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CHAPTER :- 1 INTRODUCTION TO PHARMA INDUSTRY 1

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Page 1: supply chain management Project

CHAPTER:- 1

INTRODUCTION TO

PHARMA INDUSTRY

1

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INTRODUCTION

The Indian pharmaceutical industry employment for millions and ensuring that essential drugs at

affordable prices are available to the vast population of this sub- continent.”

-Richard Greater

The Indian pharmaceutical industry today

is in the front rank of India`s science-based

industries with wide ranging capabilities in the

complex field of drug manufacture and

technology, A highly organized sector. The

Indian pharma industry is estimated to be worth

$ 4.5 billion, growing at about 8 to 9 percent

annually, it ranks very high in the third world,

terms of technology, quality and range of

medicines manufacture, from simple headache pills to sophisticated antibiotics and complex cardiac

compounds, almost every type of medicine is now made indigenously, Indian parka industry plays a

key role in promoting and sustaining development in the vital field of medicine.

International companies associated with this sector have stimulated, assisted and spearheaded this

dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the

world. The Indian pharmaceutical sector is highly fragmented with more than 20.000 registered units. It

has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control

70% of the market with market leader holding nearly 7% of the market share. It is an extremely

fragmented market with severe price competition and government price control.

The pharmaceutical industry in India meets around 70% of the country`s demand for bulk drugs.

Drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectables.

There are about 250 large units and about 8000 Small scale unites, which form the core of the

pharmaceutical industry in India (including 5 central public sector units).

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These units produce the complete range of pharmaceutical formulations. i.e., medicine ready for

consumption by patients and about 350 bulk drugs i.e., chemicals having therapeutic value and use for

production of pharmaceutical formulations.

Following the de-licenses of the pharmaceutical industry. Industrial licensing for most of the drugs

pharmaceutical products have been done away manufacture are free to produce any drug duly approved

by the drug control authority technology strong and totally self –reliant. The pharmaceutical industry in

India has low cost of production. Low R&D cost. Innovative scientific manpower. Strength of national

laboratories and increasing balance of trade.

The pharmaceutical industry can be defined as complex of processes, operations and organizations

involved in the discovery. Development and manufacture of drug and medications. The world health

organization (WHO) defines a drug or pharmaceutical preparations as:

“Any substance or mixture of substance manufactured, sold, offered for sale or represented for use in

the diagnosis. Treatment. Mitigation of prevention of disease abnormal physical stage or the symptoms

thereof in man animal ; [and for use in] restoring correcting or modifying organic in man or animal.”

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ADVANTAGES IN INDIA

1 Competent Workforce: India has a pool of personnel with high managerial and technical competence. It

has an educated work force and English is commonly used. Professional services are also easily available.

2. Cost-effective chemical syntheses: its track record OF DEVELOPMENT, particularly in the area of

improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety

of bulk drugs and exports sophisticated bulk drugs.

3. Information & Technology : it has good network of world- class education institutions

and establish strengths in information technology

4 Globalization: The countries are comminuted to a free market economy and globalization. Above all. It

has 70 million middle class markets. This is continuously growing

5 Consolidations: For the first time in many years. The international pharmaceutical industry is finding great

opportunities in India. The process of consolidation, which has become a generalized phenomenon in the

world pharmaceutical industry, has started taking place in India.

6 Legal and financial framework: India has a 53 years old democracy and hence had solid legal framework

and strong financial markets. There is already established international industry and business community

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THE GROWTH SCENARIO

India’s US$ 3.1 billion pharmaceutical industry is growing at the rate of 14 % per year. It is one of the

largest and most advanced among the developing countries. Over 20.000 registered pharmaceutical

manufactures exist in the country. the domestic pharmaceutical industry output is expected to exceed Rs 260

billion in the financial year 2002. Which accounts for merely 1.3 % of the global pharmaceutical sector. Of

this, bulk drugs will account for Rs 54 bn (21%) and formulations, the remaining Rs 210 bn (79%). In financial

year 2001, imports were Rs 20 bn while exports were Rs 87 bn.

Investment in the Indian pharma industry has increased as clear from the above mentioned two tables. The

R&D expenditure has increased up to Rs 479 crores as compared to Rs. 36 crore by the foreign firms.

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2

17.7 17.718.7

17.7 17.8

21.8 21.2

2323.7 23.9 24

25.1

22.8 22.8

21.2 21.2 20.820 20.4 20.2 19.8

18.717.8

19.7

17.8 17.8

Series 1

Ranbaxy laboratories ltd. has spend around Rs 55 crore in R&D activity and top the rank. It is one of the

few research based international pharmaceutical companies to drive the competitiveness of the industries in

international market with subsidiaries in more than 20 countries across the globe. The companies has a strong

presence in the anti- infective segment with 12 brands in the top 250 in the domestic market . The Indian

company that has ranked second in terms of R&D expenses Wockhardt Ltd. Which has very strong presence in

antibiotics and analgesics. Even though the company stood second in absolute amount of R&D it is at the top

considering R&D expenses in relation to sales. There are only two foreign firms namely Novartis India Ltd.

And glaxo smithk line pharmaceutical Ltd which make in to the list by virtue of their absolute amount of R&D

expenditure. It is impotent to note that these to foreign firms. Even though has spent substantial amount on

R&D in absolute sense. It is infect very nominal in term of R&D intensity and these two firm stood last in the

rank series best on R&D intensity.

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INBOUND INVESTMENT:

Multinationals like Roche, Bayer, Aventis and Chiron have made India their regional hub or advanced

pharmaceutical ingredients and bulk supplies. Clinical research outsourcing is also growing fast.

Pfizer doubled its R&D spending in India to around $13 million.

Novartis, Astra Zeneca, Eli Lilly and GlaxoSmithKline have committed to making India

Global hub for their clinical research activities.

R&D is no longer confined to the government or big companies. It is sprouting everywhere A number of

new companies are also taking on R&D contracts for global

Firm Divi`s Labs, Vimta Labs and Matrix Labs are some of the new stars in this space.

Indian pharma companies have achieved impressive volumes quickly. Dr Reddy`s ($450 million sales

in 2003-04) and Ranbaxy ($1.1 billion) are small in comparison to M NCs like Pfizer ($45 billion in 2003).

But they are growing twice as quickly and with better margins between 2004 and 2007, $ 26.5 billion worth

of drugs will go off patent primarily in the US and to a lesser extent in the EU market. These include

antibiotic like ciprofloxacin or flucanazole. Which together gross around $ 3.5 billion? Will mean potential

business for Indian players.

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DOMESTIC TRADE:

More than 85% of the formulations produced in the country are sold in the domestic market. India is a

largely self sufficient incase off formulation. Some life saving. New generation under-patent formulation

continues to be important. Specially by MNCs, which than market them in India. Overall . the size of domestic

formulation market is around Rs 160bn and it is growing at 10% p.a in India’s pharmaceutical imports were to

the tone of Rs 20.3 bn in FY2001. Imports have registered a CAGR of only 2 5 in the past 5 year. Import of

bulk drug have slowed in recent year

Exports:

Over 60% of India’s bulk drug production is exported. The balance is sold locally to other formulators.

India’s pharmaceutical exports are to the tune of Rs 87bn, of which formulations contribute nearly 45% and the

rest 455 % comes from bulk drugs in financial 2001, exports grew by 21%

The exports of pharmaceutical during in the year 1997-98 were Rs 49780 million. From Rs46 crores

drugs and fine chemical exports 1980-81. Pharmaceutical export has risen to approximately Rs 6152 crores

(prov. 1988-99), a rise of 11.91 % against the last year exports.

23%

24%12%12%

10%

10%6%

5%

Others PharmaceuticalAgricultureEnvironmentalPetrochemicalGovernmentUtilitiesResearch Labs

Industrial LIMS Distribution

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STEPS TO STRENGTHEN THE INDUSTRY

Indian companies need to attain the right product-mix for sustained future growth. Core competencies

will play an important role in determining the future of many Indian pharmaceutical companies in the post

product –patent regime after 2005. Indian companies. In an effort to consolidated there position. Will have to

increasingly look at merger and acquisition options of either companies or products. This would help them to

offset loss of new product options. Improve their R&D efforts and improve distribution to puncture market.

Research and development has always taken the back seat amongst Indian pharmaceutical companies. In

order to stay competitive in the future, Indian companies will have to focus and invest heavily in R&D.

The Indian pharmaceutical industry also needs to take advantage of the recent advantage in

biotechnology information technology. The future of the industry will be determined by how well it markets its

products to several regions and distributes risks. Its forward and backward integrations capabilities. It’s R&D

its consolidation through mergers and acquisitions, co-marketing and licensing agreements.

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RESEARCH AND DEVELOPMENT IN PHARMA INDUSTRY

It is key the future of pharmaceutical industry. The pharmaceutical advances for considerable

improvement in life expectancy and health all over the world are the result of a steadily increasing in research.

There is considerable scope for collaborative R&D in India. India can offer several strength to the international

R&D community. This strength relates to availability of excellent scientific talents who can develop

combinatorial chemistry, new synthetic molecules and plant derived candidate drugs.

R&D in the pharmaceutical industry in India critical to find answers for some of the diseases peculiar to

a tropical country like India and also for finding solution for unmet medical needs. Industrial R&D groups can

carry out limited primary screaming to identified lead molecules or even candidate drugs for further vivo

screaming. pre-clinical pharmacology, toxicology, animal and human pharmacokinetics and metabolic studies

before taking them of human trails in such collaboration, harmonized standard of screening can be assured

following established good laboratory practices.

The R&D expenditure by the Indian pharmaceutical industry is around 1.9% of the industry’s turnover.

This obviously, is very low when compared to the investment on R&D by foreign research-based pharma

companies. They spend 10-16%of the turnover on R&D. However. Now that India is entering in to the patent

protection area, many companies are spending relativity more on R&D.

When it comes to clinical evolution at the time of multi-center trails, India would provide a strong base

considering the real availability of clinical material in diverse therapeutic areas; such active collaboration will

be mutually beneficial to both partners. According to survey by the pharmaceutical outsourcing association and

bio/ pharmaceutical outsourcing reports. Pharmaceutical industries are utilizing substantially the services of

research organization (CROs).

The pharmaceutical and biotechnology industry is eligible for weight deduction for R&D expense upto

1.5%, these R&D companies will also enjoy tax holiday for 10 years. Promotional research and development

fund of Rs 150 crores is set up by the government to promote research and development in the pharmaceutical

sector.

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MAJOR PLAYERS IN THE MARKET

1. Ranbaxy.

2. Cipla Ltd.

3. Glaxo smithline pharmaceutical Ltd.

4. Dr reddy’s pvt Ltd.

5. Nicholas.

6. Sun pharma Ltd.

7. Pfizer.

8. Aventis.

9. Organon.

10.Glenmark.

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AN INTRODUCTION TO RANBAXY IN INDIA

Ranbaxy is one of the leading pharmaceutical Companies in India commanding a market share of

around 5%. The Company has clocked sales of USD 293 Mn in 2009 in India. Growing ahead of the

market, the Company has enhanced its competitive position in the domestic market through its focused

approach. The Company’s business has been realigned to its customer groups and investments have been

made in high growth segments. These efforts have resulted in strengthening its Chronic franchise (Life

Style led) as well as has reinforced its leading position in the Acute segment.

Ranbaxy is a strong player in the Novel Drug Delivery System (NDDS) segment. Its product

portfolio spans across Acute & Chronic Business covering Anti-infectives, Nutritionals, Gastro-

intestinals, Pain Management (Acute) Cardiovascular, Dermatological, Central Nervous Systems

(Chronic) segments.

Company’s India operations are a dominant force in a number of participating therapeutic

segments, for example Anti-infectives, Statins, Dermatology and Pain Management. A publicly listed

company, Ranbaxy India is also a member of IPA (Indian Pharmaceutical Alliance) & OPPI

(Organization of Pharmaceutical Producers of India).

Our Key Strengths

• Company growing faster than the market.

• One of the largest distribution networks that comprises 2500+ skilled field force. Dedicated task

forces for specialised & chronic therapies

• A strong player in the NDDS segment. Key brands include Cifran OD(Ciprofloxacin), Zanocin

OD (Ofloxacin) & Sporidex AF (Cephalexin)

• Strong brand building capabilities, reflected in the fact that around 20 brands feature in the “Top-

300 brands of the Industry” list. Leading brands are Sporidex

(Cephalexin), Cifran (Ciprofloxacin), Mox (Amoxicillin), Zanocin (Ofloxacin) & Volini (Diclofenac)

• A well-built customer interface, with one of the highest customer coverage across India, and an

excellent franchise with both Generalists & Specialists. This is proven by Ranbaxy India’s Corporate

Image being perceived as ‘Best-in-Class’ by customers (source: AC Nielsen ORG MARG Report, June

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Great emphasis is placed on Knowledge Management and Medico-marketing initiatives such as

Advisory Board Meetings, Post Marketing Surveillance Studies and Continuous Medical

Education programs. These have resulted in an excellent customer relationship with the medical

fraternity. More than 2000 interface programs (Symposia, CME’s) are conducted and about 20 Clinical

Papers published annually

• With a futuristic approach, the India operations attempt to capitalize on the fast- emerging, high-

growth segments with innovative products and services:

OBiological formulations such as Verorab (Rabies Vaccine) and Vaxigrip (Flu Vaccine), which

require competencies to propagate the newer concepts in the market place. These products are being

in-licensed or taken on Co-promotion from Sarnoff Pasture.

OHigh end anti-infective such as Cilanem (Imipenem+Cilastatin) & Faronem(Faropenem) have

been launched for the first time in India. Ranbaxy is championing the concept of Penems/

Carbapenmens , locally

ODry Power & Metered Dose Inhalers have been launched in the Respiratory segment. All Metered

Dose Inhalers are HFA based formulations, environment friendly inhalers. It is for the first time in

India, that a company has launched its entire HFA propellant based MDI range. The world’s first

novel product, Osovair (Formoterol + Ciclesonide) inhalation capsules has been introduced in the

Indian market.

OAnti-diabetic franchise has been further consolidated with launch of Insecure (Insulin) with an

innovative delivery mechanism - “Controlled Insulin Logistics” This ensures that the cold chain,

vital for product efficacy, is maintained.

OA slew of products have been launched in the Dermatology segment: Sun cross (Sunscreen lotion),

Sorted (Isotretnoin), Eflora (Eflornithine)

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At a Glance

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Total No. Of

Molecules

Ranbaxy +

Local tie ups

Market formulations based on more than 200 molecules (including Fixed Dose

Combinations)

Lead Molecules

Cephalexin (Sporidex), Ciprofloxacin (Cifran), Amoxycillin (Mox), Ofloxacin

(Zanocin), Atorvastatin (Storvas), Ceftriaxone (Oframax), Cefpodoxime (Cepodem),

Co-amoxyclav (Moxclav), Cilanem (Imipenem+Cilastatin), Volini (Diclofenac

combination), Silvered (Silver Sulphadizine), Cepodem (Cefpodoxime), Verorab

(Rabies vaccine)

Presence in

Therapeutic

Segments

Anti-Infectives, Cardiovascular & Diabetes, Dermatological, Neuro-Psychiatry, Pain

management, Gastro-Intestinal, Nutritional

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INTRODUCTION

TO

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SUPPLY CHAIN MANAGEMENT

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AN INTRODUCTION TO SUPPLY CHAIN MANAGEMENT

A supply chain is a network of facilities and distribution options that performs the functions of

procurement of material, transformation of these material into intermediate and finished products, and the

distribution of these finished products to customers. Supply chains exist in both service and manufacturing

organization, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

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Raw Material

Component

Manufacturer

Retailer

Consumer

Each interphase in the supply Chain represents:-movement of goods-information flows-transfer of title-purchase and sale

Key SCM Concepts

Strategic SCM consists ofDeveloping smarter ways to:-Choose-buy from and-sell to your business partners

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Traditionally, marketing.distribution, planning, manufacturing, and the purchasing organization along

the supply chain operated independently. These organizations have their own objectives and these are often

conflicting. Marketing `s objective of high customer service and maximum sales dollars conflict with

manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput

and lower cost with little consideration for the impact on inventory levels and distribution capabilities.

Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The

result of these factors is that there is not a single, integrated plan for the organization---there were as many

plashes as businesses. Clearly, there is a need for a mechanism through which these different functions can be

integrated together. Supply chain management is a strategy through which such integration can be achieved.

Supply chain management is typically viewed to lie between fully vertically integrated firm, where the entire

material flow is owned by single firm and those where each channel member operates indepdetlly. Therefore

coordination between the various players in the chain is key in its effective management. Copper and EII ram

[1993]compare supply chain management to a well-balanced and well-practiced relay team.Such a team is

more competitive when each player knows how how to be positioned for the hand-off. There lationships are

the strongest between players who directly Pass the baton, but the entire team needs to make a coordinated

effort to win the race.

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SUPPLY CHAIN DECIISIONS

We classify the decisions for supply chain management into two broad categories-strategic and

operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are

closely linked to the corporate strategy (they sometimes {/it are} the corporate strategy), and guide supply chain

policies from a design perspective. On the other hand, operational decisions are short term, and focus on

activities over a day-to-day basis. The effort in these type of decisions is to effectively and efficiently manage

the product flow in the “strategically” planned supply chain.

There are four major decision areas I supply chain management:

1) Location. 2) Production, 3) Inventory, 4) Transportation.(destitution) and there are both strategic and

operational element in each of these decision areas.

Location Decisions

The geographic placement of production facilities, stocking points is the natural first step in creating a

supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size,

number, and location of these are determined, so are the paths by which the product flows through to the final

customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing

customer markets, and will have a considerable impact on revenue, cost, and level of service. These decisions

should be determined by an optimization routine that considers production costs, taxes, duties and drawback,

tariffs, local content, distribution costs, production limitations, etc. although location decisions are primarily

strategic, they also have implications on an operational level.

Production decisions

The strategic decisions include what products to produce, and which plants to produce them in, allocation

of suppliers to plants, plants to DC’s and DC’s to customer markets.

As before, these decisions have a big impact on the revenues, costs and customer service levels of the

firm. These decisions assume of the existence of the facilities, but determine the exact path (s) through which a

product flows to and from these facilities. Another critical issues is the capacity of the manufacturing facilities18

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—and this largely depends the degree of vertical integration within the firm. Operational decisions focus on

detailed production scheduling. These decisions include the construction of the master production of Master

production schedule, scheduling production on machines, and equipment maintenance. Other considerations

include worked balancing, and quality control measures at a production facility.

Inventory Decisions

These refer to means by which inventories are managed. Inventories exist at every stege of the supply

chain as either raw material, semi-finished or finished goods. They can also be in- process between locations.

Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient

management is critical in supply chain operations. It is strategic in the sense that top management sets goals.

However, most researchers have approached the management of inventory from an operational perspective.

These include deployment strategies (push versus pull), control polices---the determination of the optimal levels

of order quantities and reorder points, and setting safety levels, at each stocking location. These levels are

critical, since they are primary determinants of customer service levels.

Transportation decisions

The mode choice aspect of these decisions is the more strategic ones. These are closely linked to the

inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular

mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be

fast, reliable, and warrant lesser safety stocks they are expensive. Meanwhile shipping by sea or rail may be

much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent

uncertainty associated with them. Therefore customer service levels and geographic location play vital roles in

such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes

good economic sense.

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SUPPLY CHAIN DECISSION

PRODUCTION DECISIONS

LOCATIONDECISIONS

INVENTORYDECISIONS

TRASPORTATION DECISION

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INTRODUCTION

TO

SUPPLY CHAIN

MANAGRMENT

IN

PHARMA INDUSTRY

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PHARMA SUPPLY CHAIN MANAGEMENT

It has been developed a wide range of supply chain and information management services to optimally

manage healthcare firms complex global procurement and supply chain processes. The company will assess

current customer supply chain processes against standard and industry benchmarks to identify areas for

improvement. Using advanced analysis and modeling tools are evaluated against identified cost and services

objectives to arrive at the optimal solution. Company can:

1. Instantly know where shipments are the transport cycle.

2. Reduce safety stock. i.e. planning improves thanks to product flow visibility.

3. Reduce administrative costs, i.e. staff spend less time on phones and fax machines and can directly

access shipment information and online documents and

4. Identify supply chain failures early, triggering contingencies plans.

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In-silico research Electronic data Quality control CRM capture ERP Sales force automation SCM Busibess Intelligence Data warehousing Knowledge management Enterprise application integration

SCM—Supply Chain ManagementERP---Enterprise resource planningCRM---Customer relationship mangement

Drug Discovery

Drug Developm

ent

Manufacturing

Sales $ Distributi

on

Product Mangem

ent

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COMPONENTS OF THE PHARMACEUTICAL INDUSTRY MANUFACTURE AND

DISTRIBUTION CHAIN

A typical pharmaceutical supply chain will consist of the one or more of the following nodes:

1. Primary manufacturing (possibly including contractor sites);

2. Secondary manufacturing (possibly including contractor sites);

3. Market warehouses/distribution centers;

4. Wholesalers; and

5. Retailers /hospitals.

1. PRIMARY MANUFACTURING:

The primary manufacturing site is responsible for the production of the active ingredient. This

normally involves either several chemical synthesis and separation stages to build up the complex

molecules involved, or fermentation and product recovery and purification in the case of biochemical

processes. The manufacturing process is characterized by long task processing times, often rounded to

multiples of shifts. Where multistage processes are operated, considerable inventories are often held

between stages. Furthermore, material from an intermediate stage must often pass some form of quality

control check before being approved for use downstream in the process. This can introduce additional

delays into the system.

2. SECONDARY MANUFACTURING:

This is concerned with taking the active ingredient at the site and adding “excipient” inert material

along with further processing and packaging to produce, usually in SKU form.

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For example: a product that is sold in form would undergo:

a) Granulation: with addition of all the excipient materials;

b) Compression: forming the pills;

c) Coating;

d) Quality control; and

e) Packaging.

The Secondary manufacturing locations are geographically separate from the primary

manufacturing locations there are often many more Secondary manufacturing sites that primary ones,

serving local or regional markets transportation between sites is of the order of 1 or 2 weeks if by ship

(usually the default mode )and of the order of one or two days if by air . Wholesalers play a significant

role in this sector.

3. OPERATIONAL ISSUES IN THE PHARMACEUTICAL SUPPLY CHAIN :

Although the processes will vary between companies, all major manufacturing companies will

operate ERP systems and follow a business process along the following lines:

Demand management in each geographical region, forward forecasts (e.g.3-24 months ) are developed,

based on historical data, market intelligence, etc. tender for manufacture may also be evaluated and

possibly accepted at this stage.

Inventory management and distribution requirements planning the demands determined are aggregated

and imposed on the appropriate warehouse/distribution centre. The impact on finished goods inventory

is assessed and of necessary.

Secondary production planning and scheduling the orders placed on the secondary sites are planned and

then scheduled in detail. The impact of production plans on active ingredient raw material stocks is

evaluated band if necessary.

Primary manufacturing company planning and AI inventory management. Here, the demands placed by

secondary manufacturing are satisfied by careful management of inventory and production planning.

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4. STRATEGIC AND DESIGN ISSUES IN THE PHARMACEUTICAL SUPPLY CHAIN:

The decision to be taken at this level include:

Pipeline and development management –this involves the selection of potential drug

to develop further, and the planning of the development activity.

Process development - the investigation of manufacturing routs and the generation of the

manufacturing processes.

Capacity plannining and plant and supply chain network design .

Plant design – The selection and sizing of the measure equipment and storage unit .

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Drug Discovery

Drug Developme

nt

Manufacturing

Distribution

Sales and Marketing

IT applications for the pharmceutical value chain

In-silico research electronic data ERP QC Warehouse Mgmt. Automation CRM

Business Intelligency/Data Warehousing/Knowledge Management Integration/ Data Mining/Enterprise Application Integration.

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SOME OF THE KEY ISSUE ARE:-

Uncertainty in the demands for the existing drugs (due to competition, uncertainty in the ability to

extend the protected life through new formulation).

Uncertainty in the pipe line of new drugs in particular, which ones will successful in trials, what sort of

dosage and treatment regime will be optimal.

Process development – this is a complex problem, drive3n by chemistry and yield optimization. It often

results in efficient processes that are operated much more slowly than the intrinsic rate giving rise to

batch processes and long cycle times responsible for some or the problems seen and the primary

production planning stage.

Capacity planning- the long times to make capacity effective mean that decisions often need to be taken

at times of high certainty. Waiting for the uncertainties to be resolved might delay the time to market by

an unacceptable amount.

Network design -often tax implications takes precedence over logistics issues, these result in economic

but potentially complicated supply chains.

Plant design - this tends to be very traditional, with no real change in manufacturing technology for 5o

years. There are significant opportunities for intensified, continuous processing.

OVERVIEW OF SOME RECENT WORK:

The recent work in the literature that is relevant here can be categorized under these headings:

Pipeline and development management:

Capacity planning;

Simultaneous development and capacity planning;

Process development and plant design ;

Supply chain simulation and dynamics.

The areas reviled in turn below:

1. DEVELOPMENT MANAGEMENT:

Consider the problems of sequencing of testing task where unlimited resources are assumed to be

available. The key feature of the model that distinguishes it from classical project scheduling is that each task

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has a probability of failure; this affects the need for the successor task. If many test for a product are performed

in a parallel, the testing activity will be more expensive, as the effect of failures on successor tests are not taken

in to account. On the other hand, the product may come to market much earlier, resulting in a much better cash

flow profile.

Consider the problem of risk management at the development stage. As mentioned earlier, the

development phase selects candidate drugs and takes them through trails and process development. It is a long,

costly and inherently risky process with the large upfront commitment. The aim this work is to support the

process of product selection and test planning while managing risk effectively. The development activities are

modeled as a probabilistic activity network, where each activity has a time, precedence relations, resource

requirements and probability of success. Risk is defined as the adverse consequences of exposure to

uncertainties, and in this context is usually related to the premature withdrawal of a candidate drug.

It extends this work to take explicit account of the resource requirements of the problems. The problem

statement is generalized in that more sources of uncertainties are considered and include.

Task processing times;

Task resource requirements;

Task success probability;

Task costs; and

Market returns.

2. CAPACITY PLANNING:

The capacity planning under clinical trials uncertainty problems has recently received some attention in

the literature. The deterministic problem of allocating new manufacturing capacity to existing or potential sites

around the world. They describe the features particular to the pharmaceutical industry, and emphasize

importance of modeling financial flows as the taxation regimes affect the rewards associated with alternatives

solution significantly. Indeed taxation considerations can easily dominate the location decisions. They consider

the problems where 3 products are at the start of clinical trials, and plans for current in future manufacturing

capacity are to be made. The key trade-off in the capacity planning decisions comes about due to the lead time

between deciding to invest in additional manufacturing capacity and that capacity coming on stream. Deferring

capacity planning decisions until more information is available from trials is obviously a lower risk

strategy ,increases the time to market. As mentioned earlier,, this measure is critical.

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3.SIMULTANEOUS DEVELOPMENT AND CAPACITY PLANNING:

The research reviewed above deals either with the problems of organizing the development activities or

planning the capacity investment in future production. It consier the problem s of planning of testing tasks and

capacity simultaneously. The aim is to optimize a performance measure for the process as a whole. This bridge

the gap between the two problems and aims to insure that the company is ready to produce a product one

testing is complete. The task two possible outcomes, successor failure. All tasks otter than process development

may be outsourced if internal resources do not suffice. Since the method is to be applied at any time in the

company `s operation, it takes account of the fact that different products will be at different stages in their life-

cycle. So overall, the decisions to be taken are:

The selection of products for testing;

The assignment of resources to testing tasks and any out-sourcing decisions;

Task sequencing;

Selection of new plants or expansions of existing ones (including timings of expansions);

Production planning’s

4.RISK IN PHARMACETICAL SUPPLY CHAIN

INFRASTRUCTURE DECISIONS:

The problem with the expected NPV measure in this context is that the risks tend to be few, significant

and discrete in nature. the expected NPV term suited to the situation where uncertainties are many and

continuously distributed .KEYNES SUCCINCTLY SUMMARIZES THE problem with the expected NPV

APPROACH IN THIS context as being based on the assumption that “a certain state of mediocrity is as

desirable as even chance of heaven or hell.

5.PROCESS DEVELOPMENT AND PLANT DESIGN:

The problem of process development in this sector has recently been reviewed. They contend that the

current practice of relying on traditional manufacturing technology means that processes are designed to be

operated in potentially ineffective ways. A hierarchical approach to designing processes that are not

constrained by traditional equipment is recommended by the authors.

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It also proposes a hierarchical approach, with the emphasis on the use knowledge bases and material

balancing at every development level to choose and assess option. The focus is particularly on synthesizing

routes and developing processes with low environmental impacts.

6. PRODUCTION PLANNING AND SCHEDULING:

This is also has received a lot of attention over the period from 1970 to the present day. However, most

of this is on short term driven scheduling. Most of the work on campaign planning was done some time ago.

However the active ingredient production process, which is effectively the rate-limiting step of the

supply chain, still tends to operate this way. The optimal planning of campaigns within the context of the

performance of the supply chain as whole.

7. SUPPLY CHAIN SIMULATIONS AND DYNAMICS:

The long supply chain and the fact that there are many decision-making agents` means that understanding

the dynamics behavior will very important. We have developed a generic approach to the modeling of supply

chain dynamic and applied it to some pharmaceutical. Over work is concerned with the modeling of both the

physical processes. (Primary and secondary manufacturing, distribution and warehousing) as well as the

business process.

ACHIEVEMENT

The achievements of the Indian pharmaceutical industry are spectacular in recent times and are praise

worthy. Has evolved as a model industry of the country in performance. But, in the 21st century, the

pharmaceutical value chain would be a tangible opportunity to make the desired technological shift-in process

and in location 1 the question before pharma company CEO’s the world over today is not: “should my company

go to India”? But “can my company afford not to go to India?”

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CAHPTER 2

OBJECTIVE

OF THE STUDY

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OBJECTIVE OF THE RESEARCH

To study the supply chain management in pharma industry.

To know the effectiveness of supply chain management in pharma industry.

To study market share of various pharma industries in Chandigarh region.

To know that demand of which industry is more.

To know what are the various problems faced while dealing with distributions and

manufacturers.

To identify the impact of supply chain management in pharma industry on the consumer

purchase behavior.

To know which supply chain management is appropriate and cost effective.

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CHAPTER 3

RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY

In planning and designing a specific research project, it is necessary to anticipates all the steps that must

be undertaken if the project is to be successful in collecting valid and reliable information. For successful

completion of any project, there should be some steps which are necessary to taken out. The step process is

called research process.

1) FOMULATIMG THE RESEARCH PROBLEM:

Formulating the research problem means defining the research objectives in the specific way. The

objective of the research should be clear specific. It includes the who, when, where, what.

2) RESEARCH DESIGN:

Research design tells us about tools and techniques are used to find the result in a better way.

For this on the “supply chain management in pharma industry” we are going for the descriptive research

and exploratory research which is mainly based on primary data.

EXPLORATORY RESEARCH:

In this research type we explore the ideas. It could conduct a study of secondary source if information is

not available. Get expert opinions or resort to case study analysis.

DESCRIPTIVE RESEARCH:

It is used to describe marketing phenomenon while trying to determine the association among variable.

Mainly in this research we used to primary data. The research objective in this type of research is generally

describing the characteristic of a consumer segment.

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3) SOURCES OF DATA:

In this project we use both primary as well as secondary data but mainly research is based on the primary.

4) SELECTION OF METHOD:

In this we use convenience sampling method and stratified random sampling method.

5) DESIGNING THE DATA COLLECTION FORM:

Observational method

Survey method

For this project we are going for survey method (questionnaire method).

In this we will fill up questionnaire forms from various pharma industries people which give the results for

the preoject.Questions are going to be open ended and close ended as per the requirement of the

information.Questions formed by me will be easily understandable and clear to every one about their

meaning.

6) DETERMINATION OF SAMPLE SIZE:-

Sample size for the research project will be 100 respondents.

7) ORGANIZING AND CARRING OUT THE FIELD WORK :-

After all survey and observation have been made, the completed data-collection forms must be

processed in a way that will yield the information the project was designed to obtain. firstly ,see that all

collected data and logical. Then data must be prepared for tabulation this means thedata must be

assigned to the categories and then cooled so that data can be put in to the computer. So that we can

analize the data easily.

8) REPORTING THE FINDING :-

After tabulating and analyzing that we you must prepare a report on the finding. Report should be

clear which so the whole result in the research project. Finding are clear to its objective and result

should be clearly mentioned.

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CHAPTER 4

SWOT

ANALYSIS

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SWOT ANALYSIS

It is often Said that the pharma sector has no cyclical factor attached to it. Irrespective of whether the

economy is in a down term or in an up term the general belief is that demand drug is likely to grow steadily

over the long term. True in some sense .but there are risks. The swot analysis of the industry reveals the position

of the Indian pharma industry in respects to its internal and external environment.

STRENGTH

Low Cost:-

Indian manufactures are one of the lowest cost product of drugs in the world. With a scalable labor force, Indian

manufactures can produce drugs at 40% to 50% of the cost to of the rest of the world. In some cases, this cost is

as low as 90%

Strong technical skills:-

Indian pharmaceutical industries pose excellent chemistry and process re-engineering skills. This is adds to the

competitive advantage of the Indian companies. The strength in chemistry skill helps Indian companies to

develop processes, which are cost effective.

Large untapped market :

India with population of over billion is a largely untapped market. Infect the penetration of modern medicine is

less than 30% in India. To put thinks in prospective. Per capita expenditure iun health care in India US$93

while the same for countries Brazil is US% 453 and Malaysia US$ 189.

Huge market for life style drugs

The growth of middle class in the country has resulted in fast changing life style in urban and to some extent

rural centers. This open huge market for lifestyle drugs which has very low contribution in the Indian market.

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WEAKNESSES

Poor R&R expenditure :

Compared to global pharmaceutical industry. Indian R&D expenditure is still minuscule, which could have

negative effect in the long run. Especially in product patent regime. The average R&D spends in India. Though

growing at a CAGR of 18% over last 5 years, is just 1.9% of sales, as against 9-10%spend by global pharma

company.

Tag of being “copy cats”

Majority of the Indian companies are dependent of the replicating drugs developed by MNC’s hence Indian

company is viewed in not so light.

Price regulations:

The Indian pharma company is marred by the price regulation. Over a period of time. This regulation has

reduced the price ability of companies. The NPPA (national pharma pricing authority). Which is the authorizes

to decide the various pricing parameter, sets prices of different drugs, which leads to lower profitability for the

companies, the company which lowest cost producer . Are at the advantage while those who cannot produce

have either to stop production or bear losses.

Slow growth:

Indian pharma market is one of the least penetrated in the world. However. Growth has been allow to come by,

as result, Indian majors are relying on exports for growth .to put things into perspective, India accounts for

almost 16% of the world population while the total size of industry is just 1% of the global pharma industry.

Low entry barriers:

Due to very low barriers to entry. Indian pharma industry is highly fragmented. This makes Indian pharma

market increasingly competitive. The industry witness price competition which reduces the growth of the

industry in value term. To put things in perspective, in the year 2003, the industry actually grew by 10.4% but

due to price competition. The growth in value term 8.2 %. (Prices actually declined by 2.2%)

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Labour laws:

Outdated and restrictive labour laws are hampering all the industries in India and making it unviable for the

MNC`s to set up production base in India.

OPPORTUNITIES

Off patent drugs:

Large number of drugs going off-patent in Europe and in the US from to 2009(approx.). $80 billion) offers

big opportunity for the Indian companies to capture this market. Since generic drugs are commodities by nature,

Indian producers have the competitive advantage, as they are they, lowest cost producers of drugs in the world.

EXPANSION:

Opening up of health insurance sector and the expected growth in per capita income are key growth drives

from long –term perspective. This leads to the expansion of healthcare industry of which pharma industry is an

integral part.

Outsourcing ;

Being the lowest cost producer combined with FDA APPTOVED PLANTS, Indian companies can become a

global outsourcing hub for pharmaceutical products.

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THREATS

Transition from “Process “patent to “Product “patent:

This is the major threat Indian pharma industry is facing. Indian companies especially medium and small

sized do not have capabilities to develop new molecules, and they may succumb to the grants.

Counterfeit drugs:

The extent of the problems of counterfeit drugs is unknown. Counterfeiting is difficult to detect,

investigate, and quantify. So, it is hard to know or even estimate the true extent of the problem. What is known

is that they occur worldwide and are more prevalent in developing countries. It is estimated that upward of 10%

of drugs worldwide are counterfeit, and in some countries more than 50%of the drug supply is made up of

counterfeit.

Other low cost countries:

Threats from other low cost countries like china and Israel exist.However, on the quality front, India is

better placed relative to china. So , differentiation in the contract manufacturing side may wane.

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CHAPTER 5

ANALYSIS

AND

INTERPRETATION

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ANALYSIS AND INTERPRETATION

Number of agencies available under each medical store:

Particulars %Age

One 6

Two 22

Three 30

Four 42

One Two Three More than 30%

5%

10%

15%

20%

25%

30%

35%

40%

45%

6%

22%

30%

42%

Series 1

Interpretation:

According to the data, it is shown that about 42% medical store more than 3 agencies, 30% have 3, 22% have

two and 6% have one.

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BUSINESS THAT MEDICAL STORES MAKE IN A MONTH:

Rupees(Rs) %Age

10000-20000 32

20000-30000 53

More than 30000 15

10000-20000 20000-30000 More than 300000%

10%

20%

30%

40%

50%

60%

Series 1

Interpretation:

By seeing the above data, we can say that 53% of the medical stores have business within Rs. 20000-30000.

32% have within 10000-20000 and 15% have more than 30000.

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MEDICAL STORES MAKES PAYMENTS IN:

Particulars %Age

Cash 35

Credit 65

Cash Credit0

10

20

30

40

50

60

70

35%

65%

Column3

Interpretation:

According to the data we can say that most of the medical stores prefer to do payment on credit basis

and 35% on cash basis.

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CHANNELS BETWEEN YOU AND YOUR DISTIBUTOR:

Particulars %Age

One 17

Two 20

Three 42

More than Three 21

One Two Three More than Three0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

17%20%

42%

21%Series 1

Interpretation:

By seeing the above data, it can be analyzed that 45% have three channels in between medical store and

their distributors. 21% have more than three, 20% have two and 17% have one.

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TIME GAP BETWEEN ORDER AND ORDER RECEIPT:

Particulars %Age

1-2 Days 73

2-5 Days 19

More than 5 days 8

1-2 days 2-5 days More than 5 days0%

10%

20%

30%

40%

50%

60%

70%

80%73%

19%

8%

Series 1

Interpretation:

By seeing the above data, it can be said that most of the medical stores receive their orders between 1-2

days. 19% receive between 2-5 days and 8% receive in more than 5 days.

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CHANNEL MOSTLY PREFERRED:

Particulars %Age

Direct from manufacture 30

From distributor 70

Direct from manu-facture

From distibutor0%

10%

20%

30%

40%

50%

60%

70%

80%

30%

70%

Series 1

Interpretation:

By seeing the above data, we can say that most of the medical store prefer to receive order from

distributor. And 30% from manufacture.

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RELATION MEDICAL STORES HAVE WITH THEIR MANUFACTURERS OR

DISTIBUTORS:

Particulars %Age

Good 35

Moderate 9

Very good 56

Good Moderate Very good0%

10%

20%

30%

40%

50%

60%

35%

9%

56%

Series 1

Interpretation:

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By seeing the above data, we can say that most of the medical store have very good relations with their

manufacturer or distributors then followed by good and moderate.

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Ques8: What are the modes of Stock Management?

a)LIFO b)EOQ

c) FIFO d) Others

LIFO 15%EOQ 10%FIFO 69%OTHERS 6%

15%

10%

69%

6%

LIFOEOQFIFOOTHERS

INTERPRETATION:

69% opted for FIFO, 15% opted for LIFO, 10% for EOQ, and 6% for others.

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Ques9: Which order system you follow?

a) Just in Time b) EOQ

c) Re-Order d) Others

Just in time 56%

EOQ 14%

Re-order 23%

Others 7%

Just in time

EOQ

Re-order

Others

0% 10% 20% 30% 40% 50% 60%

56%

14%

23%

7%

Series1

INTERPRETATION:

56% OPTED FOR JUST IN TIME, 23% OPTED FOR RE-ORDER, 14% FOR EOQ, AND 7% FOR OTHERS.

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Ques10: Which Type of Transport mode you adopt?

a) Train b) plane

c) TRUCK d) Other Vehicles

TRAIN 15%

PLANE 15%

TRUCK 60%

OTHER VEHICLES 10%

TRAIN PLANE TRUCK OTHER VEHICLES0%

10%

20%

30%

40%

50%

60%

70%

15% 15%

60%

10%

Series1

INTERPRETATION

60% OF THE STORE OWNERS HAVE OPTED FOR TRUCK, 15% OPTED FOR TRAIN AND

PLANE, 10% FOR OTHER VEHICLES.

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ARE YOU SATISFIED WITH YOUR EXISTING CHANNELS:

Particulars %Age

Yes 97

No 3

Yes No0%

20%

40%

60%

80%

100%

120%

97%

3%

Series 1

Interpretation:

By seeing the above data, we can say that most of the medical store are satisfied with their existing

channels.

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ARE THESE CHANNELS BENEFICIAL:

Particulars %Age

Yes 96

NO 4

Yes NO0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

0.960000000000001

4%

Series 1

Interpretation:

By seeing the above data, we can say that 4% of the medical store think that their channels are not

beneficial while most of them think that their channels are beneficial.

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ARE YOU SATISFIED BY THE SERVICES PROVIDED BY YOUR DISTRIBUTORS:

Particulars %Age

Yes 87

No 13

Yes No0%

200%

400%

600%

800%

1000%

1200%

1400%

0.870000000000004

13

Series 1

Interpretation:

It can be analyzed that of the medical store are satisfied by the services provided by distributors to them.

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CHAPTER 6

FINDINGS

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FINDINGS

Indian Pharma R&D has several scientific- techno-economic advantages that by far outweigh the few

inherent weaknesses.

The opportunities are appealing and attractive and the threats manageable. Thus if the proper policy

support and direction is given, the industry can carve out a niche for itself in the global market place.

Supply chain management pharma industry is very effective as sequence of activities is being followed

from manufactured to retailers (hospitals).

Demand for pharma industry of growing day by day due to growing needs of consumers.

Problems like in delivery are faced by chemists while dealing with manufacturers or distributors.

60% of the Store keepers opted for truck, 15% opted for train and plane, 10% o other vehicles.

56% opted for just in time, 23% opted for RE-ORDER, 14% for EOQ, and 7% for others. 69% opted for FIFO, 15% opted for LIFO, 10% for EOQ, and 6% for others. By seeing the above data, we can say that 4% of the medical store owners thinks that their channels are

not beneficial while most of them think that their channels are beneficial.

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CHAPTER 7

LIMITATIONS

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LIMITATIONS

Though lots of things were taken care of while conducting the survey to make the research

A fair one, yet some of the things acted as hindrance, the major ones beings as follows:-

Sample size is small; it may not give the true and clear picture of the whole pharma industry.

Sample area chosen by researcher is Chandigarh, thus the respondents are only from the area of

Chandigarh.

Some of the chemists were reluctant to give information regarding their sales and thus provided vague

data.

The attitude of few respondents was casual so the data gathered from them may not be much authentic.

Due to large inflow of customer some chemists were too busy to provide much information.

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CHAPTER 8

RECOMENDATIONS

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RECOMENDATIONS

The following factors are required to consider:-

1. Service of RANBAXY & CIPLA should be improved in case of repairing of its misleaders and glow

sign board which are out of order in an outlet up to level that it is parallel or even better than the

competitor.

2. The company should supply its glow signboard, banners, etc as an advertisement media to the

retailers of rural areas, which will as usual become sale promotion tool for them.

3. The commitment of supplying gift items or incentive should be carried out on or before the

scheduled time.

4. The company should follow a required inventory management system so that average stock can be

regularized and balanced in peak season.

5. The company should think about the immediate replacement of damaged or breakage products.

6 Effective and impressive slogans should be used.

7 . Company has to adopt strategy like free medical camp.

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CHAPTER-9

CONCLUSION

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CONCLUSION

The pharmaceutical supply chain used to be seen as a tool to supply products to market in an effective

way, where the emphasis was on security of supply. Recent changes in the operating environment mean that

companies are revisiting the component of their supply chains and identifying ways of extracting additional

benefits from them.

In this sector in particular, the supply chain of interest is not simply the physical processes of conversion

and distribution of materials. Equally important is the” value-chain” perspective of managing the innovation

and development through to capacity and production planning. There are still several exciting research

challenges in this value-chain, of which the process engineering/process system engineering community are

well placed to address.

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BIBLIOGRAPHY

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BIBLIOGRAPHY

WEBSITES:

www.pharmaceutical.com

www.supplychainmanagement.com

www.pharmaceuticalsupplychain.com

www.pharmaindustry.com

Encyclopedia on supply chain management

www.google.co.in

www.ranbaxy.co.in

www.cipla.co.in

BOOKS:

W.J. Hop and M.L. Spearman. Factory physics: foundations of manufacturing management. Irwin,

McGraw- hill, 1996.

N. viswanadham. Analysis of manufacturing Enterprises. Kluwer Academic publishers.

Sridhar tayur. Ram Ganeshan, Michael Magazine (editors). Quantitative Models for supply chain

management. Kluwer Academic publishers, 1999.

R.B Handfied and E.L. Nochols, Jr. introduction to supply chain management. Prentice Hall, 1999.

N. Viswanadhan and Y. Narahari performance Modeling of Automated manufacturing systems. Prentice

Hall of India, 1998.

Sunil chopra and peter meidel. Supply chain management: strategy, planning, and Operation, Prentice

Hall of India, 1002.

Jeremy F. Shapiro. Modeling the supply chain. Duxbury Learning 2001.

JOURNALS

Oliver e. Williamson, outsourcing: transaction cost economics and supply chain management.

Thomas Y. Choi, Zhaohui, triads in supply networks: theorizing buyer & supplier e relationships.

Mark pagell, Zhaohui, building a more complete theory of sustainable supply chain management

using case studies of 10 examples

Stephen p. Xun, on social network analysis in a supply chain context

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Larry C. Giunipero, Robert e. hooker, sacha joseph-mattews, tom e. Ton, sun brooding, a decade of

seem literature: past Present and future implications ahead.

Roth and Stay, Madeleine e Pullman, john v. gray, unraveling the good supply chain: strategic

insights from china and the 2007 recalls.

NEWS PAPERS

The Times of India

India Today

Economic Times

Business Today

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ANNEXURES

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QUESTIONNAIRE

Respected Sir/Madam,

I am conducting a survey and I need your cooperation and a related information with my project.

Name……………..

Company Name………….. Ph. No…………….

Ques1: How many agencies do you have?

a)One b)Two

c) Three d) More than 3

Ques2: How much business you have in a month?

A) 10000-20000 b)20000-30000

c)More than 30000

Ques3: What are your payment terms?

a)By cash b)By credit

Ques4: How many channels are there in between you and distributor ?

a)One b)Two

c) Three d) More than?

Ques5: What is the time between orders placed and order receipt?

a)1-2 days b)2-5 days

c) More than 5 days

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Ques6: Which channel do you prefer?

a) Direct from b)From distributor

c) Manufacture

Ques7: What type of relations you have with the manufacturer or distributor?

a)Good b)Moderate

c) Very good

Ques8: What are the modes of Stock Management?

a)LIFO b)EOQ

c) FIFO d) Others

Ques9: Which order system you followed?

a) Just in Time b) EOQ

c) Re-Order d) Others

Ques10: Which Type of Transport mode you adopted?

a) Train b) plane

c) TRUCK d) Other Vehicles

Ques11: Do you have any chain in foreign market?

a) yes b) no

If yes which kind of chain in foreign market………….

Ques12: Are you satisfied with your existing channels?

a) Yes b)No

If yes /no. What is the reason for that…………………………?

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Ques13: Are these channels beneficial?

a) Yes b)No

Ques14: Are you satisfied by the service provided by the distributor?

a) Yes b)No

If Yes/No. Reason………………………..

Ques15:Any suggestion to improve chain management in our

country……………………………………………………………………………………………………………

……………………………………………………………………………………………………………………

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