WHAT IS THE REAL DISCOUNT? Free units and discounts are turned into a percentage of the cost and compared with the wholesaler’s.
WHEN DO I PAY? At thirty days, the money works. Paid up front with goods sitting, it does not.
CAN I RETURN what does not sell? If not, the risk is mine and the discount has to pay for it.

At the counter

When to recommend it

Order direct what turns over well and does not expire soon
Negotiate the minimum, not only the discount
Ask for payment terms and the option to return what does not sell
Group orders of the same range to reach the minimum without forcing it

When not to

Accept a volume covering more than a few months of sales
Buy for the bonus on a product you do not sell
Treat a verbal condition as settled: ask for it in writing
Tie the purchase to a personal gift: commercial terms belong to the pharmacy, not to whoever takes the call

What to say at the counter. A great discount on a product that does not sell is a bad purchase. The best offer is the one that lets you order exactly what you sell, at a slightly lower cost.

Warnings

Important Commercial terms for reimbursed medicines are limited by law: do not expect (or accept) discounts or bonuses beyond what the current framework allows. Check with your professional body or adviser.
Caution Free units expire too: they arrive with their date and count as part of the stock.
Worth knowing The numbers in the example of the promotions pill are invented to teach the sums; they are not real terms from any manufacturer.

The sums, step by step

Note the unit cost with the discount and the free units (total cost ÷ total units).
Compare it with the unit cost through the usual channel.
Work out how many months of sales the order covers (units ÷ monthly sales).
Subtract the agreed payment time and value the money tied up for that time.
Decide with the three numbers in view: saving per unit, months of stock and expiry risk.

Wholesaler versus manufacturer direct

Aspect	Wholesaler	Manufacturer direct
Delivery	Several times a day	Days
Minimum quantity	None or very low	Minimum order
Discount	Standard and stable	Variable, negotiable
Risk of idle stock	Low	Higher if ordered by volume
Where it fits	What turns over every day	Specific ranges with clear sales

Direct is neither better nor worse: it is another channel with another risk. Use it where the sums work.

Self-assessment

Three questions. When you check your answers you will see the explanation for each one.

A minimum order covers six months of sales. What is it? A good buy because it has a discount A problem only if the product is expensive Tied-up money, not an offer
How are the free units in an order treated? As part of the stock, with their expiry Thrown away if they do not sell soon, uncounted As a gift with no date
What do you do with a condition promised verbally? Treat it as settled Ignore it Ask for it in writing

Training content. It does not replace the summary of product characteristics or clinical judgement.

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