Pharmacy

A large part of the task of supply chain mangers and logistics companies is to shoulder the responsibility of ensuring patient safety along with doctors. If the drug is not supplied at the right time and in right condition then health of the patients will be affected. The Supply Chain Management (SCM) companies need smooth functioning and certain roadblocks need to be overcome to achieve patient safety and satisfaction.

Titash Roy Choudhury

The   Indian   pharmaceutical market is expected to reach $20 billion by 2015, growing at a compound annual growth rate (CAGR) of 11.7 per cent during 2005-2015 and establish its presence among the world's leading 10 markets, according to a report by Ernst & Young. "It is one of the fastest growing sectors in India currently," states Prakash Rochlani, Vice President - Business Development, SSEA, DHL Supply Chain. But the most interesting part of this growth is that it is coming from various strata of the economy, especially from the rural sector. "Rural penetration of Indian pharma companies is one of the factors behind the growth of this sector," feels Krishna Parab, Director - Supply Chain, Sanofi India. And SCM plays a crucial role in supplementing this growth and supporting these changes in the pharma market. Along with supporting such changes as rural penetration and pushing the pharma sector for higher growth, SCM also ensures the availability and accessibility of the drug at the right place and on right time, thereby ensuring maintenance of the health of the patients and securing their well- being. The drug being manufactured a  the manufacturing unit after sourcing of the raw materials has to be transported and produced to the end customer at the right time, in right quantity and the best quality. A slack in any of these processes may affect the health of the patient - the end users. Currently, in the Indian pharma sector there are certain roadblocks that are hampering the smooth functioning of the supply chain and it is by overcoming these hurdles that SCM can look into providing better patient safety. Hence, utmost care has to be taken by pharma companies by implementing an effective supply chain.

Slow technology integration, lack of communication or interaction between the pharma companies and distributors, infrastructural inadequacies, etc, are some of the constraints for this sector.

From start to end: The flow

The supply chain begins with sourcing of raw materials and transferring them to the manufacturing units. Once the product is manufactured and packaged, it is transferred to the central hub from where it is moved to the mother warehouse. Finally, from the mother warehouse the products are sent to Carrying and Forwarding (CNF) agents. "Sanofi has its mother warehouse at Mumbai since most of its manufacturing units are around this city. All major pharma companies have a mother warehouse where all the products are stored before outsourcing them to CNF agents," informs Parab. The CNF agents then store the finished goods on behalf of the company and receives orders from the distributors or stockist corresponding to which they deliver the goods to the distributors. Pharma companies usually outsource this activity to companies like Safe Express or DHL and these companies look into the distribution of the drug to the distributor. But the problem starts after "the pharmaceuticals reach the distributors where there is a major communication gap.

Ensuring patient safety

Patient safety can be ensured by ensuring product integrity. "Patient safety is traceable to all key activities in the supply chain, sourcing, procurement, manufacturing    and    distribution," comments S   Sridharan, Managing Director, TAKE Solutions. Ensuring patient safety is one of the indirect responsibilities of supply chain in the pharma sector since the health of a patient is directly related not only to the availability of the drugs but also to the drug being present in the required quantity and correct condition. The best way to be prepared for any kind of medical emergency is by having an efficient supply chain that would make the drug available in the market in no time and with proper care. The unavailability of any drug, which we face sometimes, may lead to dangerous and cumbersome situations for the patients. And to take care of such an imperative responsibility, the supply chain managers in the pharma sector have to keep certain factors in mind that would help them execute their responsibility of delivering the drugs smoothly.

Time is a crucial factor and special attention has to be provided to it. Even after proper technological advancement,

if the product fails to reach the destination on time it loses its efficacy. "At Sanofi, whenever we send cold chain products, we always transfer it by au- to minimize the time required. If our products do not reach the destination on time we destroy the products," informs Parab.

Healthcare is a sensitive sector and special attention should be given to each process as it can directly affect the patients. Also when we talk about healthcare, we also take into account the delivery of drugs or medicines to the patients since without it the process of recovery will not begin. To ensure that the drugs are reaching the end consumers it is the supply chain companies that come into play. They form an integral part of the healthcare industry, which will cease to perform if the medical products are not properly transported from the manufacturing unit to the patients. And to achieve that, keeping a huge inventory is the only option. "For any industry, maintaining adequate inventory is must, but when it comes to healthcare inventory management becomes extra crucial and hyper critical," explains Rajkiran Kanagala, Head - Business Development, TCI Supply Chain Solutions. Like if there is an emergency of any particular drug, the company should be ready with back-up drugs and should maintain a proper inventory. "But the Indian pharmaceutical supply chain is unorganized and fragmented resulting in bad inventory planning. There is never 100 per cent inventory planning, instead most of the Indian companies keep buffer stock, which at the end of the year has to be destroyed, causing both environmental and moneurv damage," sighs Rochlani. So  proper inventory management has to be achieved for providing product integrity,  ensuring patient safety.

Proper processes also need to be implemented   for   maintaining   the conditions under which the drugs are stored and transported. Storage and transportation of drugs is an extremely sensitive   aspect of pharmaceutical supply chain. Different drugs have different storage requirements that have to be looked into by the supply chain department. Like cold chain drugs require a certain temperature at which it should be stored and also transported so that the quality of the drug is not altered. "While all other activities now conform to pharmaceutical good practice guidelines, the element of warehousing, transportation and distribution is perhaps one of the 'weak links' in the supply chain. Successful companies therefore employ qualified logistics service providers and closely monitor these activities through use of IT," comments Sridharan.

Prakash Rochlani

Vice President - Business Development, SSEA, DHL Supply Chain

The gap in the chain

This flow of pharmaceuticals from the source to the end user needs to be uninterrupted and cohesive, but in India with a highly fragmented and unorganized distribution system, maintenance of a proper flow is hindered. There are almost six lakh companies under this domain and maintaining a proper organized retailing in such a fragmented situation is not possible. And to make the Situation worse, the drug manufacturing companies have no direct control on the distribution of the drug from the distributors to the retailers or pharmacists. "We do not have any direct control on the distribution of  

Krishna Parab

Director - Supply Chain, Sanofi India

the drugs once: it reaches the distributors. But indirectly few pharma companies are trying to make the distribution system better. Like Sanofi is training the distributors in proper handling of the drugs and looking into their proper transportation," says Parab. For MNCs like Sanofi or other companies such indirect control can be one of the options but for small generic drug making companies in India such options are not viable. They do not have the money to invest in such training and so have no option but to leave the distribution in the hands of the distributors.

Although there is an act under the Indian Constitution, Drugs and Cosmetics Act, 1940, which has underlined the rules and regulations that each retailer and distributor has to follow, in such a highly fragmented industry there is hardly any monitoring done to check if they are adhered to. In such a situation, direct control on the distribution of their product from the distributor to the pharmacists or retailers by the pharma or logistics company will bring more transparency as it will ensure that their drugs reached the doctors or retailers at the right time, quantity and condition making the Indian pharma sector more efficient and reap more benefits.

To achieve this, first, the distribution system in relation to pharmaceuticals needs should be organized and brought under a proper domain, and then rules should be developed that gives pharma companies the authority to regulate the distribution pattern of their drugs till it reaches the retailers. "The distribution pattern is unorganized and fragmented and there is no proper visibility. Even the trading community needs to be aligned which will help in adding value to the supply chain in pharma sector, "adds Parab.

"This has been a major hurdle for years and government intervention may help to solve this problem. If there are regulations put down by the government then this gap can be bridged in a systematic manner and will prove beneficial for both the pharma companies as well the logistics companies," opines Kanagala. Once this glaring gap is shortened the supply chain will become more effective, its functioning will improve as communication between the producers and the distributors will be improved and this will at the end ensure that the right drug has reached the right person in the right quantity and quality. It is only when the government will use an upper hand on this problem that we will see drugs being delivered on time and in required quantity, which subsequently will reach the patients in right dosage and right condition, ensuring their good health and avoiding any health risks. Role of technology To ensure proper supply of the products on time and in proper condition technology and communication are two factors a pharma company has to look into. As for communication, all the stakeholders in the supply chain are in touch with each other. "There is proper communication happening in India in context of the supply chain of the pharmaceutical sector," avers Parab. But one part that needs more attention and changes is the technology side. "When compared to other sectors in India, pharmaceuticals look the most primitive and as for supply chain management India is still relying on traditional models," informs Rochlani Indian pharma companies still rely on Enterprise Resource Planning (ERPs) and old software. And it is in this aspect that the supply chain in Indian pharma is lagging behind when compared with its international counterparts. When we look at countries like the US, Europe and their processes, we see a proper amalgamation of the latest technology, which increases the efficiency and makes the process more transparent. But in India, and especially in the pharmaceutical sector technology, penetration has not been deep enough. With several vendors in the game and mostly unorganized, proper technology is required for tacking the position of the drug. Most of the drug companies in India still do not have fully integrated upgraded software such as Track and Trace system or Radio Frequency Identification (RFID) to monitor the total visibility of the position of the product.

Usage of RFID will be limited in India considering its high price tag, but as for track and trace system Rochlani predicts, "Looking at the kind of growth this sector is registering, this technology will be adopted in the next 12 to 24 months". DHL is importing technology from Australia. It is using a technology where the entire process of tracking the drug can be done from the manufacturing stage to supplying it to the distributors till it reaches the pharmacists

or retailers. Thus, DHL is taking steps to bridge the communication gap between the manufacturing or production side and the distribution side. And more such steps need to be taken if the scenario needs to improve.

 S Sridharan

Managing Director, TAKE Solutions

"Manufacturers,    logistic    service providers and regulatory bodies will have to drive the adoption of better technologies in pharma sector. Indian pharmaceutical sector is still slow while responding to new changes be it technological or otherwise and is highly reliant on traditional models," avers Kanagala.

Logistics companies like transport providers have started using Globa Positioning Systems (GPS), but when compared with the technology used worldwide in SCM in the pharma sector, India has a long way to go.

Infrastructural limitations to overcome

Inadequacy of infrastructure is another hurdle to the proper functioning of the supply chain in pharma. Proper infrastructure is essential for the proper transportation and storage of the drugs, and if the standards are not maintained then it will affect the supply chain and in turn affect the patient's need for the medicines and other medical products. "Ensuring that the goods reach on time is essential when it comes to pharmaceuticals but considering the condition of roads in India, the present scenario is grim. There are too many transit points that lengthen the total time taken making the process cumbersome," avers Parab. Yet significant progress is happening on that front and government is taking initiative to better the present conditions. But it is the infrastructure of the warehouses that   requires   immediate   attention. "When we talk about the infrastructure of the warehouses then almost 9 out of10 warehouses will not qualify outside India as a pharma regulated centre," states Rochlani. According to Kanagala, the reason behind the sub-standard condition of the warehouses in this sector is lack of awareness, "The pharmaceutical sector should see what is happening in the other verticals and how they are benefitting. This sector needs to be more open-minded and adopt the best practices in the industry."

Warehouse is where a drug stays for the maximum period of time like two to three weeks. And it is at this place that more development is required. "The top growing Sector in India under DHL is the pharma sector and to maintain this growth trajectory the current infrastructure of the warehouses needs to be improved. DHL is trying to change this scenario by developing distribution points all over the country and building proper warehouses for proper storage of drugs," informs Rochlani.

Quick Picks

Proper infrastructure is essential for the proper transportation and storage of the drugs, and if the standards are not maintained then it will affect the supply chain and in turn affect the patient's need for the medicines and other medical products.    

The legal aspect

The pharma industry has Acts like the Drugs and Cosmetics Act, Drug Price Control Order, to control the drug prices and make it available to the masses. Also, the government tries to keep a check on the agents so that they pay the required taxes. However, the situation that is hampering the supply chain of pharma sector is the fact that in India each state has a different Value Added Tax (VAT} rate. So inter-state sale is not permitted, and with the introduction of the  Goods and Service-s Tax (GST) this scenario may change. This law will encompass all the taxes be it excise duty, VAT, sales tax and integrate them into one single tax. "This Will increase the transparency of the processes and will also permit inter-state sales," comments Parab. The Government of India should also introduce bar coding system for further efficiency and precision.

"There are many price regulations that are being implemented but we think more regulations are required to improve the quality aspect of the supply chain. The process at present is rigid, for example, I can increase my distributors list to any number but when it comes to reducing my distributors list it gets complicated," avers Rochlani.

And if the following recommendations are adhered to then it will lead to lesser hurdles in the process amounting to better flow of the drugs. Be it price regulations or the taxes, the supply chain needs to be made flexible and well-connected and by bringing forth the changes suggested the connectivity can be improved.

Future prospects

DHL has registered 40 to 50 per cent growth year on year in the supply chain department of the pharma sector. "And we believe that this double-digit growth will continue for the next two to three years since Indian pharmaceutical sector has phenomenal potential," predicts Rochlani. More investments and competitors are required in this section for registering even better grout. "The   least acceptance of the best practices takes place in the pharmaceutical sector and this attitude needs to be changed need believes Kanagala. Positive changes need to be brought about from the government's end and the industry side and new developments have to be incorporated. Patient safety is the end goal for all the stakeholders involved in the SCM of pharmaceuticals and to achieve this, the sector needs to be transparent, better organized and  open to changtes

Rajkiran kangala

Head- business development, tcl supply chaina solution