Streamlining of Indian supply chain needed to cut costs

By Nick Taylor

- Last updated on GMT

Related tags Supply chain

Rising use of biologics and a tax initiative will drive the streamlining of Indian supply chains, helping companies to deliver drugs at affordable prices, according to PwC.

India represents a significant opportunity for pharma but shortcomings in some areas could restrict growth, according to a report by PricewaterhouseCoopers​ (PwC). In particular PwC highlights the supply chain and other infrastructure aspects as possible limiting factors.

Logistics can “compromise 45 to 55 per cent of the costs in the Indian supply chain from factory to shelf​”, according to a source quoted in the report, in part because of the large number of stops between initial production and final consumer.

PwC believes this situation may be improved by the Goods and Services Tax which could result in the presence of middle men in the supply chain adding substantially to the final cost of medications.

Another factor that may drive supply chain improvements is the increased prevalence of biologics. India’s biotech and biosimilar markets are predicted to grow and this will create the need for more advanced, temperature-controlled supply chains.

However, the distribution of India’s population makes this particularly problematic. Despite continuing urbanisation 70 per cent of the population still lives in rural areas, according to PwC.

This creates a number of difficulties for pharma companies seeking to penetrate India. PwC notes that there is a lack of adequate infrastructure, such as distribution channels for niche segments and poor storage facilities.

To overcome these issues PwC recommends that global pharma companies enter into alliances and partnerships to utilise local knowledge and expertise.

Overall India’s infrastructure is improving, according to PwC. Transport and energy have been particular problems but the government is keen to encourage public-private partnerships in these areas which PwC believes represent an investment opportunity despite the economic slowdown.

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