SUPPLY CHAIN IN PHARMACEUTICAL INDUSTRY

Ravi Kumar VP - Logistics & Distribution Intas Pharmaceuticals Ltd.

IPM GROWTH
Indian Pharmaceutical market IPM over last 5 yrs.
60000.0 25

50000.0 19.8 43275.9 40000.0 (CR) 32688.0 14.3 30000.0 IPM 28591.0 10.5 20000.0 36114.6

49399.9 20

14.2

10000.0

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

IPM

10

growth

15

IPM HIGHLY FRAGMENTED

IPM data for MAT 05/ 2011
8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 3,403.6 2,544.3 2,334.8 2,038.7 1,845.8 1,840.1 5.2 4.7 4.1 3.7 3.7 3.3 3.3 3.1 6.9 4,000.0 3,500.0 3,000.0 2,500.0 2,000.0 2.7 2.3 2.3 1,500.0 1,000.0 1,546.4 1,330.3 1,153.6 1,133.4 500.0 0.0

1,639.1

1,613.6

Highly fragmented - Market share of top 10 companies 40 % Intas ranks 12th in the ORG IMS report MNCs increasing market share with JVs / Aquisitions

THERAPEUTIC CATEGORIES
IPM Anti-infectives CARDIAC Gastro Intestinal Respiratory Pain / Analgesics Vitamins / Minerals / Nutrients Anti Diabetic Neuro / CNS Gynaec. Derma Others MAT ~ 05/2007 MAT ~ 05/2008 MAT ~ 05/2009 MAT ~ 05/2010 MAT ~ 05/2011 Growth in 5 yrs. 28591.0 32688.0 36114.6 43275.9 49399.9 58% 5061.1 5861.7 6328.0 7434.4 8366.3 60% 2923.8 3577.4 4063.7 4939.8 5646.8 52% 3181.8 3580.7 3926.0 4695.3 5440.6 58% 2616.3 2918.4 3205.6 3878.5 4274.3 61% 2663.2 2858.0 3131.9 3739.3 4220.9 63% 2419.1 2614.1 2788.6 3351.0 3823.0 63% 1312.7 1676.9 1909.7 2444.6 2995.0 44% 1535.6 1771.0 1982.2 2423.9 2800.6 55% 1573.8 1838.7 2086.0 2509.9 2797.2 56% 1582.4 1762.4 1994.8 2375.9 2723.0 58% 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

SOURCING ( PURCHASE )
Aggressive negotiation skills API - Backward integration wins Adds to bottom line Reverse Auctions work well 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

Higher Inventory is acceptable vis--vis Stock out

Inventory cost is lower than Gross Margin Fear of brand replacement Demand generation is a long process
High Order to Cash cycle (120180 days )

FORECASTING ACTS AS A DRIVER FOR

THE PLANNING PROCESS
Controllable Internal Events

Uncontrollable External Events

Forecasting

Planning

Decision Making

PRODUCTION PLANNING
S &OP / ORM MRP / MPS / RCCP Key deliverables Make - Buy decisions 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

S&OP PROCESS
Prioritize key SKUs of strategic markets

Key SKUs decided based on: Strategic Importance

Planned promotions Planned new product introductions Focus products

Finalize unconstrained demand req.

Financial Importance
SKU Contribution as a % of total market

Prioritize backlogs
S&OP

Conduct RCCP and develop feasible solutions

Prioritize firm customer orders (tenders etc.)

Conduct what-ifs and evaluate multiple options

Incorporate gaps between requirements and committed plan in the next DRP

Monthly Pre-S&OP Process

Post S&OP Process

DISTRIBUTION
Domestic Distribution
Primary Transportation
AIR cargo Surface cargo Full truck movement Part loads Express cargo Multi Modal Train

Warehousing
Inhouse Outsourced 3 PL

Secondary transportation Primarily by Road

International Logistics
AIR Cargo Ocean Multi Modal

CURRENT DISTRIBUTION NETWORK

Inhouse Manufactur er Regional Warehouse 1 Regional Warehouse 2 C & FA Contract Manufactur er Regional Warehouse 3

Stockist

Govt. 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 Cold Chain management

COLD CHAIN MANAGEMENT

WHY, 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 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. 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 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.

CONTROLLING COLD CHAIN....

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. The manufacturers are taking utmost care to ensure that the cold chain is maintained till the supply is done to distributors/ stockiest through its 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 COLDCHAIN

Vaccines Biological products Insulin Hormones 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 freezing Alternate lower & higher temperatures can cause ampoules to crack and leak Change in color Sediment formation Leading to regulatory blacklist, product withdrawal

COLD CHAIN BREAKS

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 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.

WHERE

ARE THE

GAPS

A case study conducted recently indicated 40% of all temperature Sensitive shipments had deviations to SOPs

Process Flow from Manufacturing to patient

PRODUCTION VEHICLE AIRPORT ..

WAREHOUSE

MODE OF TRANSPORTATION CARRYING AND FORWARDING AGENTS

Controlled Process with proper documentation Working under process for proper control Not under control, work has to be done for better compliance & adherence to standard procedures

STOCKIST & CHEMIST

PATIENTS

R4 More Risk
Physicians Hospitals Clinics

High Risk

Low Importer Risk

Manufacturers

Distributors

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 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

SIGNIFICANCE OF PACKAGING IN COLD CHAIN MOVEMENT?

Packaging material to have very high properties of insulation The product must be packed in appropriate Packaging 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

STRATEGY BEST SOLUTIONS

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 its 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

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

WARNING LABELS

CUMULATIVE TIMETEMPERATURE INDICATOR

Freeze-marker

TEMPTIME CORE TECHNOLOGIES APPLIED TO ADDRESS UNMET MARKET NEEDS

Core Products
Freeze

Cumulative Heat

Delayed Heat Threshold

Instant Heat Threshold

39

INTEGRATED WIRELESS FACILITY AND

TRANSPORT MONITORING SOLUTION
Cobalt wireless Datalogging solution from Oceasoft France System Configuration

Cobalt radio Modules with sensor Cobalt Radio Receiver and Repeater

Thermo software ( server/ client based)

INTEGRATED WIRELESS FACILITY AND

TRANSPORT MONITORING SOLUTION
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

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 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 you