Optimising the pharma supply chain

By
November 7th, 2010

EMR-Emerging-trends-1

High dependency on certain vendors in drug manufacturing

Drug manufacturing process is a complex process, which comprises of blending of API (active pharmaceutical ingredient) in solvent to a specific formulation, which is solidified to desired form & then packaged to ship.

API, which is the main component responsible for desired output from the drug, holds greater importance among all raw materials and also requires complex chemical processes to synthesize. In some cases, there are only a handful of suppliers who are equipped to produce APIs that comply to desired standards, this situation gives rise to certain potential challenges to the buyers. In this note we discuss these challenges and probable solutions to mitigate the risks to the buyer.

Our recent study with a renowned pharma company of India revealed that ~65% of their raw material for a specific blockbuster drug, is procured is from a single vendor. The vendor, aware of the situation, left very little room for negotiation in terms of pricing, minimum order quantities (MOQs), quality control and credit terms. High dependency on this vendor pushed the pharma manufacturer to agree to the terms of the vendor.

Mitigation strategies

Developing an alternate source

Actively look for alternate vendors, who can supply the same product. This could prove difficult, if the desired quantities are large. It is suggested to on-board a secondary vendor, procuring in smaller quantities to keep the primary vendor in check. Identifying and developing an alternate may require working with the vendor in upgrading the infrastructure at vendor location.

Exploring vendors from other geographies

Identifying and procuring from offshore vendors, sometimes can offer significant cost advantage and also helps manufacturer with necessary leverage in negotiating with primary vendors. Procuring from other geographies might have an impact on logistics costs.

Outsourced manufacturing

Companies should look for other countries that provide favorable environment for making the complete product, and form partnership with local manufacturers to outsource manufacturing of the drug.

Backward integration

Depending on the importance of the drug to the company, it can be lucrative to invest in backward integration of the specified API to make it in-house. This option can be looked at if the drug is of utmost priority for current & future revenues.

Depending on the importance of the drug to the company, it can be lucrative to invest in backward integration of the specified API to make it in-house. This option can be looked at if the drug is of utmost priority for current & future revenues.

NITI AAYOG prepares road map for the complete transformation of India’s Healthcare System

A report titled ‘Health Systems for a New India: Building of Blocks’ was released by NITI Aayog on November 18, 2018. It focuses on breaking silos in the health space and removing fragmentation between various initiatives, ensuring greater convergence between ministries as well as the Centre and states, as already initiated under Ayushman Bharat. The report boasts the capability of India to be able to save lives of more than million infants and reduce the death age of adults with the rollout of proposed reforms.

The report highlights the slim percentage of Indian population covered under health insurance which pose to be a major challenge to overcome in implementation of the reforms.

This report was guided by analysis undertaken by well-known international experts, along with other national counterparts representing the government, private sector and academia.

NITI AAYOG prepares road map for the complete transformation of India’s Healthcare System

The global healthcare company, Novartis has collaborated with the global leader in digital therapeutics, Biofourmis to manage patients with Heart Failure. Biofourmis, founded in Singapore and based in Boston is renowned for its revolutionary product, BiovitalsHFTM and FDA-cleared BiovitalsTM Analytics Engine. Novartis joined hands with Biofourmis to benefit from the later’s product which is integrated with wearable sensors to capture data to be analysed which will help identify early signs of heart failure and enable Novartis to provide
preventive interventions in patients with heart failure.

Novartis has planned to roll out this product in Southeast Asia initially and gradually take it globally from there.

India to host BRICS Digital Health Summit

The Prime Minister of India, Narendra Modi, at the 11th BRICS Summit held in Brazil announced that India will host BRICS Digital Health Summit. The 11th BRICS Summit happened on 14th November, 2019 under the theme “Economic Growth for an Innovative Future” and was attended by PM Narendra Modi. During his address at the summit Modi announced that India will host BRICS Digital Health Summit on innovative solution to healthy
lifestyle that will seek integration of digital technology with health informatics and diagnostics. This initiative
will reflect Modi’s ‘Fit India’ movement.

The above details were shared to media by TS Tirumurti, Secretary, Economic Relations (Ministry of External Affairs)

Indian medical travel market estimated to reach Rs 65,000 crore: FICCI-EY Report

FICCI in collaboration with Ernst & Young released a report titled ‘India: Building Best Practices in Healthcare Services Globally’ which stated that India’s medical value travel(MVT) is expected to reach US$ 9 billion (around Rs. 65,000 Crore) by 2020. With a CAGR of 13 percent, the MVT market which is US$ 54 billion is expected to grow consistently till 2025. Among 41 major medical tourism destinations, India is viewed as one of the most preferred destination and secured 5th position.

The report says that affordability and accessibility of quality healthcare services are the key drivers of MVT growth in India. Medical travellers can save as much as 50 percent owing to the average daily travelling cost within India.

FICCI Medical Travel Value Awards 2019 were also presented during Advantage Health Care India – 2019
Summit at Greater Noida on November 18th. The awards were presented under 15 categories. Apollo Cancer Institute and Apollo Hospital from Chennai bagged awards in the categories of Medical Value Travel Specialist Hospital – Oncology & Transplant – Bone Marrow and Cardiology Cardiac Surgery respectively.