Often hailed as the 'pharmacy of the world,' the Indian pharmaceutical industry is booming. It jumped from $40 billion in 2021 to an expected $130 billion in 2030, with projections hitting $450 billion by 2047. Beyond just keeping up with the demand at home, the Indian pharma industry commands over 20% of the global pharma supply chain and addresses approximately 60% of the worldwide demand for vaccines. It meets 40% of the generic demand in the US and provides a quarter of all medicines in the UK. It has undergone a remarkable transformation, evolving into a dynamic powerhouse driving healthcare advancements worldwide. Interestingly, India is the biggest contributor to UNESCO, with a share of over 50-60%. Plus, it boasts of the highest number of USFDA-approved plants outside the U.S.

The industry benefits from cost competitiveness, driven by factors such as lower labor costs, economies of scale, and efficient manufacturing processes. This cost advantage enables Indian pharmaceutical firms to provide competitively priced products both domestically and globally. The extensive scale and diversity of the Indian pharma industry offer resilience and adaptability to the demands of supply chain, enabling it to cater to diverse needs and maneuver through market fluctuations effectively. Such a widespread presence on the global stage underscores the importance of robust supply chain networks capable of meeting stringent regulatory mandates, ensuring high-quality standards, and overcoming logistical hurdles.

A global force driving healthcare solutions

The pharmaceutical supply chain in India has undergone significant transformation, spurred by globalization, technological advancements, regulatory shifts, and rising healthcare product demand. The focus has shifted from manual and transactional processes to automation and strategic innovation.
In recent years, geopolitical tensions and the COVID-19 pandemic have also highlighted the importance of supply chain resilience and diversification. As a result, there has been growing interest in the China+1 strategy, where companies seek to diversify their supply chains by investing in alternative manufacturing locations, including India. At a recently conducted panel discussion, titled ‘From Manufacturing to Patient: Ensuring Seamless Pharma Supply Chains in India’ , the overreliance on a single supplier, especially in the case of active pharmaceutical ingredients (APIs) from China, was identified as a significant threat.

Following the Covid-19 pandemic, pharmaceutical supply chains have evolved to become more agile, transparent, and resilient. They have embraced advanced technologies like machine learning and artificial intelligence. There is a significant ongoing investment in automating manufacturing and packaging processes to enhance productivity, operational cost efficiency, and labeling precision. This transformation has enabled the implementation of on-demand delivery models, employing strategies like direct-to-patient approaches and B2B eCommerce platforms.

In October 2023, OPPI and EY conducted primary research, engaging with approximately 40 Chief Executive Officers (CXOs) representing prominent Indian and multinational pharmaceutical companies, as well as other industry organizations. The following were identified as the key focus areas to bolster the Indian pharmaceutical and healthcare sectors.

  • Advancement of manufacturing technologies with a specific focus on automation and digitization
  • Building credibility in the global market with an unwavering commitment to quality
  • Adopting sustainable practices

From fragile to agile

The adoption of AI technology in digital healthcare changed everything. In a recent interview with Express Pharma, Sharmishtha Niyogi, Supply Chain Director at Merck said, “End-to-end data traceability has become an absolute non-negotiable part of the pharma supply chain strategy, essentially analysing data from across the supply chain through artificial intelligence and big data to meet the rising market demand and be resilient to potential disruptions in demand.” Ms Niyogi also believes that “supply chain and cutting-edge operations will prove to be the single, undisputed differentiator and competitive advantage for the emerging leaders.” Despite its numerous strengths relative to other developing countries, India's pharmaceutical supply chain encounters challenges like infrastructure limitations, intricate regulatory requirements, and the imperative for ongoing innovation and investment.

Navigating the supply chain roadblocks

Manufacturing and managing the entire supply chain play crucial roles in the pharmaceutical sector. In recent years, various emerging trends such as pricing fluctuations, technological advancements, sustainability initiatives, the move towards personalized and next-generation therapies, and novel healthcare delivery models have added layers of complexity to manufacturing and supply chain operations. These trends act as significant drivers, prompting a reevaluation of priorities and essential transformations within the manufacturing sector. “These evolving industry trends, along with the macroeconomic variables, and geopolitical changes, position India at the forefront of the “China+1” opportunity.

One of the foremost challenges confronting the Indian pharma supply chain is regulatory compliance. The industry operates within a complex regulatory landscape characterized by stringent quality standards and evolving regulations. Ensuring compliance with diverse regulatory requirements across different markets poses a considerable challenge for Indian pharmaceutical companies as it would for any company operating globally and subject to multiple jurisdictions.

Infrastructure constraints present another significant hurdle for the Indian pharma supply chain. Despite substantial progress in recent years, inadequate transportation and logistics infrastructure continue to hamper the efficient movement of goods within the country. In the fourth edition of the Re-Pharma Summit 2024, panelist Sabina Sawliwala highlighted the differences in costs and logistical difficulties between companies operating in India and more developed economies like the US and Europe. “Our logistics and transportation costs are literally double-digit, whereas if go to America or Europe, these are single-digit costs,” she added. Poor road connectivity, congested ports, and limited cold chain facilities impede the timely and safe delivery of pharmaceutical products, particularly to remote and rural areas. Addressing these infrastructure gaps requires substantial investment and collaborative efforts between the public and private sectors.

Furthermore, the Indian pharma supply chain grapples with issues related to counterfeit drugs and supply chain integrity. According to a 2022 study released by GS1 India, a global supply chain standards organization, more than 50 per cent of Pharma and medical devices manufacturers lose 1 per cent of their sales due to expiry and pilferage. Counterfeit medications not only pose a significant threat to public health but also erode consumer trust in the pharmaceutical industry. The study also found that “best-in-class pharma companies globally have an inventory period of 64 days as compared to Indian counterparts that have 98 days. Along with that, the overall supply chain, logistics and warehousing costs in India is 15 per cent higher compared to other countries,” the report added.

Moving forward requires investing in modern, technology-enabled logistics facilities and ensuring the highest standards of quality in drug storage and handling. This also involves optimising packaging size. Adopting smaller, more efficient packaging not only cuts down on storage and shipping expenses but also promotes sustainability and economic benefits. This may include deploying advanced refrigeration systems, GPS tracking, and real-time monitoring to maintain ideal conditions throughout the transportation process.

Making the healthcare supply chain resilient will require end-to-end supply chain visibility through digitalisation and use of global standards which facilitate interoperability. According to the study, “over 80 per cent of the Pharmaceutical and Medical Devices Manufacturers do not have product visibility till point of care. Nearly 69 per cent of survey respondents (Pharma and Medical Devices Manufacturers) do not have the capability to implement product recall beyond the distributor due to lack of end-to-end visibility.” Implementing robust track-and-trace systems and adopting technologies like blockchain can enhance supply chain visibility and mitigate the risk of counterfeit products entering the market.

Overall, the pharma and healthcare industry in India presents tremendous potential for growth especially in innovation, research, early detection, and futuristic solutions like robotics-assisted surgery. By leveraging its strengths, embracing technological advancements, and fostering collaboration, the Indian pharmaceutical industry can continue to play a pivotal role in shaping the future of healthcare delivery both domestically and internationally.

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