Pharma Case Lscm

7/27/2019 Pharma Case Lscm

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An insight into the supply chain ofPharmaceutical Industry

By,

S. P. Reddy (TL)

Sphoorthi. I

Rameez. R

Srikanth. L

Teju. G


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What is Supply Chain Supply Chain Management (SCM) is the process of

planning, implementing, and controlling theoperations of the supply chain with the purpose tosatisfy customer requirements as efficiently aspossible.

Supply chain management spans all movement and

storage of raw materials, work-in-process inventory,and finished goods from point-of-origin to point-of-consumption.


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Components of a Supply Chain

Plan

Source

Make

Deliver

Return


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INVENTORY

MANAGEMENT

REVENUE COST

LOGISTICSMUTUAL

CONSIDERATION

OBJECTIVESOF SUPPLY

CHAIN


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Activities/Functions Of SCM The functions can be divided into three main parts:

A) Strategic

B) Tactical

C) Operational


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Supply Chain DecisionsThere are four major decision areas in supply chain

management:

Location

Production

Inventory

Transportation (distribution)


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DISTRIBUTION

NETWORKCONFIGURATION

DISTRIBUTIONSTRATEGY

INFORMATION


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Supply Chain in Pharmaceutical

Industries The pharmaceutical industry

is experiencing unparalleled

change and challenge.

Globalization, treatment

and pricing

economics, government

controls and ever-advancingtechnology are posing

a challenge on the

smooth running

of the industry.


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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.


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Supply Chain Implications in the

Pharmaceutical Industry

Sales and Marketing.

Channel Management.

New Product Development

and Roll-out.


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Case Study on

Matrix Laboratories India Ltd.


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Matrix Laboratories Limited (MLL) is engaged in the manufacture of ActivePharmaceutical Intermediates (APIs) and Solid Oral Dosage Forms withturnover 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 ofproducts in CNS, anti-bacterial, anti-AIDS, anti-asthmatic, cardiovascular,gastrointestinal, anti-fungal, pain management and life style relatedtherapeutic segments.

It is not just one of the fastest growing pharmaceutical companies; it isalso one of the strongest proxies of the industrys growth, extensively

vertically integrated from intermediates to APIs to formulations tointernational marketing.

OrganizationBackground:


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19

Matrix Labs

The combined FDA approved capacity of the company is one of the largest in thecountry.

The company's Finished Dosage Forms (FDF) manufacturing facility has a capacity tomanufacture 2 billion tablets and 300 million capsules on two-shift basis.

With about 3,000 employees, including over 300 R&D scientists, Matrix focuses ondeveloping APIs with non-infringing processes to partner with generic players inregulated 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 MLLBackward vertical integration

MLL acquired stake in -

1. Concord Biotech specializing in fermentation andbiocatalytic

2. Mchem Group,China- Geographical advantage.

3. Ventures with South Africa's Aspen Pharmacare Costadvantage.

4. Belgium generics company Docpharma Robust Marketingand 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 includingboth BSRs and depots.

To identify the damaged stocks across the chain and

initiate action in a timely manner.


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The company has a supply chain network of 5 factories with bonded stockrooms (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.

Supply chain of MLL:

MANUFACTURING FACILITIES


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API FACILITIES

FACILITY PLANT AREA in Sq.Meter TOTAL CAPACITY in KL

PashamylaramHyderabad. 124687.03 222.74

Jeedimetla 37637 339.1

Kazipally 60713 243

Vizianagaram,Vishakapatnam

276028 600

FINISHED DOSAGE FORM FACILITIES

FACILITY PLANT AREA in Sq.Meter TOTAL CAPACITY in KL

Nashik,Maharastra 47285 2 Billion Tablets & 0.3 BillionCapsules Per Annum on 2shifts basis.

MANUFACTURING FACILITIES


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Suppliers to Matrix laboratories

Brand Description

GlasscoGlassware / Jointed-ware, include UPS Standard Volumetric Flask,

Measuring Cylinder, Burette, Separating Funnel etc

Molymod Educational Molecular Model Set

Scientific Lab SupplyGeneral Laboratory Supplier, eg Suba Seal Stopper, Pipette Filler,

Sintered Crucible, Quartz Cell , Countdown Timer etc

Elga Deioninser Set and Resin Cartridge Refill MCDS, C114

Atago Refractometer

Beatson Sampling / Specimen Bottle

Brother Labeling Machines, Tape, Ink Cartridge

China Products Glassware & Porcelain-ware

Electrothermal Heating Mantle, Temperature Controller

Endecott Sieves

Hanna / Eutech pH Meter, Conductivity Meter, Thermometer

Memmert Oven / Incubator / Water Bath

Nalgene Plastic-ware


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MAJOR CHEMICAL SUPPLIERS:

-Transchem Limited-Alkali Metals

-Benzochem- Borealis


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Push system : Acute therapy systemPull system : Chronic therapy system

PUSH VS PULL STRATEGY OF MLL

Action Steps Undertaken:


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Action Steps Undertaken:

Bin card system was implemented for each rack at the CFAs and the delivery staff wastrained in relevant bin card maintenance practices.

A process to regularly reconcile physical and book stocks using the cycle-count processwas 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 alignforecasting with market orders and actual sales. The process of setting safety stocks at depots was madeperiodic 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 toliquidate or destroy these stocks.

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

Benefits:


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Benefits:

Due to above steps were implemented properly the results were fascinating and this increased the profitsof 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 moreaccurate 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 stockmanagement at the depots.


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Matrix Principles for Responsible Supply Chain Management

ETHICS

ANIMAL

WELFARE

IDENTIFICATION OFCONCERNS

PRIVACY

BUSINESSINTEGRITYAND FAIRCOMPETITION

ENVIRONMENT

PROPERWASTEDISPOSAL

ENVIRONMENTAL

AUTHORIZATIONS

SPILSS ANDRELEASES

MANAGEMENTSYSTEM

COMMITMENT ANDACCOUNTABILITY

LEGAL ANDCUSTOMER

REQUIREMENTS

CONTINUALIMPROVEMENT

RISK MANAGEMENT


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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.


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Thank you

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Pharma Case Lscm