Cold Chain Indian Pharma

Cold Chain Indian PharmaPharmaceutical Industry - IndiaMarket ValueThe Indian Pharma Industry is valued at 72069 crore INR in 2013 as against 65654 crore INR in 2012 with an incremental value of 6416 crore INR.Market ShareThe top 10 companies contributed to 41% of total industry sales up while the top most company contributed to nearly 7% of total industry sales.Fragmented MarketThe total no. of stockists in India is around 65,000 and the total no. of pharmacies is about 550,000. These stockists are spread all across the length and breadth of India which poses a huge logistical challenge.Town Class PenetrationTown - Class% of the Indian Pharma IndustryMetros30Class I Towns31Class II to VI Towns19Rural20Pharmaceutical Industry - IndiaMajor contributor to global pharma marketThe countrys pharma industry accounts for about 1.4 per cent of the global pharma industry in value terms and 10 per cent in volume terms Fast growing industryThe Indian pharmaceutical industry revenue is expected to expand at a CAGR of 17.8 per cent during 200816 and reach USD36 billionRapidly growing healthcare sector The healthcare sector in India is expected to reach USD100 billion by 2015Growing generics marketThe generics market is expected to grow to USD26.1 billion by 2016Source: India Biz, PharmaBiz, Frost and Sullivan report on Indian Pharmaceutical Market, Aranca ResearchRanked 5th in terms of attracting FDIAttracted 5 per cent of the total FDIs into India from April 2000 to March 2013 Cumulative FDI inflows worth USD10.3 billion from April 2000 to March 2013 Health care Industry Pharmaceutical as part of Heath care Show a pie How many companies exist

3Growth rateFast growth to continue in domestic segmentThe Indian pharmaceuticals industry revenues are expected to rise at a CAGR of 17.8 per cent to USD36 billion during 200816

Fast growth to continue in exports segmentPharma exports from India are forecasted to increase more than two folds over the next five years

The trade surplus in the pharma sector is likely to expand to USD16.5 billion by 2016Source: Business Monitor International, Aranca Research Growth rate of inustry Major companies and their share Top ten Share of organized market 4India is primarily a branded generics (molecular copy of an off-patent drug with a trade name) market. However, it is important to note that generic versions of molecules which still had patent protection in the rest of the world were produced and marketed in India by domestic market participants until 2005, since India did not follow any patent protection laws up to 2005. With best-selling patented drugs worth $67.5 billion losing protection in the United States in 2010, Indian companies such as Sun, Lupin, Aurobindo, Dr.Reddys, Cipla and Ranbaxy have been aggressive with regard to Drug Master Filings (DMF) and Abbreviated New Drug Applications (ANDA) filings over the last few years, representing 25.0 per cent of the total approvals granted in 2007 and 30.0 per cent in 2008.

Status of Branded Generics and patent Details for patented regimeBranded generics Indian law on patents Branded generics a future 5Challenges in Industry RegulatoryNational Pharmaceutical Pricing Policy 2012The implementation of the National Pharmaceutical Pricing Policy 2012 by the government eroded margins from 20 per cent and 10 per cent to 16 per cent and 8 per cent for retailers and stockists respectively.

This decrease in the stockist margins led to a significant uncertainty among many stockists regarding the feasibility of staying in business due to lower profitability post the margin reduction.The FDI PolicyThe FDI policy, however, gives confusing signals. 100% FDI in greenfield investments is allowed by the automatic route but after November 2011, the brownfield investments require the approval of the Foreign Investment Promotion Board (FIPB) which often comes with conditions.

The time consumed in this process also acts a deterrent.Uniform code on sales and marketing The Department of Pharma (DoP) has issued guidelines on a uniform code on sales and marketing practices which is different from the MCI guidelines.

Tax authorities use the Central Board of Direct Taxes (CBDT) circular based on MCI guidelines to decide on permissible sales and marketing expenses. Drug law NLEM / DPCO Not much of medical insurance to people Regularly monitored industry 6A Typical distribution network in Indian pharmaceutical industryRM / PM410 Nos1 Own, 11 LL,77 TP, Imported FG4 NosCarry 7 day Stock23 NosCarry 30 days stock5,000 NosAvg 35 days stock500,000 NosAvg. 15 day stocksSuppliers

FactoriesHUBStockiestCFARetailers

Fast MovingSKUsStock TransferSale booked in HCS booksCredit Terms 7 & 21 days20%, 30% & 50% sales skewSecondary SaleBasis for MRs sales incentive

OfficeSecondary SaleMonthly reporting.ManuallySale & StocksDaily reporting.AutomatedDaily DispatchPlanProduction PlanEvery 10 daysAutomated PR basedon Stock Norm or PlanBulky MaterialCall on / offStock TransferLead time Avg 10 daysDaily replenishment,subject to truck loadHow it is different from US or Canada. Big Retail/ Pharmacies in Canada/US.Numerous Demand points - StockistsIndia a country of all seasons all the timeClimatic variations during the yearDiversity gets reflected to a large extent in Indias climate too. India has eight climatic zones.Climatic variations across the countryThe wide difference of climate in India can be adjudged from a comparative analysis of two different geographical areas - The chilling air of the mountains can be well combated by the burning dry heat of the Rajasthan Desert in a couple of hours only.

Challenges for supply chainBut this large scale variation poses a huge challenge for our supply chain.The long channel of distribution and high incidence of brand substitution makes it mandatory for a company to make all its stock keeping units (SKUs) available at all levels at all times.Warehousing practicesTypes of warehouses

Trends: Indian Warehousing SectorWarehousing was traditionally used as godowns to store goods from the time of production till the time of consumption.Over time the traditional warehouses have transformed to collection and storage points, where raw material, intermediate and manufactured goods are collected, assorted, stored and distributed to the point of consumption/sale.Almost 92% of the market is dominated by unorganised players, while 70 to 75% of the organised market is being controlled by PSUs.

Growth DriversThe warehousing market in India is expected to grow at a rate of 35 to 40% annually.The growth in warehousing in India is primarily being driven by the burgeoning manufacturing activity, increasing international trade and the emergence of organized retail in the country.Policy reforms from the government including the establishment of logistics parks in the PPP model, the implementation of the Warehousing and Development Act 2007 and serious attempts to roll out Goods and Services Tax (GST) are added reasons for the expected expansion in the warehousing sector.Transportation industryLiteral MeaningTransportation (American English) is the movement of people and goods from one place to another.FunctionsTransport contributes in growth of industries whose product requires quick marketing.Transport helps to create demand for goods.Transport creates place utility. Transport bridges the gap between production and consumption centers. Transport creates time utility. It helps the product to be distributed in the minimum possible time.Transport helps in stabilization of price by moving commodities from surplus to deficit areas.

ImportanceTransport Infrastructure has a share of 6.4 per cent of GDPInfrastructural bottlenecksTransport of freight by road forms an important component of freight movements within India, with a large chunk of goods, over 65 percent, being moved by road.With narrow and congested highways, poor surface quality of roads and 40 percent of villages not having access to all-weather roads, the efficiency of the transport system is severely affected.RoadsThe existing port infrastructure is insufficient to handle trade flows effectively.The current capacity at major ports is overstretched and their infrastructural upgrades are being made at very slowly pace.Interesting Fact: While Shanghais ports can turnaround a container ship in 8 hours, the same ship in Mumbai takes 3 days.SeaThe failure in augmenting the freight carrying capacity and efficiency of the railways has denied the logistics sector cheaper and efficient mode of transport.RailwaysAir cargo handling facilities at mini metros and towns are negligible as to be non-existent.Comprehensive inland waterway systems, which India has in plenty and can act as auxiliary mode of transport, has been neglected.

OthersLogistical challenges High freight costFreight cost forms 11% of the landed costs, as compared to 6% in the developed countries.BottlenecksDelayed documentation processes Vast areas & complex locations to coverDelays due to lack of connectivity in multi-modal logisticsVery few service providers offer skilled expertise, etc.VisibilityLack of visibility in the entire chain.Idle timeComplex and time consuming requirements of various government departments.Few big players85% unorganized sector, very few national players.OPPI and its standardsWhat is OPPI? The Organization of Pharmaceutical Producers of India (OPPI) established in 1965 is a premier association of research and innovation driven pharmaceutical companies in India and is also a scientific and professional body.

BUT OPPI does not have the authority to lay down legislations for pharmaceutical regulation.Who sets the standards in India?The office of the Drugs Controller General of India (DCGI) has the primary responsibility for approving new drugs, molecules and standards, Vaccines & Sera, new usage and claims, new method of administration, clinical research and trials, introductions of a new unique formulation and granting import and export licenses.

It oversees the activities of the Central Drugs Standard Control Organization (CDSCO). GDP?Good Distribution Practices (GDP) lays down the guidelines to be followed by every entity involved in the distribution of pharma products so as to maintain its original quality.

These guidelines have been issued by the Central Drugs Standard Control Organization (CDSCO).What OPPI is?Who decides the standards.. What is GDP and who has issued it?

14How cold chain is managed?Cold Chain is a system of storing and transporting vaccine at the recommended temperature range from the point of manufacture to point of use. Personnel: to manage storage and distribution.Equipment: to store and transport.Procedures: to ensure that drugs are stored and transported at appropriate temperatures.Key elements of cold chainWalk in Freezers: They maintain a temperature around (-) 20*C. An alarm system is also provided. As soon as the temperature crosses the safe range a hooter hoots loudly.Walk in Coolers: They maintain a temperature of +2*C to +8*C. They are also provided with temperature recorder and alarm systems. Once the temperature of WIC is more than the safe range, alarm system gets activated.Deep Freezers: The cabinet temperature is maintained between -15*C to -25*C. This is used for storing of drugs and also for freezing ice packs. Ice Lined Refrigerator: These type of refrigerators are top opening because they can hold the cold air inside better than a refrigerator with a front opening. Cold Boxes: Cold boxes are big insulated boxes. These are of different sizes and are used with requisite number of ice packs.Cold chain equipmentsTypical Cold Chain Structure

RetailerManufacturerHUBStockist2-8*C2-8*C2-8*CCold Chain warehouse & transportationInsulated vans/refrigerated vans are used for the transportation of cold chain products by roads in bulk quantity.

The cold chain products are transported in cold boxes with desired number of frozen/conditioned ice packs.

TransportationWalk in Coolers are used for the storage of cold chain products in the warehouses in bulk quantity.

The temperature of the Walk in Coolers is captured through the data loggers.

Power backup is maintained considering the erratic supply of power in India.WarehousingIdentifying gapsHuman capital and domain skillsLack of logistical supportCosts involvedPower supply is erraticUsage of data loggersTemperature of the storage device must be recorded thrice daily. These records should be checked during supervisory visits.It is an electronic device placed with the drug which records the drug temperature for 30 days. It has an alarm system and as soon as the temperature of the equipment storing the drug crosses the safe range alarm alerts the handlers. This device assists in temperature monitoring through following features:It shows temperature in digital LCD screen at all the time.It indicates if there was any alarming situation during the past 30 days.It shows the duration of temperature violation for every alarming situation happened in past 30 days. It has a shelf life of two years from the date of activation of device. The device once activated, cannot be stopped through-out its operational life. Hence, it provides round the clock monitoring.It has been specifically designed to be used with Walk-in-Coolers.Data LoggersCold Chain in Domestic Exporting to other countriesCautionary measures while exportingIndian requirement for importInsider tips