K J Somaiya Institute of Management studies & research

OVERVIEW of PHARMACEUTICAL INDUSTRY

Submitted by
Nitin Palve Dibyajyoti Bose Rangoli Singh

2012

ACKNOWLEDGEMENT

We place on record and warmly acknowledge the continuous encouragement, invaluable supervision, timely suggestions and inspired guidance offered by our guide Dr. J S Lamba , K J Somaiya Institute of Management Studies and Research ,Mumbai, in bringing this report to a successful completion. We are grateful to Dr. J S Lamba for permitting us to make use of the facilities available in the department to carry out the project successfully. Apart, he has been helping closely at a personal level and we acknowledge his contribution. Last but not the least we express our sincere thanks to all of our friends who have patiently extended all sorts of help for accomplishing this undertaking. Finally we extend our gratefulness to one and all who are directly or indirectly involved in the successful completion of this project work .

Nitin Palve Dibyajyoti Bose Rangoli Singh

DECLARATION

We hereby declare that the project work entitled Overview of Pharmaceutical Industry submitted to the K J Somaiya Institute of Management Studies and Research ,Mumbai, is a record of an original work done by us under the guidance of Dr. J S Lamba This project work is submitted in the partial fulfillment of the requirements for the Operations Management subject for PGDM Programme. The results embodied in this course have not been submitted to any other University or Institute for the award of any course. Date- 02-Oct-2012 Place-SIMSR, Mumbai

Nitin Palve Dibyajyoti Bose Rangoli Singh

CERTIFICATE
This is to certify that the Project entitled, Overview of Pharmaceutical Industry submitted by Nitin Palve, Dibyajyoti Bose, Rangoli Singh in partial fulfillments for the requirements for course of Operations management at K J Somaiya Institute of Management Studies and Research, Mumbai An authentic work carried out by Nitin Palve, Dibyajyoti Bose, Rangoli Singh under my supervision and guidance. To the best of my knowledge, the matter embodied in the Project has not been submitted to any other University / Institute for any course.

Date:

Dr. J S Lamba K J Somaiya Institute of Management Studies and Research, Mumbai

Contents
1 Pharmaceutical Industry Overview .................................................................................................. 7 1.1 1.2 1.3 Pharmaceutical Industry ............................................................................................................... 7 Global Scenario ............................................................................................................................. 7 Indian pharmaceutical Industry .................................................................................................. 10 Overview ............................................................................................................................. 10 Exports ................................................................................................................................ 12

1.3.1 1.3.2 2

Marketing strategies ......................................................................................................................... 13 2.1 2.2 Market characteristics ............................................................................................................... 13 Marketing Process in Pharmaceutical Industry .......................................................................... 14 Strategies for External customers ....................................................................................... 15 Strategies for the Internal Customers................................................................................. 17

2.2.1 2.2.2 2.3 3

Market Demand & Product share ............................................................................................... 17

Manufacturing Process & Operations............................................................................................. 18 3.1 3.2 3.3 Introduction ................................................................................................................................ 18 R&D ............................................................................................................................................. 19 Tablet manufacturing Process .................................................................................................... 20 Dispensing (weighing and measuring) ................................................................................ 20 Granulation : ....................................................................................................................... 21 Sizing ................................................................................................................................... 21 Powder blending ................................................................................................................. 22 Drying .................................................................................................................................. 23 Tablet compression ............................................................................................................. 23 Tablet Coating ..................................................................................................................... 24 Packaging ............................................................................................................................ 25

3.3.1 3.3.2 3.3.3 3.3.4 3.3.5 3.3.6 3.3.7 3.3.8 3.4 3.5

Capsule manufacturing ............................................................................................................... 25 Liquid ........................................................................................................................................... 25 Liquids for oral administration ............................................................................................ 25 Liquids for intraveneous administration ............................................................................. 25 Liquids for topical application ............................................................................................. 26

3.5.1 3.5.2 3.5.3

3.6 3.7 3.8

GOOD MANUFACTURING PRACTICE ........................................................................................... 26 THE ROLE OF THE LABORATORY ................................................................................................. 27 Manufacturing: Cost drivers ....................................................................................................... 28 Elements of cost .................................................................................................................. 28

3.8.1 4

Pharmaceutical Supply chain .............................................................................................................. 31 4.1 Pharmaceutical Value chain / Supply chain ............................................................................... 31 Pharmacy Supply Chain Considerations.............................................................................. 31

4.1.1 4.2

Supply chain factors .................................................................................................................... 32 Source - Suppliers................................................................................................................ 32 Make ................................................................................................................................... 34 Distribute ............................................................................................................................ 36 Buy retailers ..................................................................................................................... 38

4.2.1 4.2.2 4.2.3 4.2.4 4.3

Supply chain ................................................................................................................................ 38 Operational issues in the pharmaceutical supply chain ..................................................... 39

4.3.1 4.4

Supply chain: Future ................................................................................................................... 42 Removing the roadblocks.................................................................................................... 43

4.4.1 5 6

Top Growth Drivers of Pharmaceutical Industry ................................................................................ 46 Challenges for Pharmaceutical Industry ............................................................................................. 50 6.1 6.2 6.3 6.4 Changing trends & Implications .................................................................................................. 50 Manufacturing challenges........................................................................................................... 51 Supply chain challenges .............................................................................................................. 52 Other Challenges for Pharmaceutical industry in India .............................................................. 53

References .......................................................................................................................................... 54

1 Pharmaceutical Industry Overview

1.1 Pharmaceutical Industry
The pharmaceutical industry can be defined as a complex of processes, operations and organizations involved in the discovery, development and manufacture of drugs and medications. The World Health Organization (WHO) defines a drug or pharmaceutical preparation as: any substance or mixture of substances manufactured, sold, offered for sale or represented for use in the diagnosis, treatment, mitigation or prevention of disease, abnormal physical state or the symptoms thereof in man or animal; [and for use in] restoring, correcting or modifying organic functions in man or animal. This is a very wide definition, and correspondingly, there are number of key players in the pharmaceutical industry, including: The large, research and development-based multinationals with a global presence in branded products, both ethical/prescription and over-the-counter. They tend to have manufacturing sites in many locations. The large generic manufacturers, who produce out-of-patent ethical products and over-the-counter products. Local manufacturing companies that operate in their home country, producing both generic products and branded products under licence or contract. Contract manufacturers, who do not have their own product portfolio, but produce either key intermediates, active ingredients (AI) or even final products by providing outsourcing services to other companies,. Drug discovery and biotechnology companies, often relatively new start-ups with no significant manufacturing capacity.

1.2 Global Scenario

Market leader by market capitalization (billion $)

1.3 Indian pharmaceutical Industry

1.3.1 Overview Background Drugs industry in India dates back to the year 1901 Growth phase since 1950s - Advent of multinationals Bulk drugs - (raw material) inputs for drug formulations Around 465 bulk drugs used; of these, 425 are manufactured locally Regulations Drugs and Cosmetics Act, 1940; Rules 1945 controls and licenses the manufacture, packing, selling and distribution of drugs and formulations National Pharmaceutical Pricing Authority, 1997 - decides on prices of formulations implemented through Drug Price Control Order (DPCO) Licensing abolished in 1994 - foreign equity allowed upto 51 % At the moment, only process patenting & product patents of drugs allowed; no product patents are allowed before 1995 Industry Structure Over 350 units into bulk drugs production in the organised sector Several more in the unorganised sector Around 300 units, in paracetamol production alone, mostly for exports In house bulk drug production units or sub contractors for large pharmaceutical companies Bulk drugs units concentrated largely around Hyderabad Technology Basic chemicals and intermediary chemicals / enzymes for bulk drug manufacture sourced indigenously Raw materials constitute 70% of total cost of production Process technology for drugs obtained through reverse engineering mode (Absence of product patent laws has facilitated this mode) Usually, cheaper chemical synthesis process or at times, fermentation processes employed For select drugs, technology tie-ups with foreign partners also being done.

India currently represents just U.S. $6 billion of the $550 billion global pharmaceutical industry but its share is increasing at 10 percent a year, compared to 7 percent annual growth for the world market overall. Also, while the Indian sector represents just 8 percent of the global industry total by volume, putting it in fourth place worldwide, it accounts for 13 percent by value, and its drug exports have been growing 30 percent annually. The organized sector of India's

pharmaceutical industry consists of 250 to 300 companies, which account for 70 percent of products on the market, with the top 10 firms representing 30 percent. However, the total sector is estimated at nearly 20,000 businesses, some of which are extremely small. Approximately 75 percent of India's demand for medicines is met by local manufacturing. According to the German Chemicals Association, in 2005, India's top 10 pharmaceutical companies were Ranbaxy, Cipla, Dr. Reddy's Laboratories, Lupin, Nicolas Piramal, Aurobindo Pharma, Cadila Pharmaceuticals, Sun Pharma, Wockhardt Ltd. and Aventis Pharma. Indian-owned firms currently account for 70 percent of the domestic market, up from less than 20 percent in 1970. In 2005, nine of the top 10 companies in India were domestically owned, compared with just four in 1994. India's potential to further boost its already-leading role in global generics production, as well as an offshore location of choice for multinational drug manufacturers seeking to curb the increasing costs of their manufacturing, R&D and other support services, presents an opportunity worth an estimated $48 billion. Some of leading Indian players are shown in table below Company Name Sun Pharma Cipla Dr Reddys Labs Lupin Ranbaxy Labs Cadila Health GlaxoSmithKline Divis Labs Wockhardt Glenmark Piramal Health Torrent Pharma Market Cap (Rs. cr) 69,622.17 29,294.59 28,469.27 25,381.65 22,232.25 17,171.23 16,939.33 14,493.92 13,562.94 11,153.88 8,111.33 5,693.08

1.3.2

Exports Over 60 per cent of Indias bulk drug production is exported. Indias pharmaceutical exports are to the tune of Rs87 billion, of which formulations contribute nearly 55 per cent and the rest 45 per cent comes from bulk drugs. In financial year 2005, exports grew by 21 per cent. The Indian pharmaceutical market has been forecasted to grow to as much as US$ 25 billion by 2010 as per Organization of Pharmaceutical Producers of India (OPPI) estimates. However, Espicoms market projections forecast more modest but stable annual market growth of around 7.2 per cent, putting the market at US$ 11.6 billion by 2009. Revenue from Export India accounts for less than two per cent of the world market for pharmaceuticals, with an estimated market value of US$10.4 billion in 2007 at consumer prices, or around US$9 per capita. India currently represents just U.S. $6 billion of the $550 billion global pharmaceutical industry but its share is increasing at 10 percent a year, compared to 7 percent annual growth for the world market overall. Also, while the Indian sector represents just 8 percent of the global industry total by volume, putting it in fourth place worldwide, it accounts for 13 percent by value, and its drug exports have been growing 30 percent annually. Cipla, Nicholas Piramal, Ranbaxy, Zydus Cadila, Dr. Reddys are the few Indian pharmaceutical companies, which are known at the global level due to their quality products.

2 Marketing strategies
2.1 Market characteristics
Pricing Drug Prices Control Order (DPCO) 1970, - fixes & monitors prices in tandem with the Drug Policy - specific drugs (76) controlled under public interest - this specified list is coming down now

Prices fixed after considering costs; binding on all units in that category (inclusive of imports for resale purpose) However, market competition may force prices below DPCO levels, Market Characteristics

Bulk drugs - a commoditised market in India Availability of drugs in India - good; and at affordable prices (DCPO is one reason) Patent laws not being (applicable) enforced; so, most globally patented drugs are available at lower prices Original drugs developed include Peruvoside (Cardiatonic), Centimizone (antithyroid), Gugulipid, (Hypolipidemic) Drugs prices amongst cheapest globally Stiff competition - so, patent holders source drugs from cheaper local manufacturers Direct supplies of bulk drugs to formulation units Stringent quality norms - especially for exporting units

Demand Drivers

2.2 Marketing Process in Pharmaceutical Industry

Marketing is based around providing continual benefit to the customers, these benefits will be provided and a transactional exchange will take place. Effective Marketing process and planning in Pharma Industry include: Marketing Aspects of the Disease Product Background Target market Competitive Environment SWOT Analysis Commercial Goals and Financial Forecast Budget: Planned marketing and Sales investment Positioning/Product Story/Unique Selling Proposition Branding Guidelines Target groups Internal Communication Program External Communication Packaging Pricing Strategy Market Access and Health Economic Outcomes Research Co-operations, Licensing and Strategic Alliances

Marketing strategies are planned by targeting the 4 different external customers as well the internal customers. External customers are: Patients: Patients are the customers, who are considered before planning a product segment Physicians: Who are targeted for getting prescriptions? Chemists: Who are targeted for availability & sales of products on prescriptions of physicians? Wholesalers: Who are targeted for primary sales & availability of products for chemists? Internal customers are the team of Medical Representatives & Sales ManagersWho work in coordination with each other As per the norms laid by company Implementing strategies & Utilization of inputs provided by company achieves the sales targets given to them. 2.2.1 Strategies for External customers

2.2.1.1 Strategies for Prescribing Physicians o o o o o o o o o o o Physicians are the target customers for the company; hence the company is always trying to develop the strategy so that there is increase in the physicians. The strategy developed for the doctors mainly includes: Selection of the customers through conduction of detailed survey. Validating the potential of each potential & finalization of list of physicians. Positioning of the products depending upon the prescribing habits of the physicians. Detailing of the products to the physicians & providing free drug samples. Regular follow-ups with the physicians & chemists for continuity of prescriptions flow & availability. Providing the informative literatures for updating the current developments in the medicines. Organizing Health check-up camps for the physicians & patients. Categorizing Doctor according to the prescription support & planning promotional materials. Giving gifts as token for gesture & sponsorships to the physicians

2.2.1.2 Strategies for Patients

Main policy for patients benefit is cost economy. Indian population is mix of income level but dominated by poor patients, who lives in slums & villages, whose purchasing

capacity is already low & who cannot afford to purchase medicines for their day to day illness. Company need to focus these customers as well while deciding for pricing strategies, due to cost economy, these customers become able to purchase complete therapy & treatment

2.2.1.3 Strategies for Retail Chemists Chemists are the peoples, who are having their retails shops near the physicians clinics/hospitals. A patient carries the prescription to the retail chemists, who then dispenses the medicines, prescribed by the physicians. Hence retails chemists are also considered to be another most important customer to be targeted by the company. Hence Company has to develop separate strategy keeping in core the chemist. Giving discount on purchase to the retail chemists. Giving additional bonus offers on purchase of products Giving gifts on purchase. Like in Monsoon season, on purchase of a volume, the retails chemists will get umbrella, raincoat or other products or Kitchen utensils or coupon for lucky draw. Facility of expiry products reimbursement. The expiry will be settled immediately in next purchase invoice made by the retail chemists; hence no dues will remain pending for long time.

2.2.1.4 Strategies for Distributors and wholesalers This is another level in the channel of distribution, if ignored or not handled properly, may not result in profitable businesses in the respective market. Wholesalers are the bulk purchasers, who call upon the products from company for distribution in the market & ensure availability of the products to be dispensed on doctors prescription. Since wholesalers are directly paying to the company against whatever products they purchases, must be carefully managed. Wholesalers invests huge amount in their business, purchases on net from companies & sales to retailers on credit for a period ranging from 1 month to whatever period is decided by the wholesaler depending upon the credibility of the retailers. Since these wholesalers get their money back from the retailers after a long time, they want some benefits from the companies for their net & bulk purchases as some return on investments. Company, as knowing this need to provide better return on investments to wholesalers byProviding bonus offers on bulk purchases Providing cash discounts on repayments before the credit terms. Providing gifts & incentives for various purchase amounts. Various offers to the retailers in terms of gifts, vouchers on volume purchases, hence liquidation of stocks from the wholesalers in short times

2.2.2

Strategies for the Internal Customers Medical Representatives (MRs), First Line Sales Manager (ASMs) & Second Line Sales Manager are the internal customers who are actually involved in strategic implementation & achieving sales targets through prescription generation from the physicians. MRs are required to prepare a list of doctors of doctors, depending upon their volume of business they have to categorize Selecting the MRs irrespective of their qualifications & prior experience Though initially salary given was less (As companys sales base & profitability was less), company need to take a strategic decision of giving additional performance based incentives to their MRs. This motivated people to increase the sales month after month, with the help of support of inputs given by the company. There were product wise sales incentives also available. On sales of a particular product, MR will get a specific amount of incentives. Flexibility in Tour Program (TP) was given to MRs as well ASMs, depending upon need & potential of market as well customer, they can move other towns, areas to cover VIP doctors, if missed due to some unavoidable reasons, so that business can be ensured. The trust & homely environment is provided to MRs, which encouraged them to work for a home company like a family business.

2.3 Market Demand & Product share

The industry has enormous growth potential. Factors listed below determine the rising demand for pharmaceuticals. The growing population of over of a billion Increasing income Demand for quality healthcare service Changing lifestyle has led to change in disease patterns, and increased demand for new medicines to combat lifestyle related diseases More than 85 per cent of the formulations produced in the country are sold in the domestic market. India is largely self-sufficient in case of formulations. Some life saving, new generation under-patent formulations continue to be imported, especially by MNCs, which then market them in India. Overall, the size of the domestic formulations market is around Rs160 billion and it is growing at 10 per cent per annum.

Market share of different pharmaceutical product categories

3 Manufacturing Process & Operations

3.1 Introduction
The pharmaceutical industry takes the active ingredients of drugs (which are may be imported from overseas) and converts them into a form that can easily be given to a patient. This involves mixing the active ingredient with various other ingredients with appropriate chemical properties, then either compressing the mixture into a tablet, filling a gelatin capsule with it or dissolving it in an appropriate solvent.

3.2 R&D
R & D - Strategies Indian industry moving from reverse engineering of drugs to R&D, after signing of WTO (TRIPS) Around US $ 300 million has to be spent over a 10 - 15 year span, involving extensive analyses, global test marketing etc Larger Indian firms have diverted more resources - to chemical synthesis of basic molecules for domestic & international markets (Dr Reddys Lab, Ranbaxy Laboratories) - to further value additions through novel drug delivery systems (Cipla, Wockhardt, Sun Pharma, Ranbaxy Laboratories)

Some Indian companies have entered into contract testing where foreign partners could test, post molecule identification stage. For some others, drug discovery research is done till development stage; clinical trials are then licensed out to international majors (A global trend

R & D - Indian Corporates Ranbaxy - has invested over Rs. 300 crores (US $ 70 million) in R &D over the last 3 years (3.45 % of net sales) Focus on development of new drugs in the area of anti-infective, respiratory and cardiovascular For new drug deliver systems, Ranbaxy has an alliance with Bayer, Germany for licensing the technology for ciprofloxacin (it is successful in applying new delivery systems on cephelexin, ciprofloxacin, etc.) Dr. Reddys has invested 3% of its net sales in R&D Company focuses on new discoveries in diabetes, cancer, acid peptides and bacterial infections They have 20 patents for antidiabetic compounds & 22 patents for anti cancer compounds in USA;Dr. Reddys Foundations has been granted 3 patents so far - 2 of its compounds are into clinical trials with Novo Nordisk

- even European / Japanese companies use this route)

Collaborations in R&D with foreign research-based firms ( Ranbaxy & Eli Lilly)

3.3 Tablet manufacturing Process

The manufacture of oral solid dosage forms such as tablets is a complex multi-stage process under which the starting materials change their physical characteristics a number of times before the final dosage form is produced.

Various Unit Operation Sequences in Tablet Manufacturing

Numerous unit processes are involved in making tablets, including particle size reduction and sizing, blending, granulation, drying, compression, and (frequently) coating. Various factors associated with these processes can seriously affect content uniformity, bioavailability, or stability. 3.3.1 Dispensing (weighing and measuring) Dispensing is the first step in any pharmaceutical manufacturing process. Dispensing is one of the most critical steps in pharmaceutical manufacturing; as during this step, the weight of each ingredient in the mixture is determined according to dose. Dispensing may be done by purely manual by hand scooping from primary containers and weighing each ingredient by hand on a weigh scale, manual weighing with material lifting assistance like Vacuum transfer and Bag lifters, manual or assisted transfer with automated weighing on weigh table, manual or assisted filling of loss-in weight dispensing system, automated dispensaries with mechanical devices such as vacuum loading system and screw feed system. Issues like weighing accuracy, dust control (laminar air flow booths, glove boxes), during manual handling, lot control of each ingredient, material movement into and out of dispensary should be considered during dispensing.

Typical Manufacturing Process of Tablet

3.3.2

Granulation :

This is the stage in which the tablet ingredients are thoroughly mixed, and prepared for compressing. Traditionally, tablets have been made by granulation, a process that imparts two primary requisites to formulate : compactibility and fluidity. Both wet granulation and dry granulation (slugging and roll compaction) are used. Regardless of whether tablets are made by direct compression or granulation, the first step, milling and mixing, is the same; subsequent step differ. 3.3.3 Sizing The sizing (size reduction, milling, crushing, grinding, pulverization) is an impotent step (unit operation) involved in the tablet manufacturing. In manufacturing of compressed tablet, the mixing or blending of several solid ingredients of pharmaceuticals is easier and more uniform if the ingredients are approximately of same size. This provides a greater uniformity of dose. A fine particle size is essential in case of lubricant mixing with granules for its proper function.

Advantages associated with size reduction in tablet manufacture are as follows: It increases surface area, which may enhance an active ingredients dissolution rate and hence bioavailability. Improved the tablet-to-tablet content uniformity by virtue of the increased number of particles per unit weight. Controlled particle size distribution of dry granulation or mix to promote better flow of mixture in tablet machine. Improved flow properties of raw materials. Improved colour and/or active ingredient dispersion in tablet excipients. Uniformly sized wet granulation to promote uniform drying.

There are also certain disadvantages associated with this unit operation if not controlled properly. They are as follows: A possible change in polymorphic form of the active ingredient, rendering it less or totally inactive, or unstable. A decrease in bulk density of active compound and/or excipients, which may cause flow problem and segregation in the mix. An increase in surface area from size reduction may promote the adsorption of air, which may inhibit wettability of the drug to the extent that it becomes the limiting factor in dissolution rate.

A number of different types of machine may be used for the dry sizing or milling process depending on whether gentle screening or particle milling is needed. The ranges of equipment employed for this process includes Fluid energy mill, Colloidal mill, Ball mill, Hammer mill, Cutting mill, Roller mill, Conical mill, etc. 3.3.4 Powder blending The successful mixing of powder is acknowledged to be more difficult unit operation because, unlike the situation with liquid, perfect homogeneity is practically unattainable. In practice, problems also arise because of the inherent cohesiveness and resistance to movement between the individual particles. The process is further complicated in many system, by the presence of substantial segregation influencing the powder mix. They arise because of difference in size, shape, and density of the component particles. The powder/granules blending are involved at stage of pre granulation and/or post granulation stage of tablet manufacturing. Each process of mixing has optimum mixing time and so prolonged mixing may result in an undesired product. So, the optimum mixing time and mixing speed are to be evaluated. Blending step prior to compression is

normally achieved in a simple tumble blender. The Blender may be a fixed blender into which the powders are charged, blended and discharged. It is now common to use a bin blender which blends. In special cases of mixing a lubricant, over mixing should be particularly monitored. The various blenders used include V blender, Oblicone blender, Container blender, Tumbling blender, Agitated powder blender, etc. But now a days to optimize the manufacturing process particularly in wet granulation the various improved equipments which combines several of processing steps (mixing, granulation and/or drying) are used. They are Mixer granulator or High shear mixing machine. 3.3.5 Drying Drying is a most important step in the formulation and development of pharmaceutical product. It is important to keep the residual moisture low enough to prevent product deterioration and ensure free flowing properties. The commonly used dryer includes Fluidized bed dryer, Vacuum tray dryer, Microwave dryer, Spray dryer, Freeze dryer, Turbo tray dryer, Pan dryer, etc. 3.3.6 Tablet compression After the preparation of granules (in case of wet granulation) or sized slugs (in case of dry granulation) or mixing of ingredients (in case of direct compression), they are compressed to get final product. The compression is done either by single punch machine (stamping press) or by multi station machine (rotary press). Each tablet is made by pressing the granules inside a die, made up of hardened steel. The die is a disc shape with a hole cut through its centre. The powder is compressed in the centre of the die by two hardened steel punches that fit into the top and bottom of the die. The punches and dies are fixed to a turret that spins round. As it spins, the punches are driven together by two fixed cams - an upper cam and lower cam. The top of the upper punch (the punch head) sits on the upper cam edge .The bottom of the lower punch sits on the lower cam edge. The shapes of the two cams determine the sequence of movements of the two punches. This sequence is repeated over and over because the turret is spinning round. The force exerted on the ingredients in the dies is very carefully controlled. This ensures that each tablet is perfectly formed. Because of the high speeds, they need very sophisticated lubrication systems. The lubricating oil is recycled and filtered to ensure a continuous supply.

Common stages occurring during compression Stage 1 : Top punch is withdrawn from the die by the upper cam Bottom punch is low in the die so powder falls in through the hole and fills the die Stage 2 : Bottom punch moves up to adjust the powder weight-it raises and expel some powder Stage 3 : Top punch is driven into the die by upper cam Bottom punch is raised by lower cam Both punch heads pass between heavy rollers to compress the powder Stage 4 : Top punch is withdraw by the upper cam Lower punch is pushed up and expels the tablet Tablet is removed from the die surface by surface plate Stage 5 : Return to stage 1

Stage Occurring During Compression 3.3.7 Tablet Coating Tablets may be coated to improve the stability (by protecting the tablet from exposure to light, moisture or air) and appearance, to mask an unpleasant taste, or to protect the tablet from the acid in the stomach. In addition, outside coatings are sometimes coloured, either to improve their appearance, or to enable them to be easily identified. The majority of coated tablets nowadays use film coating. The solution is sprayed onto the tablets as they are turned in a large rotating bowl, the solvent evaporates off, and a layer of film remains on each tablet. As well as being simpler to apply than sugar coatings, film coatings have the advantage that they can be applied to embossed tablets without the embossing being filled up with coating solution.

3.3.8

Packaging Pharmaceutical manufacturers have to pack their medicines before they can be sent out for distribution. The type of packaging will depend on the formulation of the medicine. 'Blister packs' are a common form of packaging used for a wide variety of products. They are safe and easy to use and they allow the consumer to see the contents without opening the pack. Many pharmaceutical companies use a standard size of blister pack. This saves the cost of different tools and to change the production machinery between products. Sometimes the pack may be perforated so that individual tablets can be detached. This means that the expiry date and the name of the product have to be printed on each part of the package. The blister pack itself must remain absolutely flat as it travels through the packaging processes, especially when it is inserted into a carton. This poses interesting problems for the designers. Extra ribs are added to the blister pack to improve its stiffness.

3.4 Capsule manufacturing

Manufacture of capsules involves a similar process to that of tablets. The major difference is that after mixing of the formulation ingredients, instead of being compressed, the mixture is filled into gelatin capsules that may be either hard or soft in texture.

3.5 Liquid
These fall into three main categories: liquids for oral administration, liquids for injections and liquids applied topically (i.e. creams and ointments). 3.5.1 Liquids for oral administration These are usually the simplest formulations available, as the ingredients are simply mixed in a suitably sized tank. The most important aspect of manufacture is to ensure all ingredients are fully dissolved and well mixed before packing and that the formulations contain suitable effective preservatives. Where the liquid is a suspension, mixing of the bulk must be continued during packing to ensure even dispersion of the active at all times. These liquids generally include, in addition to the active ingredient and the solvent (usually water, although alcohol sometimes used as a solvent or cosolvent2), antimicrobial agents to prevent the growth of molds and yeasts, and often include sweeteners such as sucrose, sorbitol, aspartame and glycerin. In addition, a variety of other substances are sometimes used to alter such properties as solubility, flavour and viscosity. Liquids for intraveneous administration Liquids for injections are also usually simple to prepare, however, manufacture must occur under aseptic conditions using methods that ensure the finished injection is sterile. Injections are usually rendered sterile by autoclaving3; however, some medicines cannot be autoclaved and so must be sterilised by filtration during the manufacturing process.

3.5.2

As well as being available in liquid form, injections may, for stability purposes, be prepared in powder form, either freeze dried or as pure powder, for reconstitution immediately prior to use. Injections may also be prepared for intramuscular or subcutaneous administration often using oils as the vehicle rather than water. Injected liquids sometimes also contain small amounts of additives, the most common of these being sodium chloride (table salt) - used in aqueous solutions to make the injected solution isotonic 3.5.3 Liquids for topical application Liquids for topical application are usually prepared as either ointments or creams. The general difference between these forms is that ointments in the majority of cases are dispersions of water in oils while creams are the opposite. The method of manufacture is, however, the same. It involves preparation of separate oil and water phases containing the required ingredients, heating each phase to between 60-70C, mixing and then cooling the mixture with stirring until the cream or ointment is formed. The bases used are substances such as hydrocarbons and lanolin. Depending on the base used, the cream/ointment may wash off or easily absorb into the skin, or it may remain on the surface, and thus protect the skin underneath

3.6 GOOD MANUFACTURING PRACTICE

It is an essential requirement in manufacture of pharmaceuticals that the manufacturer must comply with the Code of Good Manufacturing Practice published by the Ministry of Health. Since inception, considerable efforts have been made in the manufacturing pharmaceutical industry to establish procedures and facilities that decrease the occurrence of any mishap in manufacture and packing that might adversely affect the health of the public. The Code of Good Manufacturing Practice is based on manufacturing principles established internationally, and details the standards that must be maintained by each manufacturer. Compliance with the Code is monitored by annual audit carried out by the Ministry of Health. The main points covered by the code are as follows: The manufacturing premises must be kept clean and must be designed to allow a product to be made in complete isolation from any other product being made at the same time. Equipment must be cleaned before use with all traces of the last product removed. The operator is issued with a set of batch records for each separate batch of product to be prepared. The batch records detail the product formula, and the manufacturing steps required to be followed in preparation of that product. The operator enters appropriate information on the batch records during manufacture, such as the identifying numbers of raw materials, the results of in-process checks etc. Once manufacture is complete, these records are retained as they constitute a complete record of the batch and must be readily accessible if required for either audit purposes or investigation of any product complaints.

Each batch of a product is given an unique identifying number which is written on the batch records and identifies the product throughout manufacture and is then used as the batch number on all labeling of product filled from the batch during packaging. Samples of each batch must be kept for the shelf-life of the product plus one year. Each raw material and finished product must comply before use or upon packaging with standards that are set down for each product. Such standards may be found in either the British Pharmacopoeia, United States Pharmacopoeia, or the European Pharmacopoeia, or may be standards that are set by the manufacturer and agreed to by appropriate regulatory authorities such as the New Zealand Ministry of Health before the product is allowed for sale. Such standards detail the tests and analytical methods which have to be performed to confirm the identity; determine the concentration of active drug; and ensure the absence of any undesirable contaminants prior to release of the product to market..

3.7 THE ROLE OF THE LABORATORY

In the pharmaceutical industry in general, the laboratory carries out three important functions: quality control; development of new, more appropriate mixtures of excipients; research into new active ingredients. Quality control Quality control is of crucial importance to the pharmaceutical industry, and for this reason numerous checks are made at every stage of production to ensure that quality is not compromised and that the Code of Good Manufacturing Process is adhered to. Quality control procedures include:

Sampling of raw materials. All incoming raw materials are initially quarantined, and
samples are taken and tested to ensure that the material meets strict purity guidelines. This testing involves both microbiological and chemical testing, as is laid out in the relevant Pharmacopeia (a reference book on the preparation of pharmaceuticals. Three are published - the British, United States and European Pharmacopeia). In-process checks. The manufacturing staff carry out checks on such things as tablet weight and size at frequent intervals. At hourly intervals the quality control staff take samples to check for contamination and to ensure that composition is as expected. Final product checking. Checking similar parameters to those measured during production. Monitoring cleaning. When a batch of a certain drug has been made, all equipment that has been used must be cleaned. When the next pharmaceutical to be made on that line is going to be different, this cleaning must be particularly thorough to prevent contamination. In this instance, after cleaning the quality control staff take swabs off each piece of equipment, and test them to see if they can detect the presence of the active previously used. Only when the equipment is so clean that the previous active is undetectable can the production of the next pharmaceutical commence

3.8 Manufacturing: Cost drivers

Pharmaceutical companies can achieve year-on-year cost reduction in their overall spending by rigorously identifying and eliminating wastes in their manufacturing and business processes. Today, for many companies, Manufacturing costs, as a fraction of overall costs, is considerably higher. Therefore, it is quite logical to start with a cost reduction exercise in manufacturing.

3.8.1

Elements of cost Pharmaceutical cost has several direct and indirect costs: Currently, pharma companies are taking a hard look at various cost elements and are coming up with various innovative ways to reduce them

Cost type Material cost

Cost proportion 60-70% of Pharma manufacturing cost

Stratergies to optimize cost materials at a competitive landed cost, initiatives (DMAIC) to improve batch yields and the consumption of critical input materials. Process improvements to control material cost Improved Solvent management process concepts of lean to eliminate wastes

Manpower cost

7-10 %

Define manning for each function based on manning norms & not on thumb rules Ensure efficiency of energy consuming machines and preventing wastage. Benchmarking of key performance parameters such as efficiency, power consumption per unit production Timely energy audits reducing packing rejections and by value-engineering the packing design optimizing strip dimensions, number of colors used, packing material thickness, optimal fitment of tablets within strips, number of ply, shipper sizes, material substitution, optimizing quantities drawn for sample analysis, reduced testing, standardizing makes of chemicals across sites, clubbing samples to be cost-effective Enhancing equipment utilization and identifying optimum manning norms.

Energy

Packing cost

Analyzing cost (Quality cost)

In addition to above following is important aspect of cost affecting manufacturing

Cost of manufacturing decision Cost of manufacturing decisions work primarily at the strategic and tactical domain, where the companies take decisions on the following:

Planned versus actual capacity utilization will have an impact on product costing in terms of apportioning fixed costs over the quantity produced. Planning during the project phase ensures minimum time and cost overruns. This Reduces the cost of setting up the project. The cost of these decisions is high, and so is the impact they have in the medium to long term. Companies need to evaluate their make-buy decisions more rigorously on the back of Contribution earned. Appropriate technology selection, plant location and layout and production planning influence cost of production.

Cost reduction levers Companies do implement manufacturing cost reduction programmes using levers such as process improvements, shared services, standardization, first principle costing, efficiency improvement, etc. Each of these levers needs to be addressed along two dimensions, strategic and operational. Decisions for strategic cost reduction will have a long- to medium-term impact. However, the complexity will be high. In operational cost reduction, the impact will be for the immediate or medium-term but relatively less complex. Many progressive companies use lean management as a concept to identify and eliminate wastes in the process, thereby resulting in additional throughput and better service levels at a lower cost. Companies have realized 10 to 15% reduction in overall costs and improvement in bottom-line savings by implementing structured cost reduction programmes.

4 Pharmaceutical Supply chain

4.1 Pharmaceutical Value chain / Supply chain
The pharmaceutical value chain is only partially synonymous with the pharmaceutical supply chain The value chain describes how the addition of knowledge to a specific molecule through transformational processes of R&D, pre-clinical, clinical trial, manufacture, marketing and sales activities generates commercial value to a pharma/biotech company The supply chain refers to the activities involved with planning, sourcing, manufacturing and distributing your products as it does for any other company There is also a clinical supply chain which addresses sourcing and provision of materials to clinical trail investigators

4.1.1

Pharmacy Supply Chain Considerations The value chain of Pharmacy industry varies from other manufacturing industry primarily due to following factors which differentiates their business needs. End-user (patient) safety Anti-counterfeiting requirements Product integrity Quality assurance Fraud prevention and detection Electronic signature requirements Records access and retention requirements Product tracking Class 2 pharmaceuticals must carry unique identifiers at the item level

Chain of custody tracking from manufacturer to distributors and pointof-use (pedigree requirements) End-consumers are not the principal product customers CRM doesnt focus on the patient (yet)

4.2 Supply chain factors

The value chain of pharmacy can be attributed in the following 4 parts of operations. 1. 2. 3. 4. 4.2.1 Source Make Distribute Buy

Source - Suppliers

4.2.1.1.1 Suppliers What materials/resources do pharmaceutical suppliers provide? Biologic suppliers Chemicals Farm products (plants, eggs, animals, animal by-products) Laboratory animals Growth media, cell cultures Pathogens Proteins Test organisms Non-biologic suppliers Equipment Computers, software Databases (e.g., target molecules, DNA sequences) Clinical trial supplies Clinical trial subject population information

Single source materials Reduced supplier management issues Facilitates relationship-building Risk of supply issues in the event of Supplier raw materials disruption Supplier production issues Supplier delivery issues Higher supplier power (Porter)

Multi-source materials Improved pricing and competition Minimizes risk of supplier issues Higher vendor management costs

4.2.1.2 Supplier audit Foremost of all the considerations in the pharmacy supply chain End User safety considerations Are the materials provided by our suppliers safe? Are the products manufactured by company safe? Are all the products being manufactured reaching the distributors? Are any of our products being adulterated or counterfeited?

Thus the for supply chain of pharmacy, its of utmost importance to consider the End user safety consideration to account in their operations. These considerations begin with control of process at the source from where raw material is supplied to organization. Auditing of supplier to comply with the mandatory regulations of raw material supply in accordance with consumer safety is important aspect of supplier process.

The supply chain begins with the material supplied for product manufacture Key ingredients need to be covered by Supply Agreements Price, Source, Quantity, Quality, Delivery

Quality Agreements Defined Specification Control, Change Control, Complain Resolution

Pre-purchase Usability Tests Toxicity Requirements Know where starter materials are manufactured Know who tests it and how

4.2.2

Make

4.2.2.1 Manufacturing Strategies for Value chain process - Components of the pharmaceutical industry manufacturing and distribution chain
Components of the pharmaceutical industry manufacturing and distribution chain

A typical pharmaceutical supply chain will consist of the one or more of the following nodes: (i) primary manufacturing (possibly including contractor sites); (ii) secondary manufacturing (possibly including contractor sites); (iii) market warehouses/distribution centres; (iv) wholesalers ; and (v) retailers/hospitals.

4.2.2.1.1 Primary manufacturing The primary manufacturing site is responsible for the production of the active ingredient (AI or API). This normally involves either several chemical synthesis and separation stages to build up the complex molecules involved, or fermentation and product recovery and purification in the case of biochemical processes. The manufacturing process is characterised by long task processing times, often rounded to multiples of shifts. multistage processes considerable inventories are often held between stages.

material from an intermediate stage must often pass some form of quality control check before being approved for use downstream in the process. Low production volumes Long downtime between products to avoid cross contamination of products & requirements for validated cleaning & changeover Low equipment utilization

Since most complex pharmaceuticals are produced through multistage processes, the same often holds true for the stable intermediates (stage products). Needless to say, this mode of operation does not lend itself well to responsiveness, and contributes significantly to some of the poor supply chain metrics exhibited by this industry. A further source of complexity (and convenience) is the use of contractors to manufacture some or indeed all of the active ingredient stages. This process of outsourcing is a growing one, as research-oriented companies concentrate on the discovery and development activities and rely on third parties manufacturing competence. This gives rise to extended supply chain co-ordination problems. 4.2.2.1.2 Secondary manufacturing This is concerned with taking the active ingredient produced at the primary site and adding excipient inert materials along with further processing and packaging to produce the final products, usually in SKU form. For example, a product that is sold in pill form would undergo: (i) granulation: with addition of all the excipient materials; (ii) compression: forming the pills; (iii) coating; (iv) quality control; and (v) packaging. The secondary manufacturing locations are often geographically separate from the primary manufacturing locations. This is frequently the outcome of tax and transfer price optimization within the enterprise. There are often many more secondary manufacturing sites than primary ones, serving local or regional markets. Transportation between sites is of the order of 1 or 2 weeks if by ship (usually the default mode) and of the order of one or two days if by air. Wholesalers play a significant role in this sector. They tend to be large and few. About 80% of demand flows through this channel in the UK (with three large players accounting for almost all the demand), with the large part of the remainder going to hospitals. In the US another intermediary is growingthe managed care organization (MCO) or healthcare maintenance organization (HMO). This gives manufacturing concerns give rise to extended supply chain co-ordination problems. These are accounted by following Standardization of manufacturing processes Terminology Metrics

Product process toolkits Managing network assets Grouping plants with standard equipment and processes geared to specific product types (e.g., dry products, freeze-dried, parenteral) Redundant facilities (security, shifting of work between plants) Improved demand forecasting Global demand management center Centralized ownership of all forecasting tools and databases Use of ERP web-enabled global planning capabilities Judicious use of contract manufacturing (e.g., packaging) Joint planning between product launch team and SCM team at least 1 year before NDA submission to FDA Cross-functional development, marketing, clinical, SCM and regulatory teams for each product

4.2.3

Distribute Distribution to pharmacies is different because of following Pharmaceutical products are dynamic (contract pricing, brand/generic, package size) Product is used in a different unit of measure than acquired (unlike POS) Many products are interchangeable Product availability changes constantly

4.2.3.1 The Current Supply Chain

Three principle model of distribution

Many smaller wholesalers partial product lines, regional players licensed wholesalers . Stock small target list of medications provided to a limited customer set

Secondary wholesalers Sell to other wholesalers Specialize in discounted products

4.2.3.2 Continuous replenishment Continuous replenishment of stock for distribution in pharmaceutical. Continuous replenishment means Automated replenishment of pharmaceuticals driven by utilization Just-in-time inventory An end-to-end automated process for pharmaceutical procurement

Distributors are integral to this SCM concept as they perform order fulfillment Five core components of this SCM Concept Site-level perpetual inventory system Automated inventory replenishment engine Store level inventory management and reporting Central office inventory management and reporting Dispensing transaction Interface (non-HIPAA)

4.2.4

Buy retailers

Pharmacy Group Purchasing Organizations (GPOs) Alliances of pharmacies, hospitals and other healthcare systems Leverage buying power to obtain manufacturer discounts Often turn to secondary distribution channels when manufacturers or major distributors cannot supply critical drugs when needed Drugs often stockpiled by secondary distributors for economic reasons Drug markups can be 500 1,000% during shortages Temperature-sensitive products, when diverted, are often not kept at the appropriate temperatures Retailers attribute 48 percent of pharmaceutical inventory loss to employee theft Emerging requirements for secondary distributors to provide a drug pedigree that can be tracked back to the original source (manufacturer) Clear chain of custody Cost of maintaining custodial information will fall on manufacturers

4.3 Supply chain

The Role of Manufacturers in the Normal Pharmaceutical Supply Chain Manufacturers that produce prescription medicines, including brand-name, generic, and biotech medicines, are the first link in the bio-pharmaceutical supply chain. Once these products are manufactured, these companies sell the medicine in bulk to distributors and wholesalers, who are then responsible for transporting medicine around the nation and world.

The Role of Distributors and Wholesalers in the Normal Pharmaceutical Supply Chain Distributors move the bio-pharmaceutical medicines they purchase from manufacturers to various customers, including hospitals, pharmacies and other institutions where medications are given to patients, such as nursing homes, private physicians offices, and clinics. The distribution network is made up of two components: warehouses that stock the bio-pharmaceuticals at various distribution centers around the country and the trucks that transport the stock where and when it is needed. The Role of Hospitals, Clinics, and Pharmacies (Dispensers) in the Normal Pharmaceutical Supply Chain Hospitals, clinics and pharmacies represent the last leg on the journey from the biopharmaceutical manufacturing plant to patients' medicine cabinets. Local dispensers keep a small amount of the medicines they are likely to need on hand to meet immediate demand. Most local pharmacies, for example, will have a certain amount of pain medication, antibiotics, and bio-pharmaceuticals for specific conditions like heart disease, diabetes, or asthma. When the local supplies begin to run low, the dispensing facility will put in an order to the distributor/wholesaler (or, occasionally, directly to the manufacturer) for more of a specific medicine. 4.3.1 Operational issues in the pharmaceutical supply chain Although the processes will vary between companies, all major pharmaceutical companies will operate ERP systems and follow a business process along the following lines: Demand managementin each geographical region, forward forecasts (e.g. 3 24 months) are developed, based on historical data, market intelligence, etc. Tenders for manufacture may also be evaluated and possibly accepted at this stage. Inventory management and distribution requirements planningthe demands determined are aggregated and imposed on the appropriate warehouse/distribution centre. The impact on finished goods inventory is assessed and if necessary, orders are placed on upstream secondary manufacturing sites. Secondary production planning and schedulingthe orders placed on the secondary sites are planned (typically using MRP-II type tools) and then scheduled in detail (typically using APS tools). The impact of production plans on active ingredient raw material stocks is evaluated and if necessary, orders for AI are placed on the upstream. Primary manufacturing campaign planning and AI inventory management- here, the demands placed by secondary manufacturing are satisfied by careful management of inventory and production planning.

An interesting feature of this process is that the customer-facing end is effectively a pull process (driven by orders) but the primary manufacturing stage has long cycle times which make it difficult to ensure end-to-end responsiveness. This means that

primary production is effectively a push process, driven by medium- and long-term forecasts. Relatively large stocks of AI must be held to ensure good service levels and ensure smooth operation at the interface of these processes. The well-documented bullwhip or Forrester effect is often felt at the primary manufacturing site, which is unfortunate since this is the least responsive part of the supply chain as it normally operates in campaign mode. This makes it difficult to exploit short-term opportunities (e.g. shortages of supply of a competitors product, tenders for national supplies, epidemics, etc.). Another feature of this process is an outcome of its large scale and geographical span. This is the distributed nature of decision-making, which can lead to ensions and sub-optimal decisions. Different nodes are not really aware of upstream nodes resource constraints, and orders may be filled in order of receipt, rather than on an economic basis. Of course, centralised planning would not be without its difficulties in this context.

The following supply chain performance measures are typical of the industry: Performance measure Stock level Stock turnover (annual sales/average stock) Supply chain cycle time(time between material entering as raw material & leaving as product ) Value added time (time when something happens to material as percentage of chain cycle time) Material efficiency (amount of product produced per unit amount of material used) Performance value 30-90% of annual demand quantity & 4-24 weeks of worth of finished good stock 1-8 1000-8000 hrs 0.3 - 5% 1-10%

4.3.1.1 Strategic and design issues in the pharmaceutical supply chain Pipeline and development managementthis involves the selection of potential drugs to develop further, and the planning of the development activity. Process developmentthe investigation of manufacturing routes and the generation of manufacturing process. Capacity planning and plant and supply chain network design. Plant designthe selection and sizing of the major equipment and storage units.

Some of the key issues which affect supply chain are: Uncertainty in the demands for existing drugs (due to competition, uncertainty in the ability to extend the protected life through new formulations, etc.). Uncertainty in the pipeline of new drugsin particular, which ones will be successful in trials, what sort of dosage and treatment regime will be optimal.

Process developmentthis is a complex problem, driven by chemistry and yield optimisation. It often results in inefficient processes that are operated much more slowly than the intrinsic ratesgiving rise to batch processes and long cycle times responsible for some of the problems seen at the primary production planning stage. Capacity planningthe long lead times to make capacity effective mean that decisions often need to be taken at times of high uncertainty. Waiting for the uncertainties to be resolved might delay the time to market by an unacceptable amount. Network designoften tax implications take precedence over logistics issues, these result in economic but potentially complicated supply chains. Plant designthis tends to be very traditional, with no real change in manufacturing technology for 50 years (the workhorse of the primary manufacturing site is the glass-lined stainless steel batch reactor).

4.4 Supply chain: Future

Numerous forces are dictating the need for a different sort of supply chain those are indicated in table below

To sum up, the current model for manufacturing and distributing medicines isnt fit for Pharmas future needs, as many industry executives recognize. The high margins that made it feasible to tie up capital in large stocks of raw materials and finished goods are ending. Most companies also have asset bases that are ill-suited to produce the sort of therapies that are now in the pipeline or to cope with new environmental regulations, so theyll have to sell or re-engineer much of their existing plant. The change in the industrys remit has even more fundamental implications. Pharma companies will have to manage a vast network of service providers, as well as manufacturing and distributing their own products. They will also have to acquire a much

deeper understanding of patients. In a world where outcomes count for everything, its not molecules that create value but, rather, the ability to integrate data, products and services in a coherent business offering. Understanding this shift of emphasis from products to patient outcomes is critical; those firms that can develop and supply integrated product service packages will be able to deliver significant benefits to every stakeholder in the healthcare value chain. Many pharma companies have as a result started refining their supply chains. But most of the changes theyve introduced have been short-term measures to address immediate challenges like the rationalization of larger manufacturing networks as a result of acquisitions. This is reflected in the progress or, rather, lack of it theyve made in recent years. 4.4.1 Removing the roadblocks Timely access to various emerging technologies will help Pharma manufacture and distribute its products more efficiently. Some of these technologies will enable it to build quality into its manufacturing processes, while others will enhance its throughput or facilitate collaboration to realize economies of scale Significant opportunities for improving the supply chain exist as below

Following are the ways to improve existing supply chain Strategy New development technologies

Sub strategy Formulations that are easier to manufacture

Benefits formulations that can be more easily manufactured will enable Pharma to minimize its investment in product and process development Development of oral biologics will eliminate the need for cold chain distribution of such therapies. computational modeling will enable Pharma to design and validate manufacturing processes virtually, using Quality by Design In-line process monitoring via process analytical technologies (PAT) will generate the data needed to validate these models and secure regulatory approval. flexible processes and miniaturised, modular components that can be quickly connected or disconnected, it will be relatively easy to alter the order in which specific unit operations are performed These improvements will allow pharma companies to create different supply chains for different product types and markets, manage sudden shifts in demand such as the step changes associated with live licensing and reduce their manufacturing costs. Process tomography and other such technologies will enable companies to capture real-time data on critical processes, develop complex multivariate models and automatically compensate for unexpected process disturbances. Transgenic engineering offers a fundamentally different way of producing many therapeutic proteins. less capital expenditure, is easy to scale up or down in line with demand

Virtual process design and validation

New manufacturing technologies

Flexible production

Continuous processing and automation

Transgenic production

New distribution technologies

New patient interface technologies

Greater collaboration

Cloud computing will provide the information platforms they need to share data securely and economically with suppliers around the world, analyze the data very rapidly and respond to sudden changes in supply and demand, advanced tracking technologies will enable them to monitor products from the factory gate to the patient an increasingly important feature, as the industry manufactures more biologics with high unit values and specialist delivery requirements prototype chip and receiver which records exactly when a tablet is metabolized interface technologies on the market and the information they generate will help patients manage their health more effectively Greater collaboration with the other parties involved in healthcare provision will also help the industry become more efficient. Integrating supply chains so that all the upstream and downstream partners can see the full picture would enable them to plan ahead more accurately and manage demand more cost-effectively (indicated in table below)

Greater collaboration

5 Top Growth Drivers of Pharmaceutical Industry

For the last 30 years, the pharmaceutical industry has certainly lived one of the longest and most successful business cycles as well as contributing to society. The period witnessed hundreds of new drugs approved which improved lives of millions around the world. However, many observers saw that the growth started to slow down in the late 1990s. A confluence of several factors started to impact the comfortable business model of the patent-protected blockbuster approach: Price and reimbursement control or price increases began to be outlawed by health authorities in many markets around the world The R&D productivity apparently started to decline in 1996 due to a falling count of new drug approvals despite constant increase in R&D expenditures The industry is competing in a global market for developing and selling drugs and facing new competitors The centre of gravity of global wealth is shifting east with a decreasing influence by US and Europe The generalization process of large parts of pharma revenues from generic drugs A pharma industry struggling with a negative image

Key important drivers of Pharmaceutical industry to sustain growth are enlisted here.
Innovation & drug patents : especially in terms of achieving market exclusivity (against both competitors and generics competitors).If company have patents then they can come up with a unique selling proposition and isolate them self from competition. If they don't have patents they sell generic versions of drugs whose patents have expired for less than the patent holders did/do. The industry relies on a fixed period of patent protection to provide a monopoly on profits as a reward for costly R&D investment. However, the period during which these costs can be recouped has been shortened by longer time to market as a result of increased regulatory controls and barriers to market entry around price and reimbursement.

historically, sales growth came both through volume and price, with peak sales at patent expiry. The decline in sales after patent expiry took years. This is indicated in picture below

Picture below indicate flatter product life cycle. Prudent purchasing by powerful Players limit initial growth and holds down prices. The expiration of the first patent in the same drug class could result in the whole class being priced as commodities, even before the patents expire. Generic substitution speeds up the sales decline

Blockbuster model: to outset high fixed costs incurred in researching and developing new drugs and new classes of drugs.

End to end operational capabilities. Until recently pharmaceutical companies enjoyed less competition and free pricing. Without those restrictions, managers & executives developed capabilities in house, from manufacturing functions to supporting services. This environment created the bases for a self-sufficient organizational structure. Time to market - Probably the one of the most important driver in the pharmaceutical industry is the time-to-market. Companies secure very significant returns in the early life of a successful drug, before any competition. The competition-free life is shortening, typically from 5 to 12 years. Competition in this sense relates to similar (rather than exactly the same) drugs. It may be the case that the existence of regulatory protocols has hindered innovation in this sector; with companies blaming regulators for their own innate conservatism. The regulatory process tends to be slow and expensive; both these effects must be borne by the industry. Furthermore, the complex chemical compounds involved have more complex manufacturing processes, and the activities of route investigation, process development, scale-up plant design/retrofit, commissioning and qualification are either increasing in duration or proving stubborn to shorten. An estimate of 200 400m is required to launch a new drug, and an average of 812 years elapses from patent filing to first Development of size, sales and marketing scales. Sales scales originally to influence prescribers and later payers. Size and marketing to industrialize their discoveries. Global Supply : There is a general trend for companies to divest excess capacity that came about from having many local manufacturing sites, and move towards a global supply chain management process. This brings with it many complex co-ordination issues and much tighter capacity constraints. Currently, the logistics cost in the sector is relatively high. Research efficiency is declining in the sense that the cost of each new chemical entity is increasing. Supply chain optimization : Historically, most management attention has been paid to drug discovery and sales and marketing (the extreme ends of the supply chain), but now much more attention is being paid to supply chain optimization as a means of delivering value. According to Booth (1999): there is a welcome move away from viewing the supply chain as merely having to deliver security of supply at minimum cost, to a recognition of its ability to generate both value for the customer and hence to the shareholder; restructuring of the supply chain along regional and global lines will require massive reductions in capacity, which was acquired in many cases to propitiate national interest in return for sympathetic pricing.

Embracing Change in organizations - We believe that element for fueling growth is the way pharmaceutical companies will embrace change within their organizations. A shift in mind set hence in behaviors is needed in order to redefine success. Commonly, change is lead from the top. However, too often the change required does not permeate the whole organization. Top management has its own customer, generally the shareholder. To satisfy shareholders often means to give a certain ROI which often conflicts with innovation, with doing things differently. Hence, people further down the organization dont dare to innovate. There is a resigned behavioral compliance which stifles changes. Who is to blame? Who wants to swim against the tide? Leaders should change their minds and behave coherently to show the way to change for the rest of their organizations or to let parts of the organization to try changes. As an example, I remember delivering a workshop in a seminar for a large pharmaceutical company on the topic of innovation. The participating Senior Managers from different affiliates complained that they were asked to make innovative business proposals which almost every time were finally rejected on the ground that no short term ROI would be demonstrated. Trying to create competitive advantage, daring to propose and implement stepwise new ways of working, of competing should be part of a firms DNA. Pharmaceutical companies are very conservative and the command and control is still the way forward whereas cross functional teamwork, people engagements on innovative ways at looking the business should be the norm. Companies should also explore and exploit R&D from different perspectives and we gave the example of revisiting dormant compounds. For personalized medicines, the challenges are the development costs, the regulatory and reimbursement conditions and the involvement of other stakeholders like the patient, the insurer. This business model is costly and the risk is that it may turn out as short lived if the society is not ready to pay for it. Companies should be active in creating alliances with non-pharma industry partners. Because those companies may represent new entrants who will become strong game-changers in the near future. Apart from above drivers following forces that are also likely to have a high impact on the industry: a) Increasing concentration of buyers b) Increasing power of distributors (parallel trade) c) Generic substitutes d) Scientific advances leading to new drug discovery processes and greater targeting of treatments e) Government pressure on costs and intervention f) Harmonious healthcare practice

6 Challenges for Pharmaceutical Industry

6.1 Changing trends & Implications
Summary of key trends in pharmaceutical industry & their implications in table below

6.2 Manufacturing challenges

6.3 Supply chain challenges

6.4 Other Challenges for Pharmaceutical industry in India

Infrastructure - Insufficient energy infrastructure and inadequate transport infrastructure has historically posed challenges for companies operating in India. Counterfeit - Counterfeit drugs have been a serious issue in India. Intellectual Property rights _ Intellectual property rights act in India does not allow any protection for patents before 1995. The ordinance also allows opposition for the application of patent thereby further delaying the grant process.

7 References
PWC (2012) research ,Pharma 2020 : Supplying future PWC (2012) research ,Global Pharma Looks to India : Prospects for Growth Evaluate Pharma, World Preview 2016 (May 2010). Rajesh Yadav & Naveen Yadav,Pharmaceutical Processing A Review on Wet Granulation Technology Journal (April -June 2011) http://www.ijpfr.com/Dacuments/2011/7.pdf http://pharmabiz.com/NewsDetails.aspx?aid=69318&sid=1 (June 2012) http://www.mckinsey.com/locations/india/mckinseyonindia/pdf/India_Pharma_2015.pdf

Appendix Current & future market for Indian Pharma :

Indian Pharma : Advantages

Fundamentals of Growth for Indian Pharma