Why life science brands don’t see their sell-out data – and what that costs

The distribution model: necessary evil or data blockade?

For midsize life science companies, working through distributors is often the only viable route to market. With thousands of pharmacies, drugstore chains and retail partners, direct delivery is logistically and financially unfeasible. Distributors serve more than 5,000 pharmacies in the Benelux – a network that no midsize manufacturer can maintain on its own.

But this efficiency comes at a price: data loss.

The black box between producer and consumer

Once a pallet of supplements, personal care products or OTC drugs leaves the manufacturer’s warehouse, it disappears into what we call “the distribution gap. Producers see only:

• Sell-in data: what distributors order
• Stock levels: at the distributor (if you are lucky)
• Returns: what comes back

What they don’t see:

• Which pharmacy or drugstore will purchase the product
• When products go over the counter
• Which channel (pharmacy vs. Medimarket vs. …) performs best
• Whether promotions lead to new customers or just stock building

A practical example: the 3+1 illusion

Take a typical trade promotion: a 3+1 promotion on a vitamin D supplement at a major drugstore chain. The sell-in numbers look great – the wholesaler orders 300% more than usual. Success, right?

Not necessarily. What often happens:

1. Drugstore builds inventory (forward buying)
2. Loyal customers strike for 6 months
3. New customers? Hardly
4. The months after: sell-in figures plummet

Without sell-out data, the producer does not know until months later that the promotion was mostly cannibalizing. Meanwhile, the trade marketing budget has already been spent on the next “successful” promotion.

The hidden costs of data blindness

1. Wrong channel investment
For years, a health product manufacturer divided its promotional budget equally between pharmacies and drugstores. Only when they finally received sell-out data did they see that pharmacies in a particular region were generating three times more sales per product. The insights came too late: years of underinvestment in the best-performing channel, meanwhile, had left much potential untapped.

2. Promotion Inflation
Without insight into actual sales, promotions become an arms race. Companies offer deeper and deeper discounts to meet sell-in targets while consumer demand barely grows. Margins erode, but no one dares to stop.

3. Stock chaos in the supply chain
Distributors and retailers speculate on promotions, leading to:

• Overstocks disposed of at dumping prices
• Out-of-stocks at crucial moments
• Disrupted demand patterns that make forecasting impossible

4. Frustrated Sales & Marketing teams
Sales celebrates successes based on sell-in, Marketing claims profits based on market share figures from IQVIA, but no one knows what is really happening. The result: teams working past each other and making decisions based on assumptions.

Why is this problem so persistent?

Technical barriers

• Distributors use different systems and data formats
• Retailers share data sporadically, often in Excel chaos
• Legacy ERP systems cannot process external data

Commercial reality

• Distributors see data as power tool
• Retailers demand payment for checkout data
• Smaller producers have no bargaining power

Organizational challenges

• No dedicated data team at midsize companies
• IT priority is on operational systems
• Business teams lack technical skills for data integration

The impact

Research among life science companies shows that lack of sell-out visibility can lead to well:

• 15-20% suboptimal trade spend allocation
• 10-15% missed revenue opportunities due to wrong channel focus
• 5-10% higher inventory costs in the chain

For a company with €100 million in sales, this quickly means €5 million in lost value. Annually.

It only gets worse

With the rise of e-commerce, subscription models and direct-to-consumer channels, the distribution landscape is only getting more complex. Consumers expect seamless experiences across channels. But how do you drive an omnichannel strategy if you don’t even know what’s happening in your key channels?

Pharma companies that fail to close this data gap risk:

• Market share loss to digitally-savvy competitors
• Unsustainable promotional pressure from retailers
• Further margin erosion

Gone are the days when you could drive sell-in alone. The question is not whether you need sell-out visibility, but how quickly you can achieve it before the competition catches up.