Pharma Cold Chain Distribution In India

<p style="text-align: justify;">The overall Indian pharmaceutical market, which was US$ 40 Bn in FY 20, has crossed US$ 45 Bn in FY 22. The supply chain is complex, considering geography, infrastructure condition, and many intermediate entities. Higher government spending, higher prevalence of lifestyle diseases, growing awareness about health, and higher insurance coverage are some factors triggering the growth.</p><p style="text-align: justify;">&nbsp;</p><p><img style="display: block; margin-left: auto; margin-right: auto;" src="" width="690" height="168" /></p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">Major stakeholders are companies, government agencies, and service providers.</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Companies</span></h2><p style="text-align: justify;">A small percentage of pharma companies are very conscious of compliance and quality. They are ready to go that extra mile and incur a higher cost to be compliant. However, for many companies, there is pressure to reduce the cost, and the best bet is the cost of freight/storage. They go in for the lowest cost criterion leaving last-mile delivery/storage to unorganized players.</p><p style="text-align: justify;">There is also a reluctance to try new technologies like Blockchain and AI because it adds to the cost. The distributors have a strong hold through their cartel, and it becomes difficult to implement Good Distribution Practices.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Government</span></h2><p style="text-align: justify;">Though manufacturing pharmaceuticals needs licenses, and the National Body prescribes many compliances, surprisingly, there are no regulations for the distribution of drugs. The concept of Good Distribution Practices (GDP) was discussed as early as 2018, but it must still be notified.</p><p style="text-align: justify;">This leaves the field open to all sorts of service providers. Any vendor with an RCC structure and bare minimum air conditioning facility can set up a warehouse.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Service Providers</span></h2><p style="text-align: justify;">The sector is highly fragmented, with few organized players for cold chain transportation and warehousing. Only 30 to 40 cold chain transporters have a reasonable fleet size, with less than ten dedicated pharma players&mdash;balance transport food, fruits, and fish which is a far bigger market. Similarly, out of 25 to 30 significantly big warehouse players, less than 10 are exclusive to pharmaceuticals.</p><p style="text-align: justify;">During the entire chain, the major issues are:</p><ul style="text-align: justify;"><li>Lack of real-time tracking and visibility on the consignment</li><li>Almost no real cold chain beyond the distributor</li></ul><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Upcoming Trends</span></h2><p style="text-align: justify;">A few top companies are trying to do away with C &amp; F and go in for someone like a super distributor who will provide storage space and manage inventory. This way, the company will have more control over the chain and feel more confident about being compliant. Some forward-looking companies are trying out the application of IoT, AI, Blockchain, and Automation.</p><p style="text-align: justify;">While Blockchain can help identify counterfeits, AI/Automation is reducing the time to market, increasing accuracy/efficiency in the distribution system, and better tracking medicines. With the government pushing for compliance and using the above tools, we should see a far better system in the next few years.</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This article was contributed by our expert <a href="" target="_blank" rel="noopener">Pramod Kelkar</a></em></span><br />&nbsp;</p><p style="text-align: justify;">&nbsp;</p><h3 style="text-align: justify;"><span style="font-size: 18pt;">Frequently Asked Questions Answered by Pramod Kelkar</span></h3><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">1. What are some methods to improve cold chain distribution?</span></h2><p style="text-align: justify;">As I have explained above, some major actions are needed at various levels. They will certainly help to improve pharma cold chain distribution.</p><ul style="text-align: justify;"><li>Early issuance of GDP Notification and its aggressive implementation</li><li>Working with AIOCD (All India Organization of Chemists &amp; Druggists), which is a 'cartel' to make them understand the importance of quality and traceability in the pharma cold chain. To incentivize them to put up the necessary infrastructure</li><li>Transporters should be asked to modernize the vehicles with adequate technology contraptions. Though quality-conscious pharma companies do regular audits, Govt also should carry out spot inspections</li><li>Companies should allocate funds to modernize CFA storage facilities/implementation technology tools. Pharma Cold Chain Distribution In India-Challenges and Upcoming Trends</li></ul><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">2. What are some strategies for managing last-mile operations?</span></h2><p style="text-align: justify;">The distributor appoints smaller transporters and courier agencies for last-mile delivery. These vehicles are fitted with standard aircon. The delivery can be to retailers, hospitals, or vaccination camps. A few ideas can be looked at:</p><ul style="text-align: justify;"><li>Many areas of cities have 'NO ENTRY' restrictions during busy hours. That is why three-wheelers are used, which can ply. With the rapid growth of E vehicles, one should go in for them, which will help reduce emissions and beat traffic restrictions</li><li>Many box-packing solutions with newer technology are now available at affordable prices. Like a Swiggy or Pizza delivery, a two-wheeler can be fitted with a 'Cold Box'. This will have ice gels that can maintain temperature for 3 to 4 hours, within which the deliveries can be made.</li><li>Like in the case of Govt of Odisha and Telangana, drone deliveries can be tried in emergencies</li><li>The package/strip should mention under what temperature it should be stored. Just saying 'Store under cool and dry conditions' is confusing. Even the retailers do not know whether to keep them in the freezer or on other shelves if guidelines are unclear.</li><li>Retailers should be inspected for proper use of refrigerators/chillers for storage of medicines that need temperature control</li></ul><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">3. What are the challenges in maintaining GSP in the pharmaceutical industry?</span></h2><p style="text-align: justify;">On 25th Sep 2018 Draft of Good Distribution Practices (GDP) for Pharmaceutical Products was issued by Central Drugs Standard Control Organization(CDSCO). It is a well-drafted document and very comprehensive. The challenge is that it is yet to be notified. Yes, it is only a formal announcement. The real issues are</p><ul style="text-align: justify;"><li>Lack of ownership by the various stakeholders.</li><li>Unwillingness on the part of Govt agencies to push the stakeholders for the implementation</li></ul><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;"><strong>Few Examples</strong></p><ul style="text-align: justify;"><li>Distributors are expected to keep track of medicines throughout the supply chain. However, in real cases, once the products are loaded onto the vehicle, barring the usage of a data logger, one does not have any visibility on the product's status in terms of temperature or theft. The drivers are paid incentives on mileage per litre. They tend to switch off the aircon to save fuel.</li><li>Suppose the temperature control vehicle (Reefer Truck) breaks down on the way. The after-sales support is not always quick, particularly if the area is remote. In that case, the products are left at a temperature that can be 45 Deg C in the worst summer. Also, the vehicle inside temp may be within guidelines, but the inside box temp may be different. Data loggers inside the boxes are needed.</li><li>Picking and placing the products based on challan is manual during storage in many warehouses. There is a tendency to pick what is easily reachable, which may not be as per FIFO or F(EX)IO rule. In many places, products are stored on pallets on the floor rather than having a racking system to cut costs.</li><li>Quality Systems-It needs a strong desire from the company/distributors to implement Quality Systems like Corrective and Preventive Action(CAPA), proper storage, separation of hazardous/return goods, proper packing using 'Cold Dogs' for smaller packets, documentation, and self-inspection. Even today, in some cases, the distributor warehouse is like a bungalow/shed with an improper storage/air conditioning system.</li><li>The Ministry of Health and Family Welfare(MoHFW) is the parent body for CDSCO, which is responsible for setting standards, and ensuring the quality and safety of drugs. It has Zonal Offices. Considering our geography and distributors being family-run, it is not easy to implement GDP, but with little pressure/push, at least in mega and metro cities, it can be implemented.</li></ul><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">4. What are the benefits of introducing new technologies into Pharma Cold Chain Distribution?</span></h2><p style="text-align: justify;">As said earlier, maintaining quality (focusing on temperature and storage conditions) and having traceability are the two foundations for pharma cold chain distribution. The technologies are helping achieve this.</p><p style="text-align: justify;"><strong>Examples</strong></p><p style="text-align: justify;"><strong>Traceability</strong></p><p style="text-align: justify;">The use of blockchain will revolutionize the way medicines are traced. Its core technology is verification and traceability, making it attractive to the pharma industry. It is extremely secure technology with an encrypted core. No single user can remove or change an entry. However, it deals with technologies like AI. One needs to have a reliable partner to implement it.</p><p style="text-align: justify;">A start-up founded by two Indians is doing its bit in this domain.</p><p style="text-align: justify;"><strong>How it works</strong></p><p style="text-align: justify;">The manufacturer produces medicine and marks it with a unique code, producing a hashtag. When the medicine flows from the distributor to the retailer and the end consumer, each entity can verify the origin, and the transaction gets added to the blockchain. This way, proactively, we can identify counterfeit, spurious, and substandard medicines. It gives us real-time disclosure of the entire product path.</p><p style="text-align: justify;">The system sends an alert if a distributor or retailer tries to sell more than he received(by adding fake medicines). It needs a lot of technology development at all levels.</p><p style="text-align: justify;"><strong>Storage</strong></p><p style="text-align: justify;">This can be addressed at various levels using AI/IoT. It can control temperature, optimize energy consumption, and help in FIFO/Inventory Management Technology. Also, new technologies like 'Pick n Place' should be used for the least manual intervention.</p><p style="text-align: justify;"><br /><br /></p><p style="text-align: justify;">&nbsp;</p>
KR Expert - Pramod Kelkar

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