An insight into the supply chain of Pharmaceutical Industry

By, S. P. Reddy (TL) Sphoorthi. I Rameez. R Srikanth. L Teju. G

What is Supply Chain

Supply Chain Management (SCM) is the process of

planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-ofconsumption.

Components of a Supply Chain

Plan Source Make Deliver

Return

INVENTORY MANAGEMENT

REVENUE

COST

OBJECTIVES OF SUPPLY CHAIN

LOGISTICS

MUTUAL CONSIDERATION

Activities/Functions Of SCM
The functions can be divided into three main parts:
A) Strategic B) Tactical C) Operational

Supply Chain Decisions

There are four major decision areas in supply chain management:
Location Production

Inventory
Transportation (distribution)

INFORMATION

DISTRIBUTION STRATEGY

DISTRIBUTION NETWORK CONFIGURATION

Supply Chain in Pharmaceutical Industries

The pharmaceutical industry

is experiencing unparalleled change and challenge.

Globalization, treatment

and pricing economics, government controls and ever-advancing technology are posing a challenge on the smooth running of the industry.

Key trends in the Pharmaceutical Industry

Business innovation is restructuring the value chain.

Market share and margins are declining.

Consumers have less access to new drugs.

Supply Chain Implications in the Pharmaceutical Industry

Sales and Marketing.

Channel Management.
New Product Development

and Roll-out.

Case Study on Matrix Laboratories India Ltd.

Organization Background:
Matrix Laboratories Limited (MLL) is engaged in the manufacture of Active Pharmaceutical Intermediates (APIs) and Solid Oral Dosage Forms with turnover of US$ 261 million.

It is one of the fastest growing API manufacturers in India and focuses on regulated markets such as U.S. and EU. The company has a wide range of products in CNS, anti-bacterial, anti-AIDS, anti-asthmatic, cardiovascular, gastrointestinal, anti-fungal, pain management and life style related therapeutic segments.

It is not just one of the fastest growing pharmaceutical companies; it is also one of the strongest proxies of the industrys growth, extensively vertically integrated from intermediates to APIs to formulations to international marketing.

Matrix Labs
The combined FDA approved capacity of the company is one of the largest in the country.
The company's Finished Dosage Forms (FDF) manufacturing facility has a capacity to manufacture 2 billion tablets and 300 million capsules on two-shift basis. With about 3,000 employees, including over 300 R&D scientists, Matrix focuses on developing APIs with non-infringing processes to partner with generic players in regulated markets for their early formulation entry.

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ACQUISTIONS:
(Smooth flow of drugs through supply chain)

US generic drugmaker Mylan acquired 71% stake in MLL

Backward vertical integration

MLL acquired stake in 1. Concord Biotech specializing in fermentation and

biocatalytic

2.

Mchem Group,China- Geographical advantage. advantage.

3. Ventures with South Africa's Aspen Pharmacare Cost 4. Belgium generics company Docpharma Robust Marketing

and Distribution platform.

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Key Concerns for the Company:

To reduce inventory level at the BSR and depots.

To improve inventory accuracy at stocking points including

both BSRs and depots.

To identify the damaged stocks across the chain and

initiate action in a timely manner.

Supply chain of MLL:

The company has a supply chain network of 5 factories with bonded stock rooms (BSR) attached for dispatch to the depots and 35 depots for servicing distributors. Goods move from the factory to the BSR. BSR dispatches stocks to Mother CFAs (depot). Other depots receive stocks from the Mother depot and sell them to distributors.

MANUFACTURING FACILITIES
API FACILITIES
FACILITY Pashamylaram Hyderabad. Jeedimetla Kazipally Vizianagaram, Vishakapatnam PLANT AREA in Sq.Meter 124687.03 37637 60713 276028 TOTAL CAPACITY in KL 222.74 339.1 243 600

FINISHED DOSAGE FORM FACILITIES FACILITY PLANT AREA in Sq.Meter TOTAL CAPACITY in KL

Nashik,Maharastra

47285

2 Billion Tablets & 0.3 Billion Capsules Per Annum on 2 shifts basis.

Suppliers to Matrix laboratories

Brand Glassco Molymod Scientific Lab Supply Elga Atago Beatson Brother China Products Electrothermal Endecott Hanna / Eutech Memmert Nalgene Description

Glassware / Jointed-ware, include UPS Standard Volumetric Flask, Measuring Cylinder, Burette, Separating Funnel etc
Educational Molecular Model Set General Laboratory Supplier, eg Suba Seal Stopper, Pipette Filler, Sintered Crucible, Quartz Cell , Countdown Timer etc Deioninser Set and Resin Cartridge Refill MCDS, C114 Refractometer Sampling / Specimen Bottle Labeling Machines, Tape, Ink Cartridge Glassware & Porcelain-ware Heating Mantle, Temperature Controller Sieves pH Meter, Conductivity Meter, Thermometer Oven / Incubator / Water Bath Plastic-ware

MAJOR CHEMICAL SUPPLIERS:

-Transchem Limited -Alkali Metals -Benzochem - Borealis

PUSH VS PULL STRATEGY OF MLL

Push system : Acute therapy system Pull system : Chronic therapy system

Action Steps Undertaken:

Bin card system was implemented for each rack at the CFAs and the delivery staff was trained in relevant bin card maintenance practices. A process to regularly reconcile physical and book stocks using the cycle-count process

was implemented.

An IT solution was identified and implemented for:

Accounting the Cycle count process, providing MIS on deviations and accounting the adjustment

notes. Computing the forecast using consolidated orders, with factoring for promotions and seasonality. Calculating safety stock level based on number of weeks of sales target. Facilitating communication of closing stock data from BSR and depots to logistics department. Facilitating communication of damaged and un-saleable stock quantity to commercial department. Automatically allocating stocks using FIFO principle at the depots.

Demand planning and forecasting were made a periodic activity using the above IT solution to align
forecasting with market orders and actual sales. The process of setting safety stocks at depots was made periodic and dynamic, based on updated sales data.

Norms were set to act on damaged /old and other dead stocks. Clear action steps were laid down to
liquidate or destroy these stocks.

Responsibility and accountability were set to in the organisation to monitor and authorise activities in
this regard based on visibility provided by the IT solution.

Benefits:
Due to above steps were implemented properly the results were fascinating and this increased the profits of the company by 20%.
The organization achieved an inventory record accuracy (book stocks correctly reflecting physical stocks)

of 95% within 2 months .

The company achieved (Within 2Planning cycles i.e. 2 Months)

Stock level reduction

From 8.2 weeks to 5.5 weeks at the BSR. From 6.5 weeks to 4 weeks at the depots which included damaged inventory. Reduction in stock value holding across the supply chain.

Transparency of saleable and damaged stocks quantities across the supply chain resulting in more

accurate demand planning, stock allocation and production.

Better management of damaged and un-saleable stocks: Sales realization on salvaging and selling damaged stocks at a discounted price. Timely destruction of unusable and potentially harmful products. Timely action on transport, handling, stock management and product development fronts to reduce

damages.

Reduction in proportion of old and damaged stocks; Facilitation of ensuring fresher stocks in the market.

This was achieved mainly by reducing inventory levels across the chain and also by better stock

management at the depots.

Matrix Principles for Responsible Supply Chain Management

ETHICS
ANIMAL WELFARE IDENTIFICA TION OF CONCERN S PRIVACY BUSINESS INTEGRITY AND FAIR COMPETITI ON

ENVIRONME NT
PROPER WASTE DISPOSAL ENVIRONMENT AL AUTHORIZATIO NS SPILSS AND RELEASES

MANAGEMENT SYSTEM
COMMITMENT AND ACCOUNTABILITY LEGAL AND CUSTOMER REQUIREMENTS

CONTINUAL IMPROVEMENT
RISK MANAGEMENT

CONCLUSION
MLL must ensure that their drug reaches customers with uncompromised quality.
Should retain control over the multilayered distribution system and cold chain management. Should acquire leading pharma companies in the pharmerging markets to cut down cost and fasten the delivery to the end customer.

Thank you