Mukesh Khare, Partner & Head-India Operations, Kaizen Institute highlights that aspiring to become a hub for cost-effective manufacturing and groundbreaking research and development, the pharma industry is embarking on a growth trajectory. However, the path ahead is not devoid of challenges, as there exists a discernible gap between the strategic vision and the practical operational reality of the industry
Renowned as the “Pharmacy of the World,” the Indian pharma sector has come to occupy a pivotal position within the global pharma industry. At present, India is ranked third worldwide in terms of pharma production by volume and maintains the 14th position in terms of production value.
As per a recent report by EY FICCI, the Indian pharma market is anticipated to reach $130 billion in value by the end of 2023. This projection derives impetus from the rising consensus regarding the paramount importance of delivering new and innovative medicinal solutions to patients in need.
In the midst of a world reeling under the far-reaching impacts of the COVID-19 pandemic on communities and industries, the pharma sector emerged as a resilient force, rising to the occasion. Aspiring to become a hub for cost-effective manufacturing and groundbreaking research and development, the pharma industry is embarking on a growth trajectory.
However, the path ahead is not devoid of challenges, as there exists a discernible gap between the strategic vision and the practical operational reality of the industry. There is thus, a need to upskill the industry, overhaul existing models and processes, and undertake a vital transformation of the supply chain.
Understanding challenges
In the midst of the continuous growth and expansion, supply chains in the pharma sector have become increasingly global, complex, and opaque, posing concerns about product quality and safety, causing multiple repercussions. The presence of multiple stakeholders, combined with the absence of cohesive integration across the network, impairs the visibility and traceability of products as they move up in the value chain.
Further, when talking about supply chains, there are a number of elements causing complexity – scattered manufacturing facilities leading to multi-layer networks and material movement with increased costs, decentralised R&D centres creating complexity in technology transfer and lengthening timelines for regulatory approval, and complex and unequipped distribution networks which fall short of fulfilling the exigencies of drug storage and handling.
Furthermore, disruptions to the pharma sector, including natural disasters, international trade tensions, cyberattacks, and global pandemics have become commonplace, negatively impacting the supply chain. The impact of these disruptions gets further exacerbated when companies in the sector rely on a single region for sourcing critical materials, which puts them at the risk of shortages during natural disasters and local conflicts.
Adding to this is the lack of transparency vis-a-vis the value chain. More often than not, companies lose visibility and control of the product’s movement, and this dearth of insight into the operational procedures of the suppliers can pose a substantial risk for pharma firms.
Upskilling the industry and building resilience
Reducing complexities that afflict pharma supply chains, in a scenario like this becomes imperative, offering myriad of advantages. As a first step, it is important to consolidate the fragmented network and establish an ecosystem that facilitates smooth communication among the diverse stakeholders-suppliers, manufacturers, distributors, and customers.
Moving forward, having an end-to-end view of the supply chain (supply-and-demand mapping and rationalization) is vital for developing an understanding of the processes, thereby facilitating the identification of potential vulnerabilities.
What becomes even more important here is to adopt risk assessments practices. Leveraging scenario planning and simulation models to anticipate vulnerabilities can help quantify potential risks and their plausible impact, while also granting additional time for implementing mitigation strategies.
Further, in the discourse related to disruptions, one simple practice for building resilience would be to expand the network of suppliers. Reducing reliance on a single source for critical components or raw materials can be a vulnerability, as can depending on multiple suppliers concentrated in the same place. Thus, firms should constantly look to diversify their sources. Additionally, being able reroute and redirect components between sites can help sustain production during a sudden upheaval, should the need arise – robust digital systems, however, may be required to explore favourable scenarios in this context.
In addition to building a resilient supply chain, there is also a need to strengthen quality processes. To sustain its global standing and keep up with the changing medicinal landscape, it is imperative for India to establish a robust quality organization – with visibility and oversight across all good manufacturing practices in the supply chain, both internal and external. Thus, quality control professionals must be equipped to ensure that products meet international standards, enabling them to address mounting regulatory demands and heightened scrutiny.
In this scenario, there is a need to foster more government-industry-academia collaborations to strengthen innovation, focus on quality manufacturing, ensure affordability, and advocate for environmentally friendly practices – which will be key to ensuring the growth and success of the Indian pharma industry.
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