supply chain in pharmaceutical industry

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SUPPLY CHAIN IN PHARMACEUTICAL INDUSTRY Ravi Kumar VP - Logistics & Distribution Intas Pharmaceuticals Ltd.

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SUPPLY CHAIN IN PHARMACEUTICAL

INDUSTRY

Ravi Kumar

VP - Logistics & Distribution

Intas Pharmaceuticals Ltd.

36114.6

43275.9

49399.9

19.8

15

20

25

40000.0

50000.0

60000.0

IPM growth %

Indian Pharmaceutical market IPM over last 5

yrs.

IPM GROWTH

28591.0

32688.0

36114.6

14.3

10.5

14.2

0

5

10

15

0.0

10000.0

20000.0

30000.0

MAT ~ 05/2007 MAT ~ 05/2008 MAT ~ 05/2009 MAT ~ 05/2010 MAT ~ 05/2011

IPM growth %

IPM (CR)

3,403.6

2,544.3 2,334.82,038.7

6.9

5.24.7

4.13.7 3.7

3.3 3.3 3.12.7

2.3 2.3

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

4,000.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

IPM data for MAT 05/ 2011

IPM – HIGHLY FRAGMENTED

2,334.82,038.7 1,845.8 1,840.1 1,639.1 1,613.6 1,546.4 1,330.3 1,153.6 1,133.4

0.0

500.0

1,000.0

0.0

1.0

2.0

� Highly fragmented - Market share of top 10 companies – 40

%

� Intas ranks 12th in the ORG – IMS report

�MNC’s increasing market share with JV’s / Aquisitions

THERAPEUTIC CATEGORIES

MAT ~ 05/2007 MAT ~ 05/2008 MAT ~ 05/2009 MAT ~ 05/2010 MAT ~ 05/2011 Growth in 5 yrs.

IPM 28591.0 32688.0 36114.6 43275.9 49399.9 58%

Anti-infectives 5061.1 5861.7 6328.0 7434.4 8366.3 60%

CARDIAC 2923.8 3577.4 4063.7 4939.8 5646.8 52%

Gastro Intestinal 3181.8 3580.7 3926.0 4695.3 5440.6 58%

Respiratory 2616.3 2918.4 3205.6 3878.5 4274.3 61%

Pain / Analgesics 2663.2 2858.0 3131.9 3739.3 4220.9 63%

Vitamins / Minerals / Nutrients 2419.1 2614.1 2788.6 3351.0 3823.0 63%

Anti Diabetic 1312.7 1676.9 1909.7 2444.6 2995.0 44%

Neuro / CNS 1535.6 1771.0 1982.2 2423.9 2800.6 55%

Gynaec. 1573.8 1838.7 2086.0 2509.9 2797.2 56%

Derma 1582.4 1762.4 1994.8 2375.9 2723.0 58%

Others 505.8 686.2 812.1 984.2 1114.0 45%

Lifestyle /

Environmental

change diseases

SCM IN PHARMA INDUSTRY

� Demand Planning

� Sourcing

� Production planning

� Distribution Planning

Logistics Execution & CFA Management� Logistics Execution & CFA Management

SOURCING ( PURCHASE )

� Aggressive negotiation skills

� API - Backward integration wins

� Adds to bottom line

� Reverse Auctions work well

� Domestic VS Import decisions� Domestic VS Import decisions

� Duty benefits against exports ( Ad. Lic. / DEPB )

� Cost reduction without compromising on quality

DEMAND PLANNING

� Forecasting mainly depends on

� Long term Corporate vision

� Seasonality and Market Forces

� Brand Focus & Promotion

� Competitors activity� Competitors activity

� Higher Inventory is acceptable vis-à-vis Stock

out

� Inventory cost is lower than Gross Margin

� Fear of brand replacement

� Demand generation is a long processHigh Order to Cash cycle

(120–180 days )

FORECASTING ACTS AS A DRIVER FOR

THE PLANNING PROCESS

Controllable Internal Events

Uncontrollable External Events

ForecastingDecision Making

Planning

PRODUCTION PLANNING

� S &OP / ORM

�MRP / MPS / RCCP

Key deliverables

�Make - Buy decisions

Low Reaction time to market ( Postponement )� Low Reaction time to market ( Postponement )

� New product planning and aggressive launch

� Capacity utilization

� Accuracy in scheduling and availability dates

� Regulatory changes leading to delays

� Contract manufacturing to share idle capacity

Prioritize backlogs

Prioritize key SKUs

of strategic marketsFinalize

unconstrained

demand req.

Incorporate gaps between

Key SKUs decided based on:

� Strategic Importance

� Planned promotions

� Planned new product introductions

� Focus products

� Financial Importance

� SKU Contribution as a % of total market

S&OP PROCESS

Conduct “what-ifs” and

evaluate multiple options

Prioritize firm

customer orders

(tenders etc.)

Monthly Pre-S&OP Process

Conduct RCCP

and develop

feasible solutions

Incorporate gaps between

requirements and

committed plan in the

next DRP

Post S&OP Process

S&OP

DISTRIBUTION� Domestic Distribution

� Primary Transportation � AIR cargo

� Surface cargo

� Full truck movement

� Part loads

� Express cargo

Multi Modal

�Warehousing

� Inhouse

� Outsourced

� 3 PL

�Multi Modal

� Train

� Secondary transportation – Primarily by Road

� International Logistics

� AIR Cargo

� Ocean

� Multi Modal

Inhouse

Manufactur

er

Regional

Warehouse

1

CURRENT DISTRIBUTION NETWORK

Regional

Warehouse

2

Regional

Warehouse

3

Contract

Manufactur

er

C & FA

StockistGovt.

Institutes

Chemist Hospitals /

Clinics

INTERNATIONAL LOGISTICS

CHALLENGES IN PHARMA SUPPLY

CHAIN

� Development of new formulations

� New Drug Delivery System ( NDDS )

� International Patent Regime

� Demand Management / Seasonality

� Counterfeiting / Spurious drugs� Counterfeiting / Spurious drugs

� Cold Chain management

COLD CHAIN MANAGEMENTWHY, HOW, AND WHEN

CONTENTS

� What is Cold chain

� Why Cold chain

� Cold Chain breaks

� Impact of Cold Chain Breaks

� Probable causes of Cold Chain breaks

� Factors Effecting Cold Chain transportation� Factors Effecting Cold Chain transportation

� Regulatory environment

� What needs to be done

� Packaging solutions

� Indicators and Early warners

� Cold Chain Policy – Systems Validation

� Cold Chain implementation plan

� Recommendations

WHAT IS COLD CHAIN

• Cold Chain is becoming more & more Important and Essential in the Indian Pharma Market.

– Increasing No of Products

– Increasing importance of cold chain products in Healthcare.

Definition:

• ‘Cold Chain’ is a Storing & Transporting the Pharmaceutical Products at ‘Recommended’ temperatures from the point of Manufacturing to the point of use. Manufacturing to the point of use.

• ‘Cold Chain’ is an uninterrupted series of storage and distribution activities which maintains prescribed temperature range as per the respective product requirement right from the point of manufacturing to point of consumption.

• Broadly there are three categories of Cold Chain Products.

– Product Stored Between -10 to -20 ℃

– Product Stored Between 2 to 8 ℃

– Product Stored Between 15 to 25 ℃

WHY COLD CHAIN

Growing logistics/distribution needs for high quality life sciences products due to

� Demographic Changes

� Global warming

� New Markets – longer transit times

� New Product Trends – Biologics, Drugs with Larger Molecular Structures, Highly Complex Compounds and new Biotech products

� The expiration dating of licensed products is based on the stability data collected over time on a product stored within a recommended collected over time on a product stored within a recommended temperature range

� Vaccines contain live virus / bacteria

� Increased rate of local reactions after vaccine

Further impetus if provided by � Regulatory pressures

� Quality pressures

� The distribution process, much unlike the manufacturing process does not operate under a highly-controlled environment.

CONTROLLINGCOLDCHAIN....

Responsibility maintain the safety and efficacy of drugs

• Supply chain plays a critical role in same by effective management of the un- interrupted cold chain movement.

The key Challenges in effective Cold Chain Movement

• Inadequate strong infrastructure suitable to cold chain movement creates challenges to SCM function.

– Cold Storage Hubs at Sea Ports & Air Ports

– Effective freight movement system.– Effective freight movement system.

• The manufacturers are taking utmost care to ensure that the cold chain is maintained till the supply is done to distributors/ stockiest through it’s C&FCs / Depots.

• The lack of facility at many stockiest creates concern for cold chain movement in the secondary phase of transportation & storage.

Present Mode of Movements:

• Surface (With adequate Coolants placed inside)

• Air Courier(With adequate Coolants placed inside)

• Refrigerated Van

PRODUCTS WHICH REQUIRE COLD-

CHAIN

� Vaccines

� Biological products

� Insulin

� Hormones

� Blood fractions & reagents� Blood fractions & reagents

� Some antibiotics

� Some diagnostic and laboratory reagents

� Dairy Products, Frozen foods

� Fruits and Vegetables

� Fish and Meat

TEMPERATURE-ABUSED PRODUCT IS AN

ADULTERATED PRODUCT

� Potency disturbed, impacts the shelf life of product

� Increase in impurity levels

� Vaccine efficacy grossly suffers

� Some vaccines are sensitive to heat others can get damaged by

freezingfreezing

� Alternate lower & higher temperatures can cause ampoules to

crack and leak

� Change in color

� Sediment formation

� Leading to regulatory blacklist, product withdrawal

COLDCHAINBREAKS

Factors Affecting Cold Chain Management?

• INFRASTRUCTURE for uninterrupted requisite storage condition: This involves Primary Movement Storage at CWH/ C&FC & Secondary Movement to Stockiest.

• PERSONNEL : Trained Personnel at CWH / C&FC as well as at the secondary phase of Product movement.

• EQUIPMENT : Right equipments for storage and transportation of the Products. Frequent validation of the Storage equipments should be carried out. Backup system must be available in case of failure of carried out. Backup system must be available in case of failure of primary equipment. Use of data loggers for continuous temperature monitoring.

• PROCEDURES : To ensure that the Products are stored and transported at appropriate storage condition. The required information of cold chain handling (Packaging / Movement) is available with key personnel.

• MONITORING: To ensure the personnel are working effectively with available equipments & infrastructure under the given procedure.

A case study conducted recently indicated 40% of all temperature

Sensitive shipments had deviations to SOP’s

WHERE ARE THE GAPS

AIRPORTAIRPORTWAREHOUSEWAREHOUSE

MODE OF TRANSPORTATIONMODE OF TRANSPORTATION

CARRYING AND FORWARDING AGENTSCARRYING AND FORWARDING AGENTS

…..…..VEHICLEVEHICLE

PRODUCTIONPRODUCTION

Process Flow from Manufacturing to

patient

PATIENTSPATIENTS

STOCKIST & STOCKIST & CHEMISTCHEMIST

Controlled Process with proper

documentationWorking under process for proper control

Not under control, work has to be done for better

compliance & adherence to standard procedures

R4

Distributors

Hospitals

Clinics

Physicians

More

Risk

High

Risk

Manufacturers

Importer

Distributors

Low

Risk

Most Secured Least Secured

COLD CHAIN BREAKS

� 42 Steps, 15 players, and 35 Cold chain Breaks

PROBABLE CAUSES OF COLD CHAIN BREAKS

• Inadequate planning prior to shipment.

• Improper timing of shipments eg. Shipping at weekends.

• Lack of communication between sender and receiver

• Delay in clearing cargo from airports due to inadequate

documentation or heavy traffic at airports.

• Cold rooms not initially qualified

• Calibration is missed on temperature probes

• Chart recorder malfunctions

• Alarm does not alert operators• Alarm does not alert operators

• No documentation for recording, storing and review of temperature

monitoring data

• Inadequacy of Refrigerated van /Packaging solution to maintain

cold

chain during transportation.

• Power failure at storage locations due to equipment failure or

natural

disaster such as heavy rains.

• Inadequate or no generator back-up for cold rooms.

• Improper management in the event of cold chain break could

result in

damage to the product.

REGULATORY EVOLUTION

• Packaging material to have very high properties of insulation

• The product must be packed in appropriate Packaging

Material with sufficient Coolants.

SIGNIFICANCE OF PACKAGING IN COLD

CHAINMOVEMENT?

Material with sufficient Coolants.

• The no of coolants must be determined based on proper

validation study carried out during the transit time between

two destinations.

• The stability study should be available for the assessment of

minimum temperature excursion

• Should have minimum weight so as to make it more friendly in

handling

• Labeling instruction should be clear and visible for everyone to

understand

Active Cooling Solutions Passive Cooling

Solutions

Is there one common packaging

solution to meet all requirements?

To what extend do you validate

your packaging?

Do you monitor it’s performance?

STRATEGY – BEST SOLUTIONS

Do you monitor it’s performance?

Does it meet product label

requirement in transport today?

Are your service providers

prepared to properly manage your

packaging solutions?

(handling-storage-asset and

SOP-management)

ACTIVE COOLING

Envirotainer

Unicooler

Envirotainer

PASSIVE COOLING

� Thermocol boxes – Feasible for not more

than 72 hrs. transit

� Cool Boxes

� Pallet Boxes

� Thermal Blankets - Precautionary

BETTER COLD-BOX DESIGN

APPROPRIATE LABELING

CUMULATIVE TIME-

TEMPERATURE INDICATORWARNING LABELS

Freeze-marker

TEMPTIME CORE TECHNOLOGIES

APPLIED TO ADDRESS UNMETMARKET NEEDS

Core Products

Freeze

39

Cumulative

Heat

Delayed Heat

Threshold

Instant Heat

Threshold

Cobalt wireless Datalogging solution from Oceasoft France

System Configuration

INTEGRATED WIRELESS FACILITY AND

TRANSPORT MONITORING SOLUTION

Cobalt radio Modules Cobalt radio Modules

with sensorwith sensorCobalt Radio Cobalt Radio

Receiver and Receiver and

Repeater Repeater

Thermo software ( server/ client Thermo software ( server/ client

based) based)

Facility Monitoring Solution

• Wireless Datalogging System

For monitoring Single location Multi location

INTEGRATED WIRELESS FACILITY AND

TRANSPORT MONITORING SOLUTION

Transport Monitoring Solution

• GPS/ GPRS based fleet management system combined with

wireless Datalogging System

INTEGRATED WIRELESS FACILITY AND

TRANSPORT MONITORING SOLUTION

HOW WE CAN IMPROVE EFFICIENCY &

MINIMISE VARIANCE – IMPLEMENTATION PLAN

� Shipping Qualification protocol

� Cold chain logistics quality policy

� Temperature range stipulation on all documents

� All stake holders concurrence and adherence

� Determine product limits

� Suitable staff training

� Self and third-party audits

Recommendations

� A unified body to have Industry – Govt. linkages and set

guidelines. ( Cold Chain council )

� Special focus has to be given to the subject which should

encourage investments

� To have written dispatch and delivery procedures

� All stake holders need to contribute from Ethical stand point

NOT only from Commercial stand pointNOT only from Commercial stand point

� Efficient monitoring mechanisms

� Plan time defined delivery – Minimum transit time

� Proper labeling for Storage and handling conditions

� Plan for smaller shipments

� Temp. Recording checklist through out the transit

Thank Thank Thank Thank youyouyouyou