Supply chain delays driving up Indian logistics costs

By Nick Taylor

- Last updated on GMT

Related tags: Supply chain, European union

State-border delays, tolls and paperwork are increasing logistics costs in India and making transit less efficient than the EU and China, a report found.

The Organisation of Pharmaceutical Producers of India (OPPI) and DHL found delays are worse in India than the European Union (EU) or China and this is driving up biopharm supply chain costs.

Delays at Indian borders may take anywhere between 2 to 24 hours, while transit across borders in China takes only 15 minutes to 2 hours and almost no time in the EU​”, the report states. When “inadequacies​” are considered supply chain costs in India may be higher than China or the EU. 

PricewaterhouseCoopers (PwC) made similar points​ in its 2010 look at factors that could limit growth​ of the Indian pharmaceutical sector. The report quoted a source who said logistics can account for half the costs in the Indian supply chain from factory to shelf.

Both reports said implementation of a goods and services tax (GST) could make the supply chain more efficient. Adoption of a GST was proposed in 2007 but implementation has been delayed repeatedly and is now due to come into force in April 2012.

GST may prove to be a strong incentive for greater streamlining, as middle men could potentially add substantially to the final cost of medications in a price-sensitive market​”, the PwC report said.

The reports also agree on the importance of dedicated pharma zones at Indian airports. Pharma zones at Delhi, Mumbai and Hyderabad airports were due to open by the end of 2009 but the project has been delayed. In December 2010 the first pharma zone was opened at Hyderabad airport.

Raising standards

OPPI and DHL highlight the potential for RFID (radio frequency identification), GPS (global positioning system) and anti-counterfeiting technology to improve Indian supply chain standards. India is looking at the use of technology and in January proposed making barcodes mandatory​ for pharma exports.

 PwC listed counterfeiting as one of four practical concerns for pharma companies operating in India. “Companies should remain alert to possible counterfeiting issues​”, the PwC report said.

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