As the resilience of life sciences companies continues to be tested, there is no dearth of technologies to strengthen the ecosystem. But do pharma honchos see enough value and ROI to onboard such systems? In the first of a series of thought leadership round tables, hosted by Express Pharma, as part of SAP India’s Industry Knowledge Exchange (IKEX) Series, in partnership with the Indian Pharmaceutical Alliance (IPA), life sciences leaders share insights on major pain points and some solutions
With a perfect storm of virus variants, geopolitical instability and stagflation, and much more, brewing, how do life sciences leaders transform their enterprises into more resilient and flexible entities?
Continuing the partnership with the Industry Knowledge Exchange (IKEX) Series, in association with the Indian Pharmaceutical Alliance (IPA) and SAP India, Express Pharma is organising a series of Thought Leadership Round Tables for pharma leadership across key functional areas. The aim is to understand their concerns and search for collective learnings and synergies.
Focusing on the theme, Driving Business Innovation in Life Sciences, the consensus at two recent engagements, (Bengaluru, May 11, 2022, followed by Mumbai, May 19) was that though the sector is faced with a plethora of opportunities, the challenge is to choose the right one, and the right path, to maximise chances of success.
Leaders at the Bengaluru round table spanned contract research (Dr Mahesh Bhalgat, COO, Syngene), big biopharma (Krishna Sai T, Head IT, Biocon), contract biopharma manufacturing (Sanjay Lodha, VP – Operations, Kemwell Biopharma), as well as supply chain and operational heads from pharma (Rajesh Kshirsagar, COO, and Jitendra Patel, Supply Chain Head, Micro Labs and Shailesh Siroya – Managing Director, and Bharath Bhushan D V – M&A and Investor Relations, Bal Pharma).
Round 2 in Mumbai had a similar mix, with stalwarts like Arvind Agarwal, CFO, Ajanta Pharma; Nihar Medh, Sr VP SCM, Global Head of Procurement, Cipla; Rohit Chugh, Head -Digital Transformation, Sun Pharma; Manish Kishore, Global Head – IT, Wockhardt; and Pankaj Agarwal, Operational Excellence, Lupin with Sudarshan Jain, Secretary-General, IPA giving an industry overview on recent policy interventions.
From challenges …
Supply chain and operational heads like Lodha of Kemwell Biopharma spoke about the disruptions of the COVID-19 pandemic, when India’s dependence on consumables like filters and raw materials crucial to the production of COVID-19 vaccines and other bio-therapeutics, created a backlog in production schedules and increased costs. The uncertainty of supplies and increase in freight surcharges, sometimes upto 12 per cent of the value of the consignment, led to the realisation that manufacturing of these inputs, be it equipment or ingredients, needed to shift to India.
However, this is easier said than done. Veterans like Agarwal of Lupin pointed how setting up API plants in the country has been next to impossible, resulting in India’s dependence on imports.
Micro Labs’ Kshirsagar spoke of how lead times increased, as pharma companies cannot change vendors as easily as other manufacturing sectors, due to regulations. The shortage of shipping containers continues even today, with delays of 45-60 days. His colleague Patel recalled how input costs increased prices while Bal Pharma’s Siroya commented on how the volatility impacted the ability to quote rates in tenders.
All spokespersons agreed that the regulatory diktat to trace the route of synthesis of each ingredient, after the nitrosamines linked to cancer were found in some input ingredients, added another layer of challenge. Supply chain disruptions constrained pharma companies to search and switch vendors.
Talking about the challenges of using digitisation strategies to meet these challenges, Biocon’s Krishna Sai pointed out that this magnified the need for documentation especially when companies change vendors due to scarcity. In the same vein, Wockhardt’s Manish Kishore highlighted the impact of dead inventory in the supply chain and the need to connect 3PLs across the chain.
… to innovative collaborations
But these constraints led companies to dig deeper for insights to find a way around these blocks. For instance, Dr Bhalgat spoke about how technology can be used to understand which ports are less congested than others so that supplies can be re-routed. He also commented about how technology is also being used for looking at equipment efficiency and making equipment monitoring automated and round-the-clock therefore permitting early interventions.
As companies chase limited input ingredients and the like, Medh pointed out that while companies continue to compete, the benefits of collaborating to sort out supply chain issues could perhaps be one of the biggest learnings of the pandemic.
Chugh highlighted that achieving scale, compared to peers in countries like China, was another big challenge. He also emphasised on the use of new technology- blockchain which holds a lot of promise in the pharma value chain to address the issues of counterfeit medicine and provenance. The overall thought process of implementing ‘digital transformation’ and how to bring about cultural change was debated.
Agreeing with this analysis, Ajanta Pharma’s Arvind Agarwal opined that unless large pharma companies collaborated with smaller ones, they would not be able to achieve scale. In the same vein, Kishore pointed out how collaborations with start-ups and smaller players could help India meet global pharma requirements.
From his perch as IPA Secretary-General, Jain highlighted that coordination and collaboration between companies and associations have been the hallmark for ensuring a consistent supply of medicine during the COVID-19 pandemic. Although all the companies aggressively compete in the marketplace, they have been sharing the learnings in terms of the safety of employees, digitalisation, common supply chain issues encountered during the pandemic and the situation in different parts of the country. They have been also coordinating closely with the ancillary industries and channel partners. The government has been a great support during this unprecedented time. All issues related to availability have been dealt with at high speed. This has been transcribed as a case study with IIM Ahmedabad.
Jain reiterated that we should leverage the learning going forward in the interest of public healthcare. Initiatives to supply medicines to Sri Lanka, Ukraine and Russia, is a great example of Indian pharma companies playing an important role in access to medicines. India can bring savings to healthcare systems across the world through the supply of affordable quality medicines. Recent FTAs with Australia and UAE are steps in the right direction. Going forward, he opines that digitalisation will play an important role in building productivity and efficiency in the supply chain and overall company operations.
Tech as an enabler
Commenting on the role of technologies, Lodha conceded that there were many technologies – both software and hardware- available, but obsolescence was a major problem. Replacing tech every 4-5 years made them prohibitively expensive. Krishna Sai too agreed with this assessment, that most tech needed to be replaced every 3-5 years but spoke of the benefits of harnessing the data for predictive analysis.
In the battle for resource allocation, justifying the value of technology to finance heads /CFOs is a tough sell. While leaders can sell on compliance, Dr Bhalgat pointed out that making a business case for tech spend should ideally package the cost as a value, which is possible if the benefits are clearly quantifiable.
While Kshirsagar threw up the need to integrate data across all manufacturing systems through Electronic Batch Records (EBRs), Siroya spoke on how high attrition meant that companies had to constantly train new recruits.
The threat of a limited talent pool was discussed at the Mumbai round table too, leading Medh to predict that companies which have been able to deploy technology, will be able to retain talent better.
The subtext of many conversations at both round tables was maintaining the delicate balance achieved during the pandemic, when companies pooled resources, whether it was to meet surging demand for COVID therapeutics or liaise with policymakers. And companies are aware that they need to continue to look for synergies. For instance, Medh suggested further areas of collaboration like using common vendor audits.
Companies like Sun Pharma are already harnessing technology, and Chugh gave an overview of how his company has digitised secondary sales data to gain visibility of stock beyond the factory gate.
Show RoI and benefits
Giving a CFO’s perspective, Agarwal of Ajanta Pharma referred to the benefits of digitization of inventories, suggesting that the pharma sector can learn from other sectors, especially FMCG, one of the first sectors to embrace this approach.
Given the stress on margins and the inability to pass on costs to the end-user/patient, many participants wondered if India could afford to continue to be the low-cost pharma manufacturing destination of the world. The answer would be to scale up fast, using smart technologies to do more with less.
Given the theme was Driving Business Innovation in Life Science, tech experts from SAP India like Sudakshina Ghosh, Industry Business Architect, Team Lead, Industry & Customer Advisory Practice, SAP India, Rajesh Kuppuswamy, Life Sciences and Health Care Industry Advisor, SAP India and the team from Tenthpin Management Consultants gave an overview of how pharma companies can transform their organizations into intelligent enterprise by achieving value with intelligent ERP systems
SAP’s Kuppuswamy gave examples of how SAP is incorporating user feedback to build India-centric solutions using the SAP global ecosystem, co-developing solutions with strategic partners like Tenthpin Management Consultants who have complementary expertise in niche areas.
Further expanding on this partnership, Raghuram Janapareddy, Partner & Managing Director India, Tenthpin Management Consultants who moderated both engagements, supported by team members Rama Rao Jupelli and Vishal Pratapwar, explained how SAP along with Tenthpin is building a comprehensive life sciences eco-system for collaborative innovation, wherein they invite pharma companies to be part of an advisory council to identify common business requirements and build them in a collaborative manner.
Tech solution providers like SAP and their partners like Tenthpin Management Consultants are building robust cloud-based business solutions needed by pharma companies, hoping to get more companies on board and help them find ways of harnessing their strengths.
But given the constraints, will more pharma companies invest deeper in such technologies, with an eye on future gains? And do they have a choice, if they want to not just survive, but thrive and move to the next level?
Express Pharma, SAP India, and IPA look forward to continuing this dialogue with pharma leaders at forthcoming round tables. Watch this space for more insights!
Siesmic shifts in life sciences
Resilience of the Supply Chains are being stretched to the boundaries, with multiple external factors, which are changing dynamically every day. Shorter delivery time lines, varying demand for new drugs, Expiration of stocks, theft & counterfeits, loss of potency due to failures in expected controlled environment, geo-political situations, natural calamities, etc. are impacting the supply-chains.
Inbound Logistics: The recent Pandemic has exposed the inbound supply chain challenges extensively. Shortage of APIs, extensive delays in shipments, numerous quality check for onboarding new vendors, ever-changing prices for the raw materials, raising costs etc. are impacting the supply of raw materials and intermediates for manufacturing.
Production (Manufacturing): The manufacturing process is becoming more and more complex. Distributed Manufacturing, Customized batch sizes, complexities in labelling requirements, batch traceability, cold chain monitoring are some of the challenges that pharma companies must handle. The manufacturing lines are not geared up for varying batch sizes. Capital investments are a deterrent for investing in flexible manufacturing machinery.
Marketing, Sales and Distribution (Outbound Logistics): With extreme competition and growing demand for generics, economic crisis in few countries and inflation effecting the consumer buying behaviour etc. are putting extreme pressure on the pharma companies for the growth, and sometimes their sustenance. Spurious and counterfeit drugs are compounding these woes. Due to these dynamics, it takes a lot of time to recover the investments into the R&D, which impacts the profitability and cash flow.
In addition, the involvement of multiple external players such as, Third-party Packing Agents, Logistics depots, Cold Chains service providers, 3PL, Export agencies, Airports, Ports, Customs, Marketing Agencies bring their own complexities to the outbound supply chain.
Quality and GXP: With intense scrutiny from the regulatory, changing international regulatory compliance requirements, constant surprise inspections, need for submission of enormous amount of documentation and data, expiring IP timelines are some of the macro challenges that Pharma companies are facing. In addition, there are also need for maintaining the books and records for the internal quality processes, need to prove the compliance to the SoPs and Quality Management System, managing the quality compliance by the external partners such as CROs, ensuring constant quality surveillance to avoid DS/DP expiry, managing the batch genealogy, proactive quality surveillance are some of the challenges the companies face.
(Source: Tenthpin Management Consultants)