The purpose of this report is to critically assess current purchasing and supply management practices in pharmaceutical industry, while looking at such companies as “Pfizer Inc.” and “Eli Lilly and Company”. Globalization, technological advances and increased worldwide competition has led to more complex supply chains in the pharmaceutical industry. It is important to acknowledge the increased exposure of these supply chains to risk. ‘The purpose of risk management is to ensure that adequate measures are taken to protect people, the environment and assets form harmful consequences of the activities being undertaken’ (Aven, 2007).
2. Pharmaceutical Industry Overview
There are types of companies in the pharmaceutical industry: Multinational, R&D-based multinational organisations with a worldwide supply of prescription and over-the-counter products. Pfizer and Eli Lilly are both examples of such companies. They have manufacturing sites in many countries. Large basic manufacturers, which manufacture out-of-patent prescription and over-the-counter drugs. Smaller manufacturing companies that operate locally, producing both generic and branded products under license or a contract. Contractors or outsourcing partners, producing companies, which do not have their own product portfolio, but are involved in producing necessary intermediates, active ingredients or final products by providing outsourcing services to larger companies.
This report will look closely at such manufacturers as Pfizer and Eli Lilly, both global pharmaceutical companies with complex supply chains involved in production and distribution.
3.1 Supply Chain Management in Pharmaceutical industry
At the heart of achieving consistent quality products and building a service system, lies a clearly lined Supply Chain Management strategy. Compliance with storage and transportation technology will prevent any changes in the quality of the medicines. The availability of modern information systems will provide the ability to control the passage of the drugs across the stages of the supply chain. In the end, all of these facts provide an additional competitive advantage for the manufacturers of medicines (Enyinda, 2011). The complexity of the pharmaceutical markets increases the importance of supply chain management. There are several factors contributing to this, amongst which are the following: An enormous range of existing medical products and pharmaceuticals; Specific requirements for the transport technology and storage conditions suitable for different groups of drugs; Difficulties in obtaining certificates, licenses and other permits; Limited interchangeability of medicines;
Strictly limited shelf life;
Long-term supply of products;
The need for quality control during the procurement process; The presence of a large number of counterfeit products in the market; Planning the optimal demand for medicine (stock planning);
The need for professional training, distinct information environment, accounting systems and categorization and to ensure the traceability of medications and data; These reasons determine the need to control the track of drugs across the supply chain, from the production phase up to the finishing phase, where the product gets delivered to the customer. An additional benefit for controlling the supply chain is the opportunity to track the emergence of counterfeit and substandard products in the process. Each customer, holding a box of medicine, should be able to distinguish its authenticity from the package. This requires the package to feature information about the manufacturer, expiration date, and all intermediaries involved in the distribution of medical products. If the medication is of poor quality, then it must be clear who is responsible: the manufacturer or the distributor. These are examples of procedures executed as part of risk management – the adoption and implementation of management decisions aimed at...
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