With the Indian pharma industry depicting tremendous potential and generic manufacturers foraying into research and development from being mere producers of biosimilars (generics); the question remains if the pharma supply chain is geared up to meet future challenges?
Lionel Alva
The quality of modern life has seen a sea change owing to how life-sciences and healthcare has evolved over the span of a few centuries. For contemporary medicine has changed the course of human history. It has wrought a new epoch when it comes to fighting death and disease.
In the Indian context, pharmaceuticals is a big business and the country is already a pharma manufacturing hub with the industry expected to play a much larger role in the near future. The pharma industry is thriving and India’s pharma market is the third largest in terms of volume and thirteenth largest in terms of value at present. The country is also the largest provider of generic drugs worldwide with the Indian generics accounting for 20 percent of global exports in terms of value. However, in recent times consolidation has become a key characteristic of the Indian pharmaceutical industry as it is highly fragmented. The government, depicting its support for the industry has allocated 331.5 billion rupees (about $5 billion) for the health sector. Further, lawmakers have also provided exemptions to drug-makers through indigenous research & development from price control for five years. A joint report by Assocham and TechSci reveals that the Indian pharmaceutical industry is expected to touch $55 billion by 2020 as against the current size of $18 billion but the exports may slow down to grow at a CAGR of 7.98 percent in value terms due to tightening of regulatory mechanism in top exports markets of US, Russia and Africa. India is the largest supplier of medicine to the US and pharmaceutical exports clocked a CAGR of 10.3 percent to $15.5 billion during 2014–15 from $10.4 billion during 2010–11. Prasanna Sampath, senior manager, SCM, Biocon, avers, “At present, the infrastructure required for maintaining the temperature throughout transit is not suffice. There is also a need for skill training as trained personnel are required to handle temperature sensitive shipments. Weather conditions for global shipments must also be taken into account and in certain countries the custom clearance procedures are uncertain and tedious.” Even though the generics manufactured in India have several advantages such as the cost of manufacturing being significantly lower than other major regions with class pharma production standards, the key question is if the pharma supply chain in India shall eventually become robust enough to meet the stringent requirements of an exponentially growing pharma business? Indian pharma companies are also making a foray into research and development to create new molecules, going beyond the role of just being producers of generic versions of drug compounds. While the future for generics depicts promise, at present, with US being a key market for Indian pharma manufacturers, the consolidation of pharmacy players has led to a rise in pricing pressures for generic companies existing in the US market, which is expected to result in a decline in the year-on-year growth of pharmaceutical exports from India over the next five years. Furthermore, with pharmaceuticals evolving from the ever ubiquitous pill to biological products and vaccines has made the criterion for the pharma supply chain all the more challenging. It has placed an increasing emphasis on temperature controlled transportation. Since any collapses within the cold chain may lead to losses worth thousands of dollars. In certain instances, a lapse may even cost lives as certain pharmaceutical products may be life critical. Consequently, this could lead to damaged reputations, slumping sales and lower investor confidence. Thus a supply chain that overcomes all these challenges is the need of the hour. With the pharma and lifesciences industry expanding, logistics providers must focus on investing in more research and development to cater to the evolving needs of the pharma market. Thus life sciences and healthcare companies that want to overcome the challenges of maintaining product integrity, regardless of the climate conditions faced during global distribution, will need to build a new generation of cold chains. The World Health Organisation estimates that 200,000 people a year die because ineffective, fake, and substandard malaria drugs which don't clear their systems of the parasite. According to Samar Nath, CEO, DHL Global Forwarding, “Maintaining efficacy of their products during transportation till point of consumption is the critical focus of the integrity of the supply chain covering safety, temperature conditions, humidity, security etc. Due to an increase in biological products, controlled room temperature products (CRT), now make up nearly 90 percent of all shipments. With some regulations now covering a much wider temperature range, we are seeing changes in packaging requirements and new solutions entering the market for products between 15 -20 Celsius and 15- 30 Celsius.” Adding to the complexity of the pharma supply chain is the regulatory compliance required to enter into emerging markets. This has impelled a need for logistics providers to keep abreast of the latest solutions and technologies to guarantee maximum efficacy in their supply chain. “Multi-Channel distribution in pharmaceuticals is in many instances governed by the regulatory framework of healthcare authorities at country level, the demand supply gap of a product as well as its shelf life. Large pharmaceutical companies frequently explore ways and means of ensuring better market penetration, quicker response times to demand for products and they maintain the cost/quality balance by using multi channel distribution strategies,” asserts Turhan Ozen, senior vice president, global sector leader- Healthcare, CEVA Logistics. Apart from this there has also been a focus on shorter delivery cycles. This has led to air cargo playing a larger role. “The airlines themselves face challenges in selecting handling partners with the resources and correct procedures to handle temperature controlled shipments. There cannot be a single solution; while the forwarders, shippers, airlines and handlers design their own processes which could be conflicting, the way out of this impasse is for everyone to cooperate and seek a workable solution in procedures that are uniform across the supply chain. Here, collaboration between the stake holders like forwarders, airports, ground handlers, airlines, customs brokers and the logistics function needs to be seamless for a successful supply chain,” says Ryan Viegas, vice president, Supply Chain & Procurement,Watson Pharma (Actavis). The most critical risks in transporting via airfreight occur at handling and handover points. On the tarmac, exposure being one of these, is currently the least addressed. The IATA CEIV certification is an endeavour to bring about a standardisation in the handling of pharma products. The IATA CEIV Pharma programme is a “GDP(Good Distribution Practice)+” certification given it encompasses GDPs from around the world, international standards such as WHO Annex 5 and IATA Chapter 17 and national or local regulations as applicable. This ensures excellence in the transportation and handling of pharmaceutical products while at the same time addressing specific air cargo needs. Providing an international perspective on IATA CEIV certification, Mark Whitehead, chief executive of Hactl, says, “The progressive adoption of pharma handling standards and procedures as laid down by WHO GDP and IATA CEIV is improving pharma handling, but there is still much to be done. Hactl has, as always, ensured that it is ahead of the game: we were the first handler in Hong Kong to obtain GDP accreditation, resulting from a total re-engineering of our processes and investment in new equipment such as thermal dollies. “ The implementation of IATA CEIV certifaction has resulted in shorter handling times and the maintenance of constant temperatures from unloading through to hand-out of the goods. However, more needs to be done and the challenge for air cargo as a whole is to implement such standards at all points throughout the supply chain; because one break in the cool chain undermines all the efforts elsewhere. Sampath adds, “Providing fulfillment and distribution for time-sensitive products starts with supply chain visibility (SCV). SCV is the ability to track inventory, distribution and delivery information, in real time. The chain can be disturbed due to factors that we might total have no control on like delays at customs or on the tarmac, few ad irports are not equipped to handle sensitive cargo and the last mile transit in developing countries.” At the regulatory level, the government has mandated bar-coding of mono cartons of drugs shipped out of the country from July as an additional measure to ensure that its reputation isn't tarnished by medicines manufactured illicitly in other countries and passed off as made in India. This step would help greatly in enhancing the visibility of the pharma supply chain. “RFID would be a significant role in the future for biological as they need constant track and trace. Once GST comes is implemented then things would also be much smoother and supply chain operations would be more streamlined. Location of warehousing would also be rearranged once more hubs come in and GST is implemented, “concludes PC Sharma, CEO, TCI XPS.