Top challenges in pharmaceutical supply chain in India - Medibox

Top challenges in pharmaceutical supply chain in India

Top challenges in pharmaceutical supply chain in India

Challenges are there in every business and so is the case with pharmaceutical supply chain in India. The industry has multiple layers and the outbound supply chain is very complicated with various stakeholders such as C&F, CSA, super stockists, dealers, distributors, sub-stockists, etc. Even among distributors, there are trade distributors, hospital stockists, generic Pharma distributors, medical device suppliers, consignment agents to name a few. To complicate this further, there are inter-state transfer pricing challenges, CST, Octroi, etc.

Complications do not end here! There are over 300,000 brands and 300 new brands are launched every month! Not to mention vested interest of consultants, sales targets, procurement managers. Incentives are based on primary or secondary sales and not on real-demand. Thus the negative implications are reverse logistics, high rate of expiries and high employee turnover ratios compared to any other industry. This differentiates Pharma supply chain to a large extent and hence, is one of the most complicated one!

The Pharma Industry has been very skeptical in accepting changes, still relying on supply chain and manufacturing paradigms that have been around for a long time. But not for long now, given that technology and digitalisation has disrupted every industry, Pharma supply chain will not be left behind.

Factoring top challenges:

The Pharma supply chain is highly fragmented comprising of more than 60,000 suppliers in India. There are many geographical areas which are operating with larger numbers of SKUs. and on the other hand, there are areas, where even essential medicines are not available on time! This makes the whole process of supply chain management complex and consolidation will be the name of the game!

The Bullwhip effect of inventory which increases the demand variability in the supply chain as the stock moves from manufacturer to patient. This results in higher cost impacts every stakeholder negatively on performances and more. With predictive analysis, digital supply chain solutions, this costs will take a ‘U’ turn sooner than later!

The non-visibility of inventory causes serious threats of counterfeits, loss of sale, challenges to trace products and unpredictable demand scenarios. Digital platforms talking to each other and IIoT 4.0 (industrial Internet of Things) making its foray, information dashboards at finger-tips is not very far!

GST would have an impact on the pricing, working capital requirements, contracts with vendors and customers, change in processes, etc. The impact is no one’s guess as yet; so wait and watch is the status!

Sales force effectiveness is a key parameter to define incentives, targets and it effects the functioning of Pharma supply chain directly. Smartphones, mobile apps, digital visual aids and real-time updates are redefining companies that are exponentially growing against their competitors!

Reverse logistics takes a toll on costs that are adjusted in regular sales. Just expiries result in over USD 300 dollars loss in India! End-to-end supply chain visibility of demand forecasting and analytical insights will definitely bring positive changes.

The challenges are not limited to these six points. It is imperative to know that there are various kinds of business models that exist in this industry and hence, the degree and types of challenges would vary as per the model.

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