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Building Excellence in Pharma Industry

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The Indian pharmaceuticals market increased at a CAGR of 17.46 per cent during 2005-16 with the market increasing from US$ 6 billion in 2005 to US$ 36.7 billion in 2016 and is expected to expand at a CAGR of 15.92 per cent to US$ 55 billion by 2020.By 2020, India is likely to be among the top three pharmaceutical markets by incremental growth and sixth largest market globally in absolute size. India’s cost of production is significantly lower than that of the US and almost half of that of Europe. It gives a competitive edge to India over others.
Everything looks good to the pharma industry in India. But overall pharma operations have not changed much. Yes companies have gradually cut costs, however the operations in the industry are still managed in the same way as it was 20 years ago. That needs to change. The pressure is building for fundamental change. Companies that anticipate and adapt to these changes will succeed in the years to come. Here are few opportunities that companies should cash on:

1. Free up cash from inventory
Pharma companies need to work on working capital management. On an average a pharma company holds 180 days of finished goods inventory. Ideally the realistic target for the pharma company should be lesser number of days considering the category of goods and consumption. This huge opportunity is within reach only for companies that can align across functions and use their resources thoroughly. Companies will need a powerful supply chain function with a broader and deeper involvement in planning, production, distribution and purchasing.

2. Throughput Improvement
One of the most effective ways to improve throughput is to carefully analyze the production process for bottlenecks. Once identified, there is a need to eliminate the bottleneck so that it no longer delays production. Throughput improvement can be done via Value Stream Mapping and improving inventory turnover ratios at various stages via Inventory Management Modules.

3. Manpower productivity improvement
As competition increases in every industry, greater workforce productivity becomes essential for sustaining growth. Organizations are continually under pressure to utilize resources effectively, improve workforce productivity and reduce resource management costs. Manpower Productivity Improvement (at packing lines) can be done by concepts of Line Balancing and Time & Motion Study. Changeover Time Reduction at Packing Machines can be done via Quick Change Over concepts.

4. Improve equipment efficiency
Equipments efficiency of machines in pharma industry can be improved using overall equipment effectiveness (OEE) via pillars like Autonomous Maintenance & Planned Maintenance. OEE is often a KPI for maintenance effectiveness. It’s a chance to improve existing preventative maintenance, as well as establish a measure of self-maintenance by well-trained employees.

5. Physical workplace improvement
In order to improve the physical workplace and make the problems within the process more obvious tools like Five S can be used. This can be improved further by building a culture of continuous improvement in the organization.

6. Make supply chain flexible
For a multi-billion industry that manufactures and distributes products to millions of people every day, supply chain is not among the top issues of concern. However it can be easily argued that good business performance is predicated on the formation of an efficient and lean supply chain. In progressive organizations, the integration of supply chain management with strategic planning is complete and irreversible. Being so vital to the success of a business, it is only natural that pharma companies should continually seek new ways to configure their supply chains to remain competitive.

The emphasis of pharmaceutical industry has been on developing a pipeline of new drugs rather than on productivity improvement, supply chain optimization, and cost reduction. There is much best practice available from other industries that can be exploited but this needs to be done in a way that recognizes the specific characteristics of the pharma environment.

Embarking on Operational excellence journey is the way forward for the industry. This becomes even more challenging when driving changes in a highly regulated environment which are risk averse and where process changes need to be tightly controlled.

For further details please reach out to us on publishing@faberinfinite.com.

Written by Faber Mayuri Pandya

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