Optimising spend, maximising growth

India’s pharma and chemical companies are now set to integrate deeper into global supply chains, and back integrate, with China plus one initiative and other regulations, triggering more investments. Though supply chain shocks could derail these early success stories, a deep dive at a recent thought leadership conclave revealed many opportunities and strategies to tackle the challenges.

Express Pharma, in partnership with Indian Pharmaceutical Alliance (IPA) and CHEMEXCIL, powered by SAP, recently organised a thought leadership conclave titled, Reimagining Spend Management & Supply Chain for Pharma and Chemical Industry. Cross functional experts explored how smart supply chain technology optimises spends and maximises global growth opportunities, extracted learnings from success stories, and shared real-world experience and solutions to evolve up the global pharma value chain.

Speakers explored how they could pivot materials and export logistics to the next level with advanced supply chain technology, and shared success stories highlighting greater gains from supply chain technology and automation. They also explored how smart AI contracting across the pharma and chemicals supplier universe could link spends, RoI and result in value creation. There was broad consensus on the critical need for technology material traceability to insulate pharma and chemical exports from supply chain shocks.

SAP supply chain solutions for pharma and chemical companies in India

Nikhil Kamat, SAP Director demonstrated how SAP has worked with pharma and chemical companies to improve supply chain productivity, leveraging the existing ecosystem to get the right insights, helping clients focus on intelligent work, thus improving on-time delivery performance.

The discussion centred on the increasing number of mid-market/MSME pharma companies turning to SAP in the post COVID years, to support their growth plans.As they scale up and need the support of proper auditable systems, these companies are now moving online, using systems like SAP’s vendor cockpit and transitioning to a vendor portal approach, where they can leverage SAP’s global vendor portal, with access to around eight million vendors and six lakhs in India.

Kamat also highlighted how digital invoicing has not just saved time but also has a positive ESG impact as it replaces manual paper-based invoices, giving the example of one client project where SAP influenced 6 of their 17 UN sustainable development goals just by automating the purchase order system. Kamat also spoke about vendor risk assessment, management strategies, which can be deployed when onboarding new vendors using the vendor risk dashboard which evaluates vendors on a range of parameters running from regulatory, environmental, financial, operational, etc.

In a Fireside chat, titled Future Proofing the Chemicals and Pharma Supply Chains, moderated by Viveka Roychowdhury, Editor, Express Pharma and Express Healthcare, two association chiefs discussed the impact of COVID-19 on the pharmaceutical and chemical supply chains, highlighting the invaluable lessons learned for future policy formulation. 

Sudarshan Jain, Secretary General, IPA highlighted how the pandemic served not only as a formidable crisis but also as a unique opportunity for advancement within the sector. During the height of the pandemic, a daily “war room” was established, uniting top pharma executives and government officials to tackle realtime challenges. This collaboration was vital; it fostered communication among stakeholders, allowing them to swiftly address production hurdles and supply chain uncertainties that arose from both international raw material shortages and unpredictable COVID outbreaks.

Moreover, the crisis prompted remarkable regulatory improvements, demonstrating that when push comes to shove—or when a virus comes knocking—regulatory bodies can indeed accelerate processes. Vaccines, which typically require years of development, were birthed in a mere 12 months, proving that necessity is the mother of invention, and possibly a rather impatient mother at that. India emerged as a global supplier of medicines during this tumultuous time, delivering to over 200 countries despite significant obstacles. As we move forward, the insights gained from this experience will undoubtedly shape policies, emphasising the need for continued collaboration, adaptability, and a regulatory framework that can keep pace with the demands of our ever-changing world.

During the meeting, the moderator questioned whether the lessons learned during the pandemic have been incorporated into policy to reduce red tape and improve efficiency in critical areas, like for instance, recent reports about substandard IPA (Isopropyl Alcohol) imports from China, which are not suitable for use in the pharmaceutical sector .

In response, Jain acknowledged that crises often drive faster action, but once the crisis ends, the sense of urgency fades. He pointed out that efficient systems involving collaboration, regulatory approvals, and digitalisation need to be established and sustained beyond emergencies. He also commented on the challenges of working with China, noting that Chinese regulators are secretive, and inspections of imports from China do not take place, raising concerns about the quality of materials supplied.

He agreed on the importance of oversight for critical ingredients, emphasising that moving forward, greater care must be taken to ensure the quality of essential imports. However he also noted that the limited domestic capacity to replace such imports creates a difficult balance. Ultimately, he stressed the importance of building stronger systems to address these issues in the future.

Raising the issue of capacity building in the pharmaceutical sector, specifically citing isopropyl alcohol (IPA) as an example, Roychowdhury asked Abhay Udeshi, Chairman, CHEMEXCIL and Chairman, Jayant Agro Organics about CHEMEXCIL’s role in addressing these challenges and how COVID-19 has shaped policy in the chemical sector, as supply chain challenges have left the sector vulnerable, especially in attempts to move away from China-based suppliers. For India to capitalise on global opportunities, the pharmaceutical sector must strengthen its supply chains and integrate backward into chemical production.

In response, Udheshi highlighted the importance of the chemical industry in supporting pharmaceuticals, noting that India is the sixth-largest chemical producer globally and third in Asia. The industry, valued at $220 billion, is expected to reach $300 billion by 2030 and potentially $1 trillion by 2040. He explained that chemicals are essential to almost all manufactured goods, making the sector a key player in various industries, including pharmaceuticals.

Udheshi then addressed the specific challenges posed by the pandemic. He explained that the Indian chemical industry, like many sectors, faced significant disruptions early in the pandemic due to global supply chain issues. Demand for many sectors dropped, but certain chemicals, such as IPA, acetones, and other inputs for pharma production, saw a surge in demand. Despite the crisis, the industry showed resilience and has now surpassed pre-pandemic levels. He also noted that CHEMEXCIL played a critical role in maintaining export levels during the pandemic, working closely with government agencies to resolve issues related to supply chain disruptions.

Udheshi concluded by explaining that CHEMEXCIL not only focuses on exports but also plays a key role in import substitution. During the pandemic, CHEMEXCIL was in constant communication with government departments and international stakeholders, working to keep exports running while also supporting domestic needs. He highlighted the importance of digital tools in maintaining global connections, organizing webinars, and facilitating business continuity during the crisis.

Roychowdhury highlighted the government’s PLI (Production Linked Incentive) scheme for the pharma industry and inquired if a similar initiative is being considered for the chemical sector. Udheshi confirmed that discussions with the government are ongoing, and while the pharma sector was prioritized during the pandemic, there is now recognition of the shortages in input chemicals used for pharma manufacturing. He added that the government is reviewing representations from the chemical industry and urged collaboration to identify critical chemicals in short supply so that relevant schemes can be implemented. Roychowdgury shifted focus to another concern area, raising concerns about the frequent changes in regulations, particularly the recent stricter nitrosamine guidelines, which will require pharma co