To Study the Issues in Procurement of Raw Materials in Pharmaceutical Industry

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influence decision making and, improved market intelligence.

Specification

Define category

Identify stakeholders

Determine portfolio positioning

Review document requirements

Prepare statement of work

Review performance requirement

Compile the appropriate tender

Plan for procurement

Selection

Collect supply market intelligence

List prospective candidates

Prescreen to shortlist

Issue tender document

Carry out selection process

Review stakeholder buy-in

Complete selection

Commitment

Prepare relevant document

Supply agreement

Service agreement

Purchase order

Memorandum of understanding (risk)

Letter of intern (risk)

Appropriate contractual instrument

Payment

Confirm delivery of goods or service

Check as appropriate

Identify deficiencies

Revert to supplier and resolve

Check payment terms against invoice

Pay invoice

MANAGEING THE COMPLEXITIES OF THE GLOBAL SUPPLY CHAIN:

With the increased globalization and accompanying complexity of the pharmaceutical supply chain, managing the role of sourcing materials has become very challenging task. Reduction in time and cost are important objectives of procurement, but increased regulation and more rapid enforcement make this objective difficult to achieve. Current trends have forced healthcare industry to more rapidly optimize sourcing activities for raw materials, intermediates, and other material components for both clinical supplies and commercial manufacturing. If managed improperly, sourcing can result in supply chain interruptions, significant unexpected increase in cost and quality control issues.

Procurement today is not only dealing with saving money for the business but have also created a value and strategic role. The challenges require a lot of strengthening capabilities, the creating of competitive merits through new sourcing strategies and establishing solid relationships with their suppliers. 360-degree spent visibility and intelligent sourcing gives pharmaceuticals industry’s procurement departments enormous power to increase portability, maintain price competitiveness, minimize exposure to risk, accelerate cash flow and capture innovative from a global base of supplier. The industry Challenges are:

• Consumer and the healthcare provider demand steady flow of safe, effective and beneficial medical treatment at affordable prices

• Industry and government authorities want rigorous science, strict regulatory compliance and airtight supply-chain accountability

• Legal and regulatory complexity is on the rise

• R&D is both expensive and risky with generics bringing intense price competition

• Increased outsourcing of mission critical business process, such a clinical testing, requires rigorous management to ensure rapid introduction of safe, effective products.

A report sponsored by price waterhouseCooper, based on survey of 112 industry executive worldwide, was found that 50% see raw materials sourced outside of the U.S as the greatest exposure to the supply chain and 61% view contaminated or independent raw materials as the top threat, even as 78%believethat global sourcing will increase. Only 25% stated they share common practices and information with suppliers, while nearly 60% said they are focused on willingness of supplier to provide information and to address regulatory requirement.

OUTSOURCING- A PROCUREMENT VIEW:

Pharmaceutical companies are looking to use strategic partnership with custom manufacturing to enable them to improve the coordination of their entire supply chain from process development through packaging, as opposed to delegation of supply chain management. Most healthcare companies are now skillfully combining in-housing production with outsourcing from third party vendors. Key drivers are secure, competitive and timely access to product, optimization of resources, including human talent and financial assets, and optimal efficiency. By undertaking strategic sourcing, healthcare companies can secure closer links with an evolving core list of selected vendors restructure their asset base and instead focus on their investments on developmentof process and flexibility in launch facilities such as pilot plants and early phase production plants. Additionally, there is a relentless need to optimize initiative and monitor performance.

HURDLES IN STRATEGIC PROCUREMENT:

1) Regulatory Compliance: regulatory requirement plays a major role in procurement of raw materials as well as sale of finished products. Increased vigilance of the regulatory authorities such as United States Food and drugs Administration (USFDA), Drugs Enforcement Agency (DEA), Customs Services, etc. plays a critical role in choosing the right supplier for raw materials as well as finished goods. As in a recent case, USFDA banned the import of drugs from India Ranbaxy Pharmaceuticals which lead to a great loss to the corporate customer who were purchasing the finished product the finished product from them as outsourcing contracts.