Raw material procurement is a crucial part of the supply chain for pharma. The process can be highly complex, with multiple suppliers & overlapping supply chains. Although India is world-renowned for producing generic pharmaceuticals and is a globally recognized source of low-cost medicine, the challenges of procuring quality raw materials & complying with India’s strict regulations are severely limiting the growth potential of this sector. These factors lead to in rise in prices for treating patients, which can have a serious impact on patient access to essential medicines.
Indian pharmaceutical companies face a number of challenges in the procurement of raw materials and the most common ones are limited access to raw material availability, high logistics costs and lack of transparency in the supply chain.
Limited access to raw material availability
The pharmaceutical industry has limited access to raw material availability in raw material procurement. Limited access to raw material availability in pharmaceuticals is a significant problem for the industry and this is mostly due to few available suppliers that have sufficient manufacturing expertise, and stable materials supply chain. It is a serious problem & can be caused by several factors, for instance, limited access to capital, limited capacity of production facilities and other constraints related to raw material supply.Although it is a popular opinion that pharmaceutical companies have a limited access to raw material, companies can bring in their own raw materials or buy them through third parties. However,
when it comes to the end product quality and safety, it becomes important to ensure that they are using the best possible materials available.
High logistics costs
Pharmaceuticals are high-margin products and their raw material procurement is a critical cost centre. Pharmaceuticals feature high logistics costs in raw material procurement, making them highly sensitive to variability in customer demand and supply chain disruptions. High logistics costs in raw material procurement in pharmaceutical can be attributed to the large number of suppliers that need to be kept track of and managed. This is because many suppliers sell a range of products via different channels.The main reasons for high logistics costs are the need to keep a high level of quality control, track packages through the supply chain, and comply with security regulations. Logistics costs are the expenses incurred in moving, storing and protecting products. These costs affect product cost as well as a company's overall profitability. The high investment on logistics causes customers to consider a change in brand name due to poor quality of service or poor customer satisfaction. Lack of transparency in the supply chain
Lack of transparency in the supply chain in raw material procurement in pharmaceutical can lead to false labelling and misleading information, which may ultimately result in adverse events. In the pharmaceutical industry, supply chain transparency is crucial to ensure that product quality and safety are not compromised. Lack of transparency in the raw material procurement process, through confidentiality agreements and lack of disclosure to the customer can lead to product quality issues and unnecessary costs. Furthermore, it also leads to mismanagement, waste and inefficiency is a key cause for pharmaceutical companies to invest in new technologies.In the pharmaceutical industry, transparency is a challenge to ensure quality and safety. Raw materials can be obtained from more than one source, which makes it impossible to trace them back to their suppliers.
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