logistics & supply chain issues in pharmaceutical company

Logistics & Supply Chain Issues in Pharmaceutical Company

The pharmaceutical Industry

• The pharmaceutical market will reach nearly USD 1,100 billion by 2015

• The research-based pharmaceutical industry currently spends over USD 100 billion (EUR 75 billion) on R&D

• Indian pharmaceutical industry ranks 4th in the world in terms of production volume and 13th in domestic consumption value

Significance of logistics in pharmaceutical companies

Need to study issues & challenges To meet customer service improvement & cost reduction It is highly crucial as it is time-sensitive Excellent supply chain management can yield: 25-50% reduction in total supply chain costs 25-60% reduction in inventory holding 25-80% increase in forecast accuracy 30-50% improvement in order-fulfilment cycle time 20% increase in after-tax free cash flows

Introduction

Issues & Challenges

Managing Pharmaceuticals Managing perishable products Degradation of the medicines as they move along the supply

chain which results in allowing substandard products to be dispensed to the patients

Maintaining temperature control Typically more focus is given on R&D Manufacturers can’t have control once Pharmaceuticals are

docked to wholesalers Shipping of expiry products

Issues & Challenges

Crisis Management In case of an epidemic break-out, global demand for certain

medicines overshoots the demand suddenly. Product withdrawal during sales due to side-effects and expiry

Issues & Challenges

Little Incentive for Reducing Inventory Ethical requirement of providing medicines Out of stock situations are unacceptable & patent lifespan is

low Exceptionally long cycle times and lots of inventory

Counterfeit Drugs and Security High price of drugs worldwide Easy to fake prescription drug labeling

Issues & Challenges

Outdated Manufacturing Sites Reluctant Govt. bodies to approve any changes fearing

product quality

Parallel Trade Cross trading across the borders Black market transactions in developing nations No track of drugs coming in & going out of the country

Issues & Challenges

Complex Network Design Controlling wide supply chain with huge Stock Keeping Units

becomes very difficult Reducing finished goods is difficult Training & education cost to the stakeholders is high Integration of domestic and international businesses. Eg :

Nicholas Piramal India Limited Bringing a consensus in manufacturing, sales, marketing, and

distribution department to agree on a forecast

Conclusion

Logistics has emerged as an important element in the pharmaceutical industry as it becomes a greater percentage of total costs

Unlike other sectors, value-chain perspective of managing process innovation through capacity and production planning is equally important

Emerging technologies like RFID can mitigate many of these logistics issues