Logistics & Supply Chain Issues in Pharmaceutical Company

1. Logistics & Supply Chain Issues
in Pharmaceutical Company

2. The pharmaceutical Industry
• The pharmaceutical market will reach nearly USD 1,100 billion
by 2015
• The research-based pharmaceutical industry currently spends
over USD 100 billion (EUR 75 billion) on R&D
• Indian pharmaceutical industry ranks 4th in the world in terms
of production volume and 13th in domestic consumption value

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

4. Introduction

5. Issues & Challenges
 Managing Pharmaceuticals
 Managing perishable products
 Degradation of the medicines as they move along the supply
chain which results in allowing substandard products to be
dispensed to the patients
 Maintaining temperature control
 Typically more focus is given on R&D
 Manufacturers can’t have control once Pharmaceuticals are
docked to wholesalers
 Shipping of expiry products

6. Issues & Challenges
 Crisis Management
 In case of an epidemic break-out, global demand for certain
medicines overshoots the demand suddenly.
 Product withdrawal during sales due to side-effects and expiry

7. Issues & Challenges
 Little Incentive for Reducing Inventory
 Ethical requirement of providing medicines
 Out of stock situations are unacceptable & patent lifespan is
low
 Exceptionally long cycle times and lots of inventory
 Counterfeit Drugs and Security
 High price of drugs worldwide
 Easy to fake prescription drug labeling

8. Issues & Challenges
 Outdated Manufacturing Sites
 Reluctant Govt. bodies to approve any changes fearing
product quality
 Parallel Trade
 Cross trading across the borders
 Black market transactions in developing nations
 No track of drugs coming in & going out of the country

9. Issues & Challenges
 Complex Network Design
 Controlling wide supply chain with huge Stock Keeping Units
becomes very difficult
 Reducing finished goods is difficult
 Training & education cost to the stakeholders is high
 Integration of domestic and international businesses. Eg :
Nicholas Piramal India Limited
 Bringing a consensus in manufacturing, sales, marketing, and
distribution department to agree on a forecast

10. Conclusion
 Logistics has emerged as an important element in the
pharmaceutical industry as it becomes a greater percentage of
total costs
 Unlike other sectors, value-chain perspective of managing
process innovation through capacity and production planning
is equally important
 Emerging technologies like RFID can mitigate many of these
logistics issues