1. Manufacturing - Manufacturing of medicines is a complex process that cannot be majorly done in a single manufacturing unit. The sub components required to assemble the final product are developed in various countries and assembled at a final unit but the disruption in logistics during the pandemic made imports, exports and manufacturing very difficult which exposed the major flaw in GVC. 2. Procurement - India is over-dependent of raw materials from China to reduce the economic costs. India is currently importing more than 70% of the required active pharmaceutical ingredients (API) and intermediaries required. Many companies are only dependent on China and the domestic supply has been neglected that turned the tables when China imposed regulations and lockdown forcing India to search for alternatives. 3. Distribution - Distribution is also facing unique challenges in the form of reduced staffing, increased demand and orders, delay in delivery of medicines due to restrictions and lockdown, which points out the lack of transparent distribution channels. 4. Cost of drugs - The increase in demand provided the companies a chance to increase their profits. They have increased the prices of many of the drugs mainly the two drugs that have been in high demand paracetamol, vitamin the prices have gone up by almost 50%. 5. Increase in duplicate drugs - With the situation in chaos, the duplicate drug markets are increasing at a rapid level. For example, the number of nameless sanitizer brands in market before pandemic and at present have increased.
6. API reserves - As of present, the reserves in major companies were expected to run only for six months and some of the minor companies have already ran out of the inventory and unable to procure raw materials have stopped production temporarily. Future of Pharmaceutical Industry in India As for the future, India is provided with a chance to prove its power and capability to take on the challenges and overcome them. It is a blessing in disguise as it opened an opportunity to invite companies that are exiting from China and establish itself. When it comes to pharmaceutical industry, Indian government and companies still have a lot of loop holes to work on to position itself at global level. Consideration for companies and industry1. Supply chain risk management practices and mitigation - Companies should re-evaluate their strategies, risk assessment. They also have to consider dual sourcing and location of supplier and the import rate of API and slowly shift to domestic suppliers to avoid any future problems. 2. Digitalization and Automation is expected to flourish to create more transparency in distribution as this will help the distributors and manufacturers to keep an eye on the stock visibility and improve forecasting. 3. Although being largest producer of medicines, India is not a vaccine developer. So, companies have to adopt to new technologies to be more efficient and productive and should focus on R&D to develop new vaccines and stay updated on the situations around the world.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
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