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Pharmaceuticals & Health Care |
Pharmaceutical companies today are aggressively launching new products frequently and expanding into new geographies globally.
Some of the key issues concerning the pharmaceutical industry supply chain are:
· New Product Development (NPD): One of the most important issues of the pharmaceutical industry globally is the time-to-market of new drugs. This can be handled by a standardized new product development process which will help reduce investment costs significantly and decrease time to market. Proper planning of the product development cycle and choosing the right kind of drugs to develop form the two most important drivers in a standardized NPD process.
· Capacity planning: The uncertainty of the clinical trial process and competitors activity brings in a lot of uncertainty in gauging the future demand for the product. Also capacity planning needs to be done at a much earlier stage compared to other industries as it takes some time for the capacity to be effective. The long cycle time to develop a product further adds to this uncertainty. This leads to a capacity planning issue.
Typically the pharmaceutical manufacturing stage works on a “push” based model, which makes the supply chain less responsive to demand changes and sometimes leads to a “bullwhip” effect. The direct effect of this is high inventory level pile-up across the chain. Secondly short term opportunities are missed.
· Network Planning: With increasing exports the length of the supply chain increases. Global supply chain increases the span of the whole chain resulting in sub-optimal decisions being taken at each of the different global nodes. This results in a lack of supply chain visibility.
Secondly, for generic drugs margins tend to be wafer thin. Firms need to rationalise their supply chain to reduce costs without affecting the customer service levels.
Above all, firms need to take strategic decisions regarding where to set up plants and warehouses in order to meet the projected demand keeping in mind various factors like
o Demand geography
o Logistics cost
o Tax structure and tax benefits
· Inventory Management: In the low margin generic drugs segment, inventory management becomes a very important aspect of the supply chain. This becomes all the more important when there are similar drugs (substitutes) in the market by competitors. The firm needs to make sure that the correct assortment of products is present at the pharmacy shelves.
There are a couple of other factors as well which needs to be considered for inventory management like expiry date of a batch, licence date and patent expiries of a product etc.
· Transportation and Logistics: This is another important area specifically in the developing countries like India. Margins are low and transportation cost is high.
Also in India there is a lack of cold chain infrastructure. There are very few cold chain logistics service providers in India and the cost is high as well. This becomes an issue since some of the pharmaceutical drugs and devices need a cold chain infrastructure for storage and transportation.
Some of the other key areas in transportation including use of RFIDs for increasing supply chain visibility and security; and use of multi-modal transport.
In order to make the best use of the available investment budgets, health care providers need to make their supply chain efficient. These inefficiencies might be a huge factor considering the scale of operations of typical health care providers. Some of the supply chain improvements needed are a Vendor Managed Inventory (VMI) System, proper disaster management (by maintaining critical safety stocks and having alternate procurement options for critical drugs), improved quality assurance for incoming products, IT investments to streamline operations (this is very important in India to offer better and faster services to customers) and effectively handling the increasing network complexities (due to tie up with clinics, offering services directly at the patient’s home etc.)
Aqua MCG, through its thought leadership and industry expertise, offers its clients customized solutions in each of these problem areas facing the pharmaceutical & health care supply chain to achieve sustained and profitable growth. |
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| Joint Opportunity Targetting & Go-to-market Plan |
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| We did a opportunity assessment, targeting, positioning, JV creation and implementation roadmap for industry specific end-to-end rail based transportation and terminal centric warehousing solutioning for the above companies. Read more about it. | |
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| Logistics and Distribution |
| The logistics network forms backbone of the supply chain connecting various functions together. Learn more about the changing role of logistics and distribution in firms today. | |
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