Streamlining supply

SME IT/OUTSOURCING

IT can help reduce the time to market drugs.

This May, Hyderabad-based B2B Software and Microsoft India launched B2B Pharma, a solution expected to aid the pharma sector in financial management, supply chain management (SCM) and manufacturing needs of the companies. Then we have Cognos, a leading player in the business intelligence and performance management solutions' arena , which launched two new performance solutions to help pharmaceutical companies improve clinical trials management and optimise sample distribution across the sales force for corporate revenue targets.

Clinical trials represent one of the biggest direct-spend components in most pharmaceutical R&D budgets. Also take the example of Torrent Pharmaceuticals which has deployed SAP (ERP) across its entire gamut of business locations globally and integrated it with its Sales Force Automation solution.

There are hundreds of such examples. While ERP or Enterprise Resource Planning is a given in most pharmaceutical companies (for that matter, in any manufacturing unit), what is gaining importance here is SCM or Supply Chain Manufacturing solutions. Better supply chain practices reduce the time to market, hence cut costs and ultimately add to the bottomline.

SCM is the management of the entire value-added chain. It involves delivering the right product to the right place, at the right time and at the right price. SCM basically integrates the company's internal systems to those of its suppliers, partners and customers. It primarily works with five basic components called Plan, Source, Make, Deliver and Return, to achieve three primary goals: Reduce inventory, increase the transaction speed by exchanging data in real time, and increase sales by implementing customer requirements more efficiently.

Pharmaceutical companies that mainly have to deal with distribution networks, bulk purchasers and hospitals, also need to assess current customer supply chain processes against standard and industry benchmarks to identify areas for improvement. Companies are also adopting Web-based supplier collaboration solutions, RFID (Radio Frequency Identification), supply chain optimisation, collaboration over the Internet, reverse auctions, and collaborative product development.

While compliance regulations mandate good clinical, laboratory and manufacturing practices and privacy and fiscal rules, they greatly implicate IT systems, states a recent IDC report. Pharmaceutical companies are making investments from a few thousand rupees to lakhs and crores. The investments are in the form of product technology, hardware, services, training and maintenance. One way out is to outsource the IT needs to experts just as Hyderabad-based Granules India did by entering into an agreement with SQL Star.

SQL Star will integrate Granule's processes across the entire supply chain, finance and HR covering operations spread across Granule's headquarters at Hyderabad, three plants in India, sales and marketing office in the US and the logistics, distribution and technical support network globally. This ERP implementation is scheduled to be operational from July 1, 2006.

Talking about RFID, a study by ABI Research predicts that about 10 medications will be tagged on a large scale during 2006. A WHO recent study said counterfeit drugs represent more than 10 percent of global sales. The annual cost of counterfeiting to the pharmaceutical industry is estimated to be around $68 billion. Electronic Product Code (EPC) or Radio Frequency Identification (RFID) is the best medicine against counterfeit drugs and item-level tagging, which can help eliminate this problem.

Drugs have to reach the stores on time in refrigerated containers. Hence this is a high volumes, low-margins business in a majority of cases. This would mean, RFID tags will have to become cheaper.