Pakistan Pharma Industry SWOT – Part 46 – Asrar Qureshi’s Blog Post #637

Pakistan Pharma Industry SWOT – Part 46 – Asrar Qureshi’s Blog Post #637

Dear Colleagues!  This is Asrar Qureshi’s Blog Post #637 for Pharma Veterans. Pharma Veterans welcome sharing of knowledge and wisdom by Veterans for the benefit of Community at large. Pharma Veterans Blog is published by Asrar Qureshi on WordPress, the top blog site. Please email to asrar@asrarqureshi.com for publishing your contributions here.

Opening Note

February 2022 marked my completing 47 years of working in Pharma Industry. Allah be praised. I am still working. My journey of near half century is also the journey of Pharma Industry in Pakistan. Great changes have occurred in this time and a lot could be written about it. In my blogs, which were started about four and a half years ago, I have covered several topics related to Pakistan Pharma Industry. This multi-part series is the SWOT – Strengths, Weaknesses, Opportunities, Threats – Analysis of the Pharma Industry and propose strategies.

Strategies to Avert Threats/Risks

In this last set, we shall discuss strategies that shall help in averting threats and risks. These may be prevailing now and may be coming up in the near future. The nearness of future is important factor, because some of the shadows are already lurking. In the strategic language ‘Clear and Present Danger’ is which is here and now and serious. Some do belong to this category also.

We shall start from the present and move into future.

2. Strengthen Supply Chain – Supply Chain is usually the last function which is delegated by the owners to the employees. In many organizations, it is never delegated. The obvious reasons are the amount of capital which is tied up with purchases, the management of inventory, buying at good prices, buying quantities and buying time decisions etc. 

a. Supply chain is the lifeline of any business, more so for the manufacturing enterprises. We do not work on JIT – Just in Time principle; we must carry stocks due to several factors. 

i. Our vendors are not sensitive about time. They do not work by days, much less hours. They work by weeks. They commit for next week but would not say which day of next week. This unreliability is across the spectrum of all types of vendors. The import vendors from China and India are no better, they also do not follow committed timeframes. Over time, this issue has worsened. COVID became a reason for more disturbed supplies all over the world. First, it was closed factories, then it was unavailability of containers, then it was shortage of vessels, then it was crowded ports. All these reasons were genuine, and the supply chain remained unpredictable; it still is. 

ii. The prices have become unstable. There are arbitrary increases at every purchase, and there is no flexibility for negotiation. This is being seen both at domestic and international level. The local packaging vendors complain of ever-increasing paper prices, the material vendors complain of rising cost of basic materials. The problem is that the selling prices are fixed and therefore all increases in cost must be absorbed by the manufacturer.

iii. The availability has become unpredictable. Prior to COVID, the material availability was usually a given. One could order frequently to keep inventory costs low, and it was particularly important for the high value materials. The situation has changed, and it looks like it will stay the same in the future. Welcome to the new normal.

b. Supply chain consumes the largest amount of money which may even be close to cost of selling. Any money saved directly adds to the bottom line. This is the importance of improving/upgrading procurement and supply chain. Owners own handling of supply chain does not mean it is done in the most appropriate way. They may be saving money but in all the wrong places. Our emphasis is mostly on unit price rather than value for money. We would buy a poor material for a little less money and then suffer without regret. It is time to organize and develop supply chain on modern lines. It will be cost-effective and efficient.

c. Supply chain suffers in most companies due to these reasons:

i. Procurement people are mere purchasers. They do not understand the difference between purchase and procurement. A purchase is focused on that item, in that quantity, in that time. It does not take into account any planning or logic or integration with other factors. Procurement, on the other hand, is a holistic process which involves planning, negotiation for prices/ quantities/terms, comparisons, and using best practices. Due to this severe handicap, procurement remains traditionalistic and unscientific.

ii. Procurement people are grossly involved in kickbacks and commissions. Their overriding concern about their own welfare rather than corporate benefit, mars the buying process. This happens even when the owners themselves are handling procurement. Owners may also get involved in kickback business if the business is on partnership basis, and partners have divided responsibilities. 

iii. Procurement usually does not consider itself accountable, particularly when the owner is its boss. The question of performance does not arise and the improvement in process never happens.

d. Supply chain challenges will increase further as the availability gets restricted due to various factors. India has restricted export of certain molecules like tramadol, ketamine, due to their addictive potential, whereas Pakistan does not include these in restricted list. Pakistani manufacturers are dependent on import of these materials from India as these are not available elsewhere. Finding alternatives is not easy or even possible. Supply chain cannot even excuse itself and get away.

e. Supply chain has evolved in the entire world and has become a highly scientific, organized function. Several metrics are applied to determine and maintain the efficiency of supply chain. Hiding behind owners or their own self is not good, it is bad for the corporate.

Strengthening supply chain is no more an option, it is a must-do. A weak, inefficient supply chain is a huge threat for the present and future plans of the corporate. It also should not be delayed because every lost day may cause many losses.

To be Continued……

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