Indian pharma industry changing dynamics_Essay by Ellakkiya

Out line

ü  Introduction

ü  Key growth drives

ü  Healthcare supply chain

ü  Integrated supply chain in healthcare

ü  Best practise of health care supply chain

ü  Product selection and qualification

ü  On time and accurate ordering and reporting

ü  Promoting data utilisation through

ü  A five step plan

ü  Internal factor

ü  External factor

ü  Proposed solution-supply chine integration

ü  Conclusion

Introduction

Ø  A fact the people, technology, activities, information and resources that have to come together to ensure the delivery of the product from the point where it is manufactured to the end point in a cost effective way.

Ø  It not only delivers medicines and health product to the population, they also return critical information recording need, demand and consumption to health system planner

Ø  The Indian Pharmaceutical Industry, sized at USD 34 billion (including exports) in 2013-14, has remained on a strong growth trajectory, over the past few years. The industry size is expected to increase to USD 48 billion by rd th 2017-18 at a CAGR of 14%.

Ø   Indian Pharma industry is ranked 3 globally in terms of volume and 10 in terms of value, supplying 10 % of global production. Of the USD 34 billion market, the domestic formulations market is about USD 10.9 billion (or INR 660.7 billion) and constituted around 1.1% of the global pharmaceutical market in value terms.

Ø  This is because of lower drug prices and lesser penetration of healthcare, vis-a-vis developed markets, such as US and Europe. India spends only 3.5 - 4% of its total gross domestic product (GDP) on healthcare and hence, ranks amongst the lowest in this respect, globally. In contrast, developed countries spend about 10-13% of their GDP on healthcare. The Indian Pharmaceutical Industry is highly fragmented with about 15,000 players, mostly in the unorganized sector.

Ø   Out of these, about 300 - 400 are classified as belonging to medium & large organized sector. However, organised players dominate the formulations market, in terms of sales.

Ø  In 2013-14, the top 10 formulations companies accounted for 42.3% of total formulation sales. MNC pharmaceutical companies have steadily gained a foothold in the Indian formulations market. As of March 2014, they enjoyed a market share of 20- 24%.

Ø  The key drivers are majorly knowledge, skills, low production costs, and quality. Due to this there is demand from both domestic as well as international markets.

Key Growth Drivers

Ø  Indian Biotechnology The global biotechnology industry is undergoing a transformation, thereby creating enabling factors that can lead to the growth of the Indian Biotech Industry.

Ø   Increasing cost of bringing a new drug to the market: India can play a key role in reducing cost and time to market for new drug development through outsourcing of various components of the drug ü development process.

Ø  Top pharma companies spend a large part of their research for in licensing new modules: There is an opportunity for R&D focused Indian biotech companies to enter into such alliances through collaborative development projects.

Ø   Inflammatory & Infectious disease segment high on agenda: In the Indian context these are the two of the strongest disease segments with a huge domestic market.

Ø   Early stage deals are more common compared to the middle and late stage deals: Indian companies with limited financial resources can optimize business models by partnering with larger companies for product development and licensing at an early stage

Healthcare supply chain

Ø  The main purpose of the healthcare supply chain is to deliver the product in a timely order to fulfil the needs of providers. The role of producers is to manufacture medical products such as surgical suppliers, medical devices and pharmaceutical.

Ø  In the past hospitals that manage its purchasing costs well could operate efficiently. Today the cost of materials management can exceed 45%of a hospitals operating budget, with nearly 30-35% attributable to supply costs done.

Ø  The application of supply chain management practice in the health care actor not only related to physical goods like drugs, pharmaceuticals, medical devices and health aids but also to the flow of patients.

Integrated supply chain in health care 

Ø  In hospitals, integrated supply chain strategy should be constant to minimize patient care.  The hospital supply chain enable to strategy by ensuring product availability.

Ø  Minimizing storage space, maximizing patient care space. Reducing material handling    time and cost for all medical staff minimizing inventory. Hospital supply chain has to ensure proper linkages to clinical systems revenue cycle. IT and clinical operation. The supply chain often is viewed as “back dock” support services that provide the products and services requiring the clinical departments. To be fully effective it must be an integrated link in the chain of clinical and non clinical operations

Ø  Health supply chain can be characterised by different mode of integrations

Ø  It characterised by different mode of action

ü  Integration and co ordination of process

ü  Integration and co ordination of information flows

ü  Integration and co ordination of planning process

ü  Integration of intra and intra organisational processes

ü  Integration of market approach

ü  Integration of market development

Ø  The application of supply chain management practices in healthcare setting is almost by definition related to organizational aspects like building relationships, allocating authorities and responsibilities, and organizing interface processes.

Ø  Different studies have highlighted the importance of organizational process when applying supply chain management practices.

Ø  Recent studies reveal that elements like organizational culture, the absence of strong leadership and mandating authority, as well as power and inter relationships between stakeholders might severely hinder the integration and co ordination of processes along the health care supply chain.

Ø  Healthcare supply chain integration is not only related to the integration and co ordination of planning processes but this can also be linked to joint “market development” and offering new “care products”.

Ø  Product co development is a recognized phenomenon in the field of supply chain management and within industrial supply chains many joint efforts are made to develop new product across suppliers, customers and organizational units.

Ø  The supply chain orientation within the health care sector can be regarded as complex social change process.

Best practices of healthcare supply chain

Ø  It summarized in the following table:

Table 1: Best practices of healthcare supply chain

Product selection and qualification

Ø  USAID/SUSTAIN works with selected hospitals to ensure appropriate product selection and supply by:

ü  Establishing hospital medicine and therapeutic commodities to develop and product lists for each hospital

ü  Promoting and building capacity for effective use of dispensing and product usage logs to accurately qualify needs.

On time and Accurate ordering and Reporting

Ø  Simple low cost interventions to improve ordering and reporting rates allow hospitals to optimally leverage commodities and supplies available through the national system.

Ø  There intervention include

ü  Identifying focal persons responsible for submitting there orders

ü  Developing order checklist to coordinate submission of reports for HIV-related and general commodities

ü  Sending mobile phone text message remainders to respective alcohol order focal persons one week before order deadlines.

ü  Providing hospital-based coaching and training in logistics/commodity management, good storage practices and quality improvement.

Promoting data utilisation through:

Ø  Activities for improving hospital storage management practise include:

ü  Supporting the MOH directive for coordinating supply chain management for anti retroviral drugs, in collaboration with the president’s Emergency plan for AIDS Relief [PEPFAR] and the global fund

ü  Collaborating with NMS to obtain feedback on timelines and order accuracy

ü  Reporting improvement efforts at SUSTAIN project supported hospitals

ü  Supervising and assessing permanence through support supervising exercises conducted by MOH Regional pharmacists and medicines Management Supervisors, using the routine storage management monitoring tool and developing improvement plans with hospital teams

ü  Building competencies among storage and pharmacy personnel for logistics and for stock information management systems

ü  Collaborating with NMS to provide storage personnel with practical training  in good storage practices.

A five –step plan

v  Better segmentation of products, markets, and customers

v  Greater agility, to reduce costs and increase flexibility

v  Measurement and benchmarking

v  Alignment with global standards

v  Collaboration across the health-care value chain

Internal factors

      Segmentation

Ø  Many pharmaceutical and medical device companies come close to running one-size-fits- all supply chains. They develop forecasting, production and distribution strategies for each category.

      Agility

Ø   More than just being fast when there’s an emergency; it mean building an         operating model that can better respond to demand shifts and customer wishes –at the same or even reduced cost.

Ø  An agile supply chain model also requires stability in production, replenishment, a d visibility. Many health care companies need to make deliveries from third parties and in house plants more reliable and to upgrade their sales-and operations-planning capabilities to the standards of the fast-moving-consumer-goods industry.

      Measurement

Ø  Healthcare companies need to increase the transparency of there costs, including manufacturing, transport, warehousing, inventory holding, staff, and obsolescence-moves that could cut operational costs and optimize route-to market approaches and product portfolios.

Ø  Commercially available benchmarking tools and approaches provide rough guidance for high-level opportunities in services, costs, and inventories, but not fully comparable results or tangible recommendations on how to capture value.

 External factor

Ø  While internal optimization can deliver better service at lower cost, companies have even more to gain from optimizing externally. To do so, they must align processes and improve collaboration.

 Alignment

Ø  Manufacture of fast moving consumer goods use point-of-sale information from retail consumers to build production plans.

Ø  May increase efficiency and patient safety by making it harder for counterfeiters to operate, by reducing medication errors, and by improving recall processes.

      Collaboration

Ø  While the use of common standards is a part of the challenge, supply chain partners must find ways to collaborate more effectively to reap the full benefit. Barriers  to improvement are often cultural rather than technical- transactional relationships must be transformed into something more ambitious.

Proposed solution- supply chain integration

Ø  In hospitals, the supply chain strategy should be to maximize patient care. The hospitals supply chain enables this strategy by:

v  Ensuring product availability

v  Minimizing storage space

v  Maximizing patient care space

v  Reduced material handling time and costs for all medical staff [nurses, pharmacists, doctors]

v  Minimizing non-liquid assets [inventory].

Conclusions

Ø  Today, healthcare provides are under enormous pressure due to increasing competition, government regulation, rising costs, demand for higher quality of service

Ø  .Undoubtedly, healthcare becomes tremendously complex as a business activity to manage diversified locations, changing organizational structures, mergers, employees, and multiple information system chain by monitoring supply chain performance.

Ø  The latest innovation in RFID technology, supply utilisation management and virtually centralized supply chain management holds the key as the future. Looking to the future, supply utilisations to dig deeper and more broadly into there supply chain expenses to harvest new and even better supply savings.

Ø  Exploiting the power of RFID technology is not simply about replacing bar codes with tags. The specific benefits that RFID tags offer over bar codes present an entirely new way of working in the competitive business environment.

Ø  To summarize: the health care industry is highly interdependent and only one part can’t attain efficiency leaving behind others. That is the reason why strategy such as virtual centralization is proving to be popular and successful.

Ø  That is not the end of the road, the industry has to look forward to each and every minute development in the supply chain of related industries to reap the benefit of being alert and quick to adapt to.