LISKO PAKISTAN (PVT.) LTD.

Duration: From 1st May to 11th June, 2011 Report based on THEORIES LEARNED AND THEIR APPLICATION Due date of the report 25th June, 2011 (2 weeks after the successful completion of internship) Report submitted on 7nd July, 2011 Delayed by 12 days Reasons for delay: MBA exams scheduled on 25th June, 2011, leading to delay in c ompilation.

Name department(s) in which you worked, giving duration in each, stating the supervisor’s name and designation according to the following format: Department Supervisor’s Name Designation Duration Supply Chain Department Nazar Talib Director 6 weeks

CONTENTS SUPPLY CHAIN AND ITS LINK WITH CORPORATE OBJECTIVES 4 CONTRIBUTIONS TO THE SUPPLY CHAIN DEPARTMENT 5 Introduction 6 Overview of the industry 7 SUPPLY CHAIN DEPARTMENT 10 THEORIES LEARNED AND THEIR APPLICATION 10 SUPPLY CHAIN PROCESS [Supply chain mangement] 10 Logistics: [Supply chain mangement] 11 Quality Management: [Supply chain mangement] & [Production Management] 11 Distribution 13 INVENTORY MANAGEMENT [Supply chain mangement] 13 INVENTORY PLACEMENT [Supply chain mangement] 13

AGGREGATE PLANNING [Supply chain mangement] & [Production Management] 14 VENDOR EVALUATIONS PROCESS [Supply chain mangement] 15 ADEQUACY OF FECILITIES AT THE WORKING ENVIROMENT [Supply chain mangement] 15 OUTSOURCING [Supply chain mangement] 18 Practices for Lowering Costs and Increasing Sales 19 SOCIALLY RESPONSIBLE PRACTICES [Supply chain mangement] 20 E-commerce: [Supply chain mangement] 20 TOTAL QUALITY MANAGEMENT 21 Enterprise Resource Planning [Supply chain mangement] 21 WORKFORCE COSTING [Supply chain mangement] & [organizational behavior] 22 PERFORMANCE GAUGING: [production management] 23 ENVIRONMENTAL MANAGEMENT SYSTEM 23 BALANCED SCORECARD: [Supply chain mangement] & [ Strategic Management] 24 FAILURE MODE AND RISK ANALYSIS: [Supply chain mangement] 25 26 Process analysis [production management] 27 Process Evaluation Matrix [Production Management] 30 Conclusion and Recommendations 31 References 32 Bibliography 32 SUPPLY CHAIN AND ITS LINK WITH CORPORATE OBJECTIVES Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market, networked economy syncing it with its corporate objectives. In Peter Drucker s (1998) new management paradigms, th is concept of business relationships extends beyond traditional enterprise bound aries and seeks to organize entire business processes throughout a value chain o f multiple companies. During the past decades, globalization, outsourcing and information technology h ave enabled many organizations, such as Dell and Hewlett Packard, to successfull y operate solid collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities enabling it to pursue it s corporate objectives. This inter-organizational supply network can be acknowle dged as a new form of organization. However, with the complicated interactions a mong the players, the network structure fits neither "market" nor "hierarchy" ca tegories (Powell, 1990). It is not clear what kind of performance impacts differ ent supply network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complex network structure can be decomposed into individ ual component firms (Zhang and Dilts, 2004). Traditionally, companies in a suppl y network concentrate on the inputs and outputs of the processes, with little co ncern for the internal management working of other individual players. Therefore , the choice of an internal management control structure is known to impact loca l firm performance causing to deviate from key goals and objectives. In the 21st century, changes in the business environment have contributed to th e development of supply chain networks. First, as an outcome of globalization an d the proliferation of multinational companies, joint ventures, strategic allian ces and business partnerships, significant success factors were identified, comp lementing the earlier "Just-In-Time", "Lean Manufacturing" and "Agile Manufactur ing" practices. Second, technological changes, particularly the dramatic fall in information communication costs, which are a significant component of transacti on costs, have led to changes in coordination among the members of the supply ch ain network allowing a more focused and integrated approach to the firms mission , vision, and corporate goals. Many researchers have recognized these kinds of supply network structures as a n ew organization form, using terms such as "Keiretsu", "Extended Enterprise", "Vi rtual Corporation", "Global Production Network", and "Next Generation Manufactur ing System". In general, such a structure can be defined as "a group of semi-ind ependent organizations, each with their capabilities, which collaborate in ever-

 

changing constellations to serve one or more markets in order to achieve some bu siness goal specific to that collaboration" (Akkermans, 2001). The security management system for supply chains is described in ISO/IEC 28000 a nd ISO/IEC 28001 and related standards published jointly by ISO and IEC CONTRIBUTIONS TO THE SUPPLY CHAIN DEPARTMENT As an internee in the department my job included: • Assisting the supply chain officer in their routine activities for e.g. daily ca lls to key clients for updates on requirement and market demand • Filing of documents and their history backup • Identifying weaknesses in the department and devising solutions to resolve them • Learning routine job activities by doing • Preparing a cost and benefit approach for all the activities • Costing for the business decision and promotional activities for the clients • Getting to know the nuts and bolts of the process in the department.

INTRODUCTION Lisko Pakistan (Pvt.) Ltd is one of the leading and deep-rooted National company that specializes in the production of human medicines. The company was establis hed in 1972 and in No time, it managed to position itself at a very vanguard of the Pharmaceutical and Health Sector. The company operates in compliance with the good manufacturing practice on patte rn set by the WHO, owing to its un-remitted pursuit of perfection, the company g ot the ISO 9001:2000 performance certification and is continuing to work with co nsumer trust. A major part of the company’s success is attributed to its technical staff that in corporates a number of highly qualified experts. Our employees from various pros pects are continously advancing through systematically kept special training pro grams, that are set periodically by Board to ensure complete efficiency in work. At Lisko Pakistan strategies are always drawn by keeping consumer satisfaction , needs, wants & attitudes as our first priority. From the very beginning the com pany committed itself in supplying consumers with reliable medicaments combining efficacious, quality, safeness and economical price. These are with other facto rs that have made Lisko Pakistan a popular performer over the years. Due to Lisko Pakistan’s commitment with its consumers that highest quality medicin es will always be provided to them, therefore it is made sure that the Raw Mater ials present in their products should be imported from quality & reliable world wide sources such as, U.K, Netherlands, Italy, Spain, Japan, Belgium, France, Ge rmany India and China etc. Currently the company is manufacturing Antibiotic, Anti-allergy, Anti-malerial, Anti-depressent, Anti-T.B, Anti fungal and General Health Care Products, that ha ve established their names due to their high quality & appropriate price. With t his, not only in Pakistan but these products are also highly trusted and demande d in international markets, that has enabled Lisko Pakistan to export them in di fferent parts of the world.

OVERVIEW OF THE INDUSTRY Pakistan has a very vibrant and forward looking pharma industry. At the time of independence in 1947, there was hardly any pharma industry in the country. Today

Pakistan has about 400 pharmaceutical manufacturing units including those opera ted by 25 multinationals present in the country. The Pakistan pharmaceutical ind ustry meets around 70 per cent of the country s demand. The domestic pharma mark et, in terms of market share is almost evenly divided between the national compa nies and multinationals. The industry provides direct employment to over 70,000 and indirect employment t o around 150,000 across the country. National pharma industry has shown a progressive growth over the years, particul arly over the last one decade. The industry has invested substantially to upgrad e itself in the last few years and today the majority industry is following Good Manufacturing Practices (GMP), in accordance with the domestic as well as inter national guidance. Currently the industry has the capacity to manufacture a vari ety of products ranging from simple pills to sophisticated biotech, oncology and value added generic compounds. Although Pakistan s pharmaceutical and healthcare sectors are expanding and evol ving rapidly, about half the population has no access to modern medicines. Clear ly this presents an opportunity, but much more work needs to be done by the gove rnment and industry stakeholders. The value of pharmaceuticals sold in 2007 exce eded $1.4 billion, which equates to per capita consumption of less than $10 per year and value of medicines sold is expected to exceed $2.3 billion by 2012. Pakistan is a developing pharmaceutical market, with a large population and econ omic progress evident, but per capita drug spending was rather low at around $9. 30 in 2007. Private spending accounts for 65 per cent of total healthcare expend iture sourced through out-of-pocket payments, international aid and religious or charitable institutions. Pharmaceutical spending accounts for less than 1 per c ent of the country s GDP, comparable to levels in some neighbouring countries. T he forecast period is likely to witness the marginal strengthening of the generi cs sector, albeit more in terms of volumes than values. The share of generics is also likely to increase further as major drugs come off the patent in the near term, to the likely benefit of the generics-dominated local industry. The Pakistan pharma industry is relatively young in the international markets wi th an export turnover of over $100 million as of 2007. Pakistan Pharma Industry boasts of quality producers and many units are approved by regulatory authoritie s all over the world. Like domestic market the sales in international market hav e gone almost double during last five years. The pharma industry is focusing an Export Vision of $500 million by 2013. In the meantime, exports are also likely to boost due to new regional and global opportunities. The Pakistan Pharmaceutical Industry is a success story, providing high quality essential drugs at affordable prices to Millions. Technologically, strong and se lf reliant national pharmaceutical industry is not only playing a key role in pr omoting and sustaining development in the vital field of medicine within the cou ntry, but is also well set to take on the international markets. The country s pharmaceutical exports were $101 million in 2006-07 and growing at an annual rate of 22 per cent. In 2005-06 exports hit the mark of $83 million. Export target for FY2008 had been projected at $125 million. On the other side of the border, Indian pharmaceutical exports stand at $6 billi on, growing at a pace of 20 per cent. Country s spending on health as percentage of GDP was only 0.8 per cent as compared 5-6 per cent in Sri Lanka, 3-4 per cen t in Bangladesh, 6-7 per cent in Algeria, 5-7 per cent in Mexico, 6-9 per cent i n Iran and 10-15 per cent in Costa Rica and Cuba. Economy contribution and Importance Being one of the major indicators of economy, pharma industry has contributed po sitively so far and has somehow managed to increase production by a meager 1 per cent. Similarly industry contribution and weightage surged to 6.7 per cent in t otal Large Scale Manufacturing (LSM) production during 1QFY09. On the other hand, LSM posted 6.20 per cent negative growth in 1QFY09 over the c orresponding period of previous year mainly due to deteriorating economic of the country. Challenges

   

 

 

 

The fast-deteriorating business environment especially for the pharmaceutical co mpanies in the wake of high cost of production has been burdening the local phar ma sector. Also, the cap on drug price by the government for the last seven years has aggra vated the situation further. Last price increase, which was of 3 to 4 per cent, was allowed by Ministry of Health in December 2001. The prices of the Active Pharmaceutical Ingredients (APIs) used for the manufact uring of drugs as well as of other raw materials like paper, plastic, glass, rub ber, etc. have increased manifold since 2001. The cost of oil, gas, electricity, transportation and labour has also spiked dramatically during this period. Bristol-Myers Squibb (BMS) has an annual turnover of around Rs 1.5 billion and i s the second multinational pharmaceutical, which is going to kiss Pakistan goodb ye. Earlier, Merck Sharp & Dohme (MSD) closed down its operation in Pakistan som e months back and was acquired by a local pharmaceutical firm Organon Bio Scienc es (OBS). "It is not the end but a new beginning for the pharmaceutical firms", said a pha rma industry lynchpin. "Especially MNCs are shutting down business because of to ugh business conditions," added he. He also pointed out that more and more MNCs are mulling to close operations in Pakistan. "After MSD and BMS, two more firms will follow suit in the near future," he said and added that the local pharmaceutical companies are also facing hard times as well and they are opting for mergers to survive in the present situation. Recen tly two local pharmaceutical companies Hilton Pharma and SAMI Pharmaceutical con solidated their operations in order to survive in the current situation.

SUPPLY CHAIN DEPARTMENT THEORIES LEARNED AND THEIR APPLICATION SUPPLY CHAIN PROCESS [SUPPLY CHAIN MANGEMENT] LISKO basically operates on quota system basis. On country level, planning is do ne and the budget is prepared. How much demand is there to be met is the questio n that is to be answered. For example, providing vaccines for swine flu. Another example relating to Pakistan is that of Hajj Mencevax. Vaccine tender is placed every year before Hajj around august. Normally, LISKO Pakistan wins the tender. Then further preparations are made by LISKO Pakistan. When do they have to supp ly the vaccines, in which quarter? The demand is to be met across the globe for the Hajj Mencevax Vaccines. CEVA is the clearing agent for LISKO. CEVA works with Cargo Lux. They work only wherever Cargo Lux is operating. For example, the product is manufactured at Bel gium site. It is then to be transported by road to the airport. Then the flight and the destination the product has to arrive at. Furthermore, there are differe nt shipping terms and regulations present in different countries and they vary f rom country to country. Now LISKO has its global insurance partners which manage its CIP (Carriage and I nsurance Paid). They believe that keeping a central insurance company backing th em would save the premium that has to be paid, would result in further cost savi ngs and other advantages that come as a result of the pooling in. However in Pak istan, insurance is to be done locally. It is a one of the biggest challenges fa ced by LISKO Pakistan. For example, there might be an insurance claim that may a

rise because of the supplier’s mistake. So the local insurance company won’t be will ing to accept the claim as it the problem occurred at the end of Belgium when su pplying the product The vaccines LISKO produces normally are to be kept in the temperature range of 2C– 8C. For the vaccines, an order has to be placed at least 2 months to 3 months in advance on the JD Edwards system being used at LISKO. Once all this is done, the shipment takes place. The shipment has to change hands. For this to happen, very crystal clear documen tation system has been implemented by LISKO. There are certain documents a perso n should have before the shipment can change hands. The requirements include the invoice, Bill of Label, Certificate of Analysis, Batch Certificate (it includes the expiry, technicalities of the product, its components). Furthermore, the lo cal approval for the shipment is required. Country approval maybe required, whet her the vaccines have been approved in Pakistan. After this the logistics gets i nvolved and take it a step further. Cold Chain Management is an important part o f it. Cold Chain Management (CCM) requires active monitoring. LISKO recently has accepted DHL’s services. DHL provides LISKO with end to end services. DHL is well equipped and acquainted with latest technology. From the time a particular cart on of vaccines is lifted from the factory to the time it reaches the warehouses here, DHL provides tracking services and keeps LISKO updated on the transportati on status. LOGISTICS: [SUPPLY CHAIN MANGEMENT] When logistics is brought up, LISKO recently did a very thorough route analysis. It wanted to minimize its transportation time. LISKO wanted to find out the fas test possible route. They evaluated airlines they were using for the transportat ion of medicines from one country to another it was operating in. Cargolux fligh t frequency was lesser than Emirates which flew 4 times a week, twice as more. F urthermore, there was another advantage associated with Emirates. Sometimes ther e might be a few small packages to be transported. Emirates took these few small packages even on its commercial flights. Other than this, the time it took for the vaccines or medicines to be transported to reach the airport was also calcul ated taking the shortest route possible by road. QUALITY MANAGEMENT: [SUPPLY CHAIN MANGEMENT] & [PRODUCTION MANAGEMENT] LISKO made its documentation robust. How did it do this? Lets take their vaccine s. The vaccines required a temperature between 2C to 8C. The vaccines can’t be exp osed to less than 2C temperature for more than 10 minutes or it becomes useless. They are Do-Not-Freeze products. The vaccines are very costly and special care needs to be taken of them. So on the cartons which carry these vaccines, it is v ery clearly stated “DO NOT FREEZE”. So in the transit, everyone putting their hands on the package read the instruction and act accordingly and deal with it more de licately. The same way for fragile goods it has a warning that they might break. Furthermore, these instructions are important as incase of something going wron g, LISKO can place a claim against the airline as clear instructions were issued from their end about the product. Local surveys were done with the objective to reduce cost. Ground handling opera tions were checked, the facilities they had and were using. CargoLux are using S APS (Shaheen Airport Services) while Emirates is using Gerrys DNATA. The costs o f using them were evaluated. Inspection was done. They checked for things like i f the Temperature System was present or not and of what quality? Is there any Te chnical staff? The Automation level present? The insurance policy that LISKO has for vaccine insurance is a separate from the marine insurance. The marine insurance does not cover all of it. The premium pa id for such insurance is higher. Furthermore, there are some complications. Clai ms less than $1,000 can’t be claimed for. The company doesn’t want to waste its reso urces on small claims as evaluating the claim is costly and time consuming. The good thing that LISKO Pakistan experiences now is that this comes under the glob al coverage provided by the multinational. LISKO doesn’t like its shipment lying at airports overnight. They believe they can take better care and handle the shipment better than anyone as they have the st ate-of-the-art technology. So they contact DHL, which then heads to the airport

with its containers and transport the shipment to LISKO warehouses. LISKO made D HL place automated temperature devices in its containers because the product cou ld be damaged if the right temperature is not maintained. They have USB devices which form graphs as soon as they are plugged in. The person at the warehouse se es all these temperature logs before signing the receiving. The insurance firm i s contacted before every shipment. They are kept in the loop on every stage and this shows us that LISKO shares it information in an efficient manner with its p artners. Once the product comes to the LISKO warehouse, they take good care of it. The wa rehouses LISKO has in Pakistan were made in accordance to the World Class standa rds and have hi-fi cold chain management facilities. There are several measures which check that the product is not tampered and is i n its original state. Electronic measures are placed in such as the 3M monitor w hich displays graphs on a scale of 10 and can be programmed for updates every 10 seconds or 20 seconds. Other than this, there are chemical measures which ensur e the validity. If the product is exposed to the temperature of less than 2C for more than 10 minutes, it freezes. So the color would change automatically as so on as the product freezes. Furthermore in case of vaccines, q-tags (above 8C for max are than 10 min) and freeze tags (below 2C for more than 20 min) are used. LISKO places a strong emphasis on quality and practices GQMS. The process it use s are following European Quality Laws When choosing an airport, LISKO always checks whether the ground handlers its us ing are IATA certified or not? Are they ISO certified or not? DISTRIBUTION: Vikor Distributor is a provider of normal finished goods. LISKO does business wi th it for backup purposes. There was a time when there were a lot of freezing cl aims come up. LISKO decided to look into it in depth. They re-evaluated and chec ked the packaging that was being used. Previously, they were using cartons and o ther packages but now they have decided for vaccines, pallet shippers are the be st for this purpose INVENTORY MANAGEMENT [SUPPLY CHAIN MANGEMENT] Inventory management at LISKO is efficiently managed with a vast area of warehou se, having separate portion for raw materials inventory, cold storage room for f inished products, and a shelf area for the products to be dispatched in a short time. The raw material INVENTORY PLACEMENT [SUPPLY CHAIN MANGEMENT] Several techniques for inventory placement are used by LISKO in order to fulfill the demand on time, as they believe in On-Time-delivery. As said by their produ ction manager and Supply Chain manager; “We do not believe in delays”. The methods used for inventory placements are; • Centralized Placement • Inventory pooling • Vendor managed inventories • Forward placement with wholesalers • Continuous replenishment • Radio Frequency Identification ( about to introduce in near future) AGGREGATE PLANNING [SUPPLY CHAIN MANGEMENT] & [PRODUCTION MANAGEMENT] Unlike food and other products, products of pharma are taken special care of exp iry. Hence products cannot be manufactured pre-schedule years in advance in anti cipation or through aggregate planning. Medicines made 6 months in advance are a lready 6months short of its 2 year life when it is supplied at the shop, shop ke epers do not accept. Hence products are started with the process of manufacturin g 2 months before the month’s demand, as the process takes 55-60days. Though for c yclic demands products are produced as demand is forecast are 95% above probable . Products for winter season such as cough, Anti-allergic etc. For winter season , demand peaks, hence RM is imported 2 months in advance to meet the demand. In addition, government tenders for supply takes months to finalize, and production

is started before their finalization in order to be to supply the products on t he first day of the contract. Figure 1: Demand and production schedule of cough syrup Months Forecasted demand (,000)(in units) Raw material import order January 3047 1012 February 2034 1045 March 1012 1056 April 1045 1002 May 1056 1098 June 1002 1007 July 1098 1506 August 1007 2200 September 1506 3500 October 2200 3002 November 3500 3047 December 3002 2034 However, LISKO operates on quota system basis. On country level, planning is don e and the budget is prepared. How much demand is there to be met is the question that is to be answered. For example, providing vaccines for swine flu. Another example relating to Pakistan is that of Hajj Mencevax. Vaccine tender is placed every year before Hajj around august. Normally, LISKO Pakistan wins the tender. Then further preparations are made by LISKO Pakistan. When do they have to suppl y the vaccines, in which quarter? The demand is to be met across the globe for t he Hajj Mencevax Vaccines. VENDOR EVALUATIONS PROCESS [SUPPLY CHAIN MANGEMENT] Different vendors have different reliability tests at multi nationals while in l ocal firms, most business is on the terms of goodwill and trust. • Printer vendor: Some offer cheap rates and good package, then check by giving or ders of small quantity to check reliability. Choose the best by trial and error • Distilled Water vendor: Water of charge 2+ is requirement. Check consistency of water charge through different segments and different weeks. • Carton pack vendor: Check strength of carton, if matches by 6layer and 4 layer s pecification quoted. Variation in the amount of layers will cause deformity. Ski lled workers check for carton strength, if variation then vendor dumped as black listed. According to Amir Idrees head of Supply Chain at LISKO “At LISKO there is very com prehensive set of forms, involving many requirements such as educational backgro und, skilled labor. The vendors are requirement to submit three quotations among st which the best one is chosen.” Explaining further he stated that there is different vendor for fixture and fitt ings, gifts, printing, packaging, toll manufacturing etc. The evaluation process is so strict that only handfuls are able to qualify. His major concerns were that at LISKO the supply chain it is lacking with a cons istent value chain, from the procurement and distribution side both. For e.g. Pr oducts used for dialysis and cancer patients are stored in refrigerated rooms wi th temperature maintained at 2-8 Degree Centigrade, but when it comes to distrib ution, the distributors does not have temperature maintained carriers, and ice j elly slabs are used to cool the product during transport to end users. Hence one the primary concerns to improve in value chain because of which they are lookin g for distributors which offer these kind of services. ADEQUACY OF FECILITIES AT THE WORKING ENVIROMENT [SUPPLY CHAIN MANGEMENT] Land: Industrial area is an expensive area from the start to establish a plant at. Fur thermore the area should be separate and away for contaminated areas like sewera ge areas, poultry farm, cow shelter, waste dumps etc. An approximate of 2000sq y ards is to be purchased to fulfill the minimum requirement.

Layout plan A layout plan would be of only 3 batches, tablet, capsules, and syrup as a minim um requirement. This would be guided and approved by the ministry of Health, Isl amabad. Where a drug manual is provided according to which all the production ac tivities take place. Tablet dept requirement900 sq yards/min requirement Capsule dept requirement300 sq yards/min requirement Syrup dept requirement 600 sq yards/min requirement Machinery As a standard specification and regulations separate machines are requirement fo r each department, where one cannot be used for the other. The cost of machines double as every unit has be of pure Aluminum to prevent rot ting and unstable compounds. Labor Essentials of labour have to be fulfilled before the task of the labor starts it self. Hire production manager Quality control staff Pharmacists In actual the expenses of labor start before the actual production or sales itse lf. Lab equipment The entire production and experimentation lab has to built from pure stainless s teel to avoid content dilution and compound instability while the experimentatio n process. This almost doubles the costs of setup. Registration file Before any production process or transactions start a registration file has to c ome into being involving testing methods, types and specifications of equipments and machinery etc. This provides all the essentials of what the firm’s assets com prise of and how will the firm go about the manufacturing process. Unlike any consumer good production firm, which can switch its line of productio n by extending the brand name and diversifying, the pharmaceutical industry cann ot deviate an inch in its batches, areas of production, methods of production an d product category etc. Registration of syrups and capsules requirement is pre-s pecified by this manual. Official registration charges comprise of almost Rs 8000/product. License application Federal drug inspector with its panel of inspection pays multiple visits to the facility to inspect the line of process. After thorough observation and audit th e decision is carried out under licensing board meeting. Special report is publi shed which is then approved later. Special requirements: HVAC ducting & Power plants In compliance with the WTO standard protocols, the HVAC (Heating, ventilation an d Air Conditioning) is a compulsory requirement for all pharmaceutical productio n facilities in Pakistan. Ducting around the premises and around every departmen t and operation room forms the initial process. Further, chiller plants generati ng cool air through the duck are the second step, of almost 24-30 tones power. Generators Power generation plants have also been occurred to be of essentiality due to exc essive power failure upsetting the whole process of production. Standby generat ors to ensure smooth electric supply and continuous operations are necessary ens uring lesser problems. A minimum requirement of 200KW. De-ionizer water plant High capacity water deionizer plant is necessary, due to high water requirement in cleaning floors, washing bottles, cooling, etc. This is installed in case pur chased de-ionized water falls short of requirement.

Category Land

Requirement(Minimum)

Cost/Unit

2000sq yards Rs 20 Million Layout plan 3 batches Rs 5 Lakhs Machinery Aluminum made Rs 10 Million Labor Pre operational staff Rs. 5 Lakhs Lab equipment Stainless steel Rs 8 Lakhs Registration file Procedure and product registration License application Panel inspection Special requirements: HVAC ducting & Power plants Standby generators De-ionizer water plant Chiller Plants Continuous power supply Hi-capacity Rs 15 Million Rs. 15lakhs Rs 10lakh Total cost of facilities

Rs 16 Lakhs Rs 1lakh

Rs 45,580,000

OUTSOURCING [SUPPLY CHAIN MANGEMENT] Mainly three categories of outsourcing activities are being carried out: 1. Distilled water Plants used to purify water have a high cost of setup. These activities are outs ourced due to shortage of water at the source of industrial spots. The water providers have access to plentiful amount of water as their stations a re at commercial spots and near pumping plants. Their costs are low due to plent iful supply and no pumping issues, as the water is pumped at high pressure from the source. 2. Toll manufacturing Four words are enough to describing this phenomenon, “From manufacturer to manufac turer”. This is carried out in two typical cases: 1. Incase when more burden of supply and capacity limit has been achieved, then other manufacturers are contracted with to produce the required material/pr oduct. Only labor charges are requirement to be paid though. Standard processes are followed hence no manufacturing constraints are encountered 2. If you are making capsules and have not yet been authorized to make liqu ids. Hence you can toll manufacture it from some other producer and start market ing and supplying your products by the time you get authorization from the minis try, an estimated time of 6months. Once you have achieved the authorization, you will be in the market 6months earlier, and will have market stance, gained mark et recognition and share already, increasing competitiveness. 3. Logistics Typically small company owned transports, mostly Shehzor and Suzuki Pickup are u sed within the region to fulfill the material flow requirement. However, for cross regional supply requirements automobiles are needed which can carry bulk of material allowing lower per unit costs.

40 wheeler trucks are ideal, but are not feasible to be purchased because of hig h cost and infrequent usage. In addition, it proves to be cheaper as only one wa y petrol charges need to be paid. Whereas if the truck was company owned 2 way p etrol charges would have been incurred. This leads to significant cost savings i n case of long journeys. I.e. Quetta, Peshawar, Khyber Pakhtunkhuwa etc. PRACTICES FOR LOWERING COSTS AND INCREASING SALES [Supply Chain Mangement] & [Pr inciples Of Marketing] o Lowering costs: Achieve economies of scale Search for different RM sources around the world. Different rates/Kg allows more competition dragging down prices and lowering costs. Difference of 1 rupee save s millions. o Increasing sales: Direct marketing is not allowed. Indirect promotion through doctors convinced by Medical reps, to prescribe a par ticular product Heavily invest in promotional activities, discount packages, free gifts, 100 on 100 offers (sell 100, the next 100 go free to you), Pakistan tour packages. SOCIALLY RESPONSIBLE PRACTICES [SUPPLY CHAIN MANGEMENT] Great lists of corporations are involved in socially responsible practices, some fund to the NGO’s, while some randomly all over the world. However they: Donate appreciable amounts of funds to NGO’s such as Behbud, Dar-ul-sukun etc. The y are also up whenever the country faces crises, like in the recent flood havoc, the firm donated many good quantity of painkillers, anti-allergic and anti-sept ic. There are a list of programs carried out at these frims. The list of activities include the: GIPAP program, Glivec International Patient Assistance program Glivec is a breakthrough product by LISKO used for breast cancer treatment and M yeloid leukemia patients. One pack the product of which costs around Rs. 1.5 lak hs. But still worth millions of dollars are being donated to NGO’s and cancer trea tment hospitals and patients to help establish a company-patient connection. LEPROSY programs for assisting people in need LISKO active partner of WHO and is also working in collaboration with WHO to tre at anti-malaria patients. An Exfal program involving providing patients with medicines at subsidized rates or free of cost to some E-COMMERCE: [SUPPLY CHAIN MANGEMENT] LISKO and LISKO are working actively to perfect their process of supply chain, i n collaboration with IT world forum. This will enable them to get more and more organized, systematic and efficient in their value chain synchronization. SAP has also been implemented in LISKO throughout the world since August 2006. O ther software’s include Oracle financial planning. LISKO has its own software for forecasts and predicting future trends for produc tion and sales known as “FUTURE CAST SOFTWARE” implemented around 150 countries. FCS has been pushed to produce results with an accuracy of 85%, currently LISKO is operating at 83.9% accuracy. FCS predicts keeping past trends, market plan strat egies and cyclic trends in focus. Quantity levels are forecasted for the next 72 months, updated each quarter. E-commerce has enabled to operate at less than 3 months of inventory level and struggling to get it to 2months According to Amir Idrees, “It is our vision to use inventory at the optimal level.” TOTAL QUALITY MANAGEMENT [Supply chain mangement] Total Quality Management forms the essential of every firm irrespective of the t ype of industry. Amongst the locals not many practices are popular but in MNC’s Six sigma has been implemented at Production and warehousing departments Kaizen approach has been thoroughly used in logistics

Lean manufacturing has been introduced as a new practice. This involves sending associates and employees abroad for training purposes, after which they come bac k here and train the local employees. Popularly known as “Trainee to trainer” approa ch Amongst special practices are: cGMP (Current Good Managerial Practices), which continuously improves it policie s and managerial approaches in line with the new developments in the field of ma nagement. Famously new theoretical reviews made by Harvard and Stanford. GWK (Good warehousing practices) HSE (Health Safety Environment): Many standards are being followed in obligation s with LISKO International and WHO. For e.g. Previously the supply containers wh ere not protected properly and only a sheet was used to cover the RM. But now al l of the imported material is heavily cushioned with loose fill or raw-paper, wi th containers being used for cross regional transport. The containers provide sa fety against rain and are dirt free either surface or inside. POO (Process Oriented Organization) ENTERPRISE RESOURCE PLANNING [SUPPLY CHAIN MANGEMENT] LISKO believe in providing ease of understanding to their lower level workers an d staff. This is highlighted in the case of their ERP system even, where they ha ve introduced a simple and easy form of ERP system i.e. VISUAL FOX PRO 9 in orde r to link all departments together and to enhance the pace of communication betw een each department. Enterprise resource planning is carried out throughout the system and has been a n essential part of working. Helps keep track of daily procurement process, ware housing, level of inventory, material checking in and out, on the basis of which other decisions are based which is more realistic. LISKO and multi-national corps is struggling for a consistent value chain. Their concern revolves around the improper synchronization with their supplying partn ers. Only if the distributors also had the ERP software’s implemented which was sy nced with the firms and suppliers, a more realistic view of the whole data would be reflected, facilitating market scenario analysis and easing decision making. WORKFORCE COSTING [SUPPLY CHAIN MANGEMENT] & [ORGANIZATIONAL BEHAVIOR] To meet the demand and production needs a number of strategies are followed: Chase Strategy Level work force plus overtime strategy A mix of both strategies is followed to fulfill the requirements in different de partments. as an overall process. Overall labour requirement is revised every qu arter, allowing recruitment and layoffs of contractual workforce. Overtime and b onuses are a part of strategy allowing meeting the divisional requirement of log istics, warehousing, production etc. PERFORMANCE GAUGING: [PRODUCTION MANAGEMENT] • Sampling is part of the practices to ensure consistency in the functions and pro cesses. Involves Key Performance Indicators that allow gauging performance and m easuring its progress. Some KPI’s are Days Inventory Outstanding [DIO], Months of coverage [MOC]. • This sampling is been carried out every year, as a part of the company policy an d Regulatory Compliance which differs from country to country, as every country has different regulations and standards to abide by. • Warehousing and distribution costs/ freight are also kept in mind. ENVIRONMENTAL MANAGEMENT SYSTEM: [PRODUCTION MANAGEMENT] EMS system of Genix is in line with the international standards of ecology in or der to highlight and promote ethical business practices by keeping the importanc e of concern for ecology. They have a unique system for effluents drain out by the Genix. The drain situat ed in korangi area always showed a high reading of COD in it. The genix decided to dump out their solid materials by vendor management while the liquid flowing

out of Genix is now stored and tested on material sheets to check the hazardous chemicals. This way, Genix is now incorporating a system of flowing out the wast e in the drain in an efficient and meeting the standards of environmental concer ns as laid down by NEQS. The liquid draining out of Genix is stored in a container before leaving the pre mise, which is then tested and the most hazardous material are fetched out by th e management. The system is redesigned and now the quality of raw material used at Genix ensures the least hazardous materials in it. The process is re-engineer ed in a way that now the chemicals draining out of the production and quality co ntrol are now been reduced by using the methods of material testing by sheets. T he process of EMS has been certified by ISO: 140

BALANCED SCORECARD: [SUPPLY CHAIN MANGEMENT] & [ STRATEGIC MANAGEMENT] Strategic Theme: Operations Excellence Objectives Measures Targets Initiatives Financial • Cost recovery • Profitability • Increased market share in the category of cancer medicine • Increase return on investment • Recovery of costs by June 2012 • Controlling cost of manufacturing, warehousing, transportation Customer Retain existing customers and attract new ones

• Sustain top 5 position on anti-biotic market • Design products (service packages) according to usage patterns in the past and t he future demands of customers • Cater to customers according to needs: o Need o Perception • Market research for the purpose of usage patterns • Product Development Programs • TICSS service quality program • Order Fill Rate, Backorder Levels, OnTime Delivery Internal

Continually struggle to improve the skilled people and processes • Recruit, growth and retain • Continually work for process improvement • Increase standards and training processes • ASPIRE (Achine sustained productivity through innovation and recognition enforce ment) program Learning

Innovation of product and service • • • • • • rograms • Employee training and development Emphasis on technicians and engineers ‘x’ employees to be hired ‘y’ employees to be trained Senior technicians to be trained through external training programs Subordinates to be trained by the senior technicians through in-house training p APICS Membership

FAILURE MODE AND RISK ANALYSIS: [SUPPLY CHAIN MANGEMENT] Occurrence: Severity: Detection: High no. Low no. High no. Low no. High no. Low no. High severity Low severity Unlikely to detect Likely to detect Likely Unlikely

Process analysis [PRODUCTION MANAGEMENT] The firm produces a number of products categorized according to their diseases. However there are four major categories of medicines, processes of which will be analyzed below. For TABLETS: 1. Weighing For the mixture to be prepared the right amount of active and inactive ingredien ts shall be mixed together. Hence they are weighed before mixed to ensure a fix percentage of each ingredient. 2. Sieving Before any mixture is prepared it is filtered for any impurities. Only when thes e impurities are removed, the content is ready for manufacturing. 3. Mixing and Blending 4. Wet granulation Wet granulation is a process of using a liquid binder to lightly agglomerate the powder mixture. The amount of liquid has to be properly controlled, as over-wet ting will cause the granules to be too hard and under-wetting will cause them to be too soft and friable. Aqueous solutions have the advantage of being safer to deal with than solvent-based systems. • Procedure o Step 1: The active ingredient and excipients are weighed and mixed. o Step 2: The wet granulate is prepared by adding the liquid binder–adhesive to the powder blend and mixing thoroughly. Examples of binders/adhesives includ e aqueous preparations of cornstarch, natural gums such as acacia, cellulose der ivatives such as methyl cellulose, gelatin, and povidone. o Step 3: Screening the damp mass through a mesh to form pellets or granul es. o Step 4: Drying the granulation. A conventional tray-dryer or fluid-bed d ryer are most commonly used. o Step 5: After the granules are dried, they are passed through a screen o f smaller size than the one used for the wet mass to create granules of uniform size. Low shear wet granulation processes use very simple mixing equipment, and can ta ke a considerable time to achieve a uniformly mixed state. High shear wet granul ation processes use equipment that mixes the powder and liquid at a very fast ra te, and thus speeds up the manufacturing process. Fluid bed granulation is a mul tiple-step wet granulation process performed in the same vessel to pre-heat, gra

nulate, and dry the powders. It is used because it allows close control of the g ranulation process. 5. Drying Dry granulation processes create granules by light compaction of the powder blen d under low pressures. The compacts so-formed are broken up gently to produce gr anules (agglomerates). This process is often used when the product to be granula ted is sensitive to moisture and heat. Dry granulation can be conducted on a tab let press using slugging tooling or on a roll press called a roller compactor. D ry granulation equipment offers a wide range of pressures to attain proper densi fication and granule formation. Dry granulation is simpler than wet granulation, therefore the cost is reduced. However, dry granulation often produces a higher percentage of fine granules, which can compromise the quality or create yield p roblems for the tablet. Dry granulation requires drugs or excipients with cohesi ve properties, and a dry binder may need to be added to the formulation to fac ilitate the formation of granules. 6. Sieving according to required mash size 7. Weight of granules according to formulation 8. Final mixing and lubrication After granulation, a final lubrication step is used to ensure that the tableting blend does not stick to the equipment during the tableting process. This usuall y involves low shear blending of the granules with a powdered lubricant, such as magnesium stearate or stearic acid. 9. Compression(Quality control check) This is achieved using tablet presses machines. The tablet press is an essential piece of machinery for any pharmaceutical and nutraceutical manufacturer. Commo n manufacturers of tablet presses include Fette, Korsch, Kikusui, Manesty and Co urtoy. Tablet presses must allow the operator to adjust the position of the lowe r and upper punches accurately, so that the tablet weight, thickness and density can each be controlled. 10. Cleaning and de-dusting(Quality control check) Once the tablets have been compressed, the tablets are de-dusted to remove any g ranules present on the surface on the tablet. This is all done under the supervi sion of the quality control staff. 11. Weight check for variation(Quality control check) The final product is eventually weighted for any variation in the mixture. This process is carried out under the International standard requirment. If the varia tion is above 105% or below 90%, then the product is discarded and has to repeat the whole process again. 12. Blister(Quality control check) Many tablets today are coated after being pressed. Although sugar-coating was po pular in the past, the process has many drawbacks. Modern tablet coatings are po lymer and polysaccharide based, with plasticizers and pigments included. Tablet coatings must be stable and strong enough to survive the handling of the tablet, must not make tablets stick together during the coating process, and must follo w the fine contours of embossed characters or logos on tablets. Coatings are nec essary for tablets that have an unpleasant taste, and a smoother finish makes la rge tablets easier to swallow.

 

 

Process Evaluation Matrix [PRODUCTION MANAGEMENT] S.NO EVALUATION IN TERMS OF: TABLETS(GENERAL) SYRUP(LIQUID) INJECTAB LES(VIALS & AMPULES) OINTEMENT 1. TIME 2 DAYS/BATCH 2 DAYS/BATCH -2 DAYS/BATCH -Exception with regard to the evaluation of stability studies 2 DAYS/BATCH 2. MACHINERY/ WORKERS 50% Machine 50% Worker 50% Machine 50% Worker 50% Machine 50% Worker 50% Machine 50% Worker 3. EFFECIENCY Efficiency requirement met under United States Pharmacop ia, British Pharmacopia United States Pharmacopia, British Pharmacopia United S tates Pharmacopia, British Pharmacopia United States Pharmacopia, British Pharm acopia 4. DEFECTIVE PERCENTAGE 4-5% 4-5% 4-5% 4-5% 5. CAPACITY 20000/8Hrs 50000/8Hrs 24000/8Hrs 20000/8H rs 6. ENVIROMENT Heating, Ventilating, and Air Conditioning Heating, Ventilating, and Air Conditioning -Most sensitive -Heating, Ventilating, and Air Conditioning Heating, Ventilating, and Air Co nditioning

CONCLUSION AND RECOMMENDATIONS Not much can be recommended of this industry. The processes are very fixed, all the final products tested and approved under the same standards. In the pharmaceutical industry, the manufacturing process is precisely defined a nd hence the productivity of labor cannot be increased by offering more incentiv es. This is because production time is fixed, and the worker cannot take out the product before time to increase productivity, as it would affect the quality of the product. However there are certain factor, which can make a difference on t he standards the firm operates in: • Technological reforms should be brought in the firm/industry. Our pharmaceutical industry lacks latest equipment and machinery, which handicaps the industry fro m the manufacturing of latest ointments and medicines which then eventually have to be imported. If the latest machinery are bought, they would increase the pro duction capacity of the firm and also enable the production of low cost groundbr eaking medications which have to be imported at high cost. • A good working environment always supports the business environment. If the work ers are offered a clean and cool working environment the productivity of the wor kers would increase, the workers would require less breaks, in addition they wou ld even fall less sick and hence take fewer leaves.

• Only if the raw material used are of good quality standards and provides a high quality output, then the industry can boost its performance. Most of the local f irms today are producing low quality products with the exception of some for e.g . Getz pharma.

REFERENCES Nazar Talib Chief Executive Sohail Talib Director BIBLIOGRAPHY WWW.WIKIPEDIA.COM WWW.LISKOPAKISTAN.COM

LISKO PAKISTAN (PVT.) LTD. Duration: From 1st May to 11th June, 2011 Report based on THEORIES LEARNED AND THEIR APPLICATION Due date of the report 25th June, 2011 (2 weeks after the successful completion of internship) Report submitted on 7nd July, 2011 Delayed by 12 days Reasons for delay: MBA exams scheduled on 25th June, 2011, leading to delay in c ompilation.

Name department(s) in which you worked, giving duration in each, stating the supervisor’s name and designation according to the following format: Department Supervisor’s Name Designation Duration Supply Chain Department Nazar Talib Director 6 weeks

CONTENTS SUPPLY CHAIN AND ITS LINK WITH CORPORATE OBJECTIVES 4 CONTRIBUTIONS TO THE SUPPLY CHAIN DEPARTMENT 5 Introduction 6 Overview of the industry 7 SUPPLY CHAIN DEPARTMENT 10 THEORIES LEARNED AND THEIR APPLICATION 10 SUPPLY CHAIN PROCESS [Supply chain mangement] 10 Logistics: [Supply chain mangement] 11 Quality Management: [Supply chain mangement] & [Production Management] 11 Distribution 13 INVENTORY MANAGEMENT [Supply chain mangement] 13 INVENTORY PLACEMENT [Supply chain mangement] 13 AGGREGATE PLANNING [Supply chain mangement] & [Production Management] 14 VENDOR EVALUATIONS PROCESS [Supply chain mangement] 15 ADEQUACY OF FECILITIES AT THE WORKING ENVIROMENT [Supply chain mangement] 15 OUTSOURCING [Supply chain mangement] 18 Practices for Lowering Costs and Increasing Sales 19 SOCIALLY RESPONSIBLE PRACTICES [Supply chain mangement] 20 E-commerce: [Supply chain mangement] 20 TOTAL QUALITY MANAGEMENT 21 Enterprise Resource Planning [Supply chain mangement] 21 WORKFORCE COSTING [Supply chain mangement] & [organizational behavior] 22 PERFORMANCE GAUGING: [production management] 23 ENVIRONMENTAL MANAGEMENT SYSTEM 23 BALANCED SCORECARD: [Supply chain mangement] & [ Strategic Management] 24 FAILURE MODE AND RISK ANALYSIS: [Supply chain mangement] 25 26 Process analysis [production management] 27 Process Evaluation Matrix [Production Management] 30 Conclusion and Recommendations 31 References 32 Bibliography 32 SUPPLY CHAIN AND ITS LINK WITH CORPORATE OBJECTIVES Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market, networked economy syncing it with its corporate objectives. In Peter Drucker s (1998) new management paradigms, th is concept of business relationships extends beyond traditional enterprise bound aries and seeks to organize entire business processes throughout a value chain o f multiple companies. During the past decades, globalization, outsourcing and information technology h ave enabled many organizations, such as Dell and Hewlett Packard, to successfull y operate solid collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities enabling it to pursue it s corporate objectives. This inter-organizational supply network can be acknowle dged as a new form of organization. However, with the complicated interactions a mong the players, the network structure fits neither "market" nor "hierarchy" ca

 

tegories (Powell, 1990). It is not clear what kind of performance impacts differ ent supply network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complex network structure can be decomposed into individ ual component firms (Zhang and Dilts, 2004). Traditionally, companies in a suppl y network concentrate on the inputs and outputs of the processes, with little co ncern for the internal management working of other individual players. Therefore , the choice of an internal management control structure is known to impact loca l firm performance causing to deviate from key goals and objectives. In the 21st century, changes in the business environment have contributed to th e development of supply chain networks. First, as an outcome of globalization an d the proliferation of multinational companies, joint ventures, strategic allian ces and business partnerships, significant success factors were identified, comp lementing the earlier "Just-In-Time", "Lean Manufacturing" and "Agile Manufactur ing" practices. Second, technological changes, particularly the dramatic fall in information communication costs, which are a significant component of transacti on costs, have led to changes in coordination among the members of the supply ch ain network allowing a more focused and integrated approach to the firms mission , vision, and corporate goals. Many researchers have recognized these kinds of supply network structures as a n ew organization form, using terms such as "Keiretsu", "Extended Enterprise", "Vi rtual Corporation", "Global Production Network", and "Next Generation Manufactur ing System". In general, such a structure can be defined as "a group of semi-ind ependent organizations, each with their capabilities, which collaborate in everchanging constellations to serve one or more markets in order to achieve some bu siness goal specific to that collaboration" (Akkermans, 2001). The security management system for supply chains is described in ISO/IEC 28000 a nd ISO/IEC 28001 and related standards published jointly by ISO and IEC CONTRIBUTIONS TO THE SUPPLY CHAIN DEPARTMENT As an internee in the department my job included: • Assisting the supply chain officer in their routine activities for e.g. daily ca lls to key clients for updates on requirement and market demand • Filing of documents and their history backup • Identifying weaknesses in the department and devising solutions to resolve them • Learning routine job activities by doing • Preparing a cost and benefit approach for all the activities • Costing for the business decision and promotional activities for the clients • Getting to know the nuts and bolts of the process in the department.

INTRODUCTION Lisko Pakistan (Pvt.) Ltd is one of the leading and deep-rooted National company that specializes in the production of human medicines. The company was establis hed in 1972 and in No time, it managed to position itself at a very vanguard of the Pharmaceutical and Health Sector. The company operates in compliance with the good manufacturing practice on patte rn set by the WHO, owing to its un-remitted pursuit of perfection, the company g ot the ISO 9001:2000 performance certification and is continuing to work with co nsumer trust. A major part of the company’s success is attributed to its technical staff that in corporates a number of highly qualified experts. Our employees from various pros

pects are continously advancing through systematically kept special training pro grams, that are set periodically by Board to ensure complete efficiency in work. At Lisko Pakistan strategies are always drawn by keeping consumer satisfaction , needs, wants & attitudes as our first priority. From the very beginning the com pany committed itself in supplying consumers with reliable medicaments combining efficacious, quality, safeness and economical price. These are with other facto rs that have made Lisko Pakistan a popular performer over the years. Due to Lisko Pakistan’s commitment with its consumers that highest quality medicin es will always be provided to them, therefore it is made sure that the Raw Mater ials present in their products should be imported from quality & reliable world wide sources such as, U.K, Netherlands, Italy, Spain, Japan, Belgium, France, Ge rmany India and China etc. Currently the company is manufacturing Antibiotic, Anti-allergy, Anti-malerial, Anti-depressent, Anti-T.B, Anti fungal and General Health Care Products, that ha ve established their names due to their high quality & appropriate price. With t his, not only in Pakistan but these products are also highly trusted and demande d in international markets, that has enabled Lisko Pakistan to export them in di fferent parts of the world.

OVERVIEW OF THE INDUSTRY Pakistan has a very vibrant and forward looking pharma industry. At the time of independence in 1947, there was hardly any pharma industry in the country. Today Pakistan has about 400 pharmaceutical manufacturing units including those opera ted by 25 multinationals present in the country. The Pakistan pharmaceutical ind ustry meets around 70 per cent of the country s demand. The domestic pharma mark et, in terms of market share is almost evenly divided between the national compa nies and multinationals. The industry provides direct employment to over 70,000 and indirect employment t o around 150,000 across the country. National pharma industry has shown a progressive growth over the years, particul arly over the last one decade. The industry has invested substantially to upgrad e itself in the last few years and today the majority industry is following Good Manufacturing Practices (GMP), in accordance with the domestic as well as inter national guidance. Currently the industry has the capacity to manufacture a vari ety of products ranging from simple pills to sophisticated biotech, oncology and value added generic compounds. Although Pakistan s pharmaceutical and healthcare sectors are expanding and evol ving rapidly, about half the population has no access to modern medicines. Clear ly this presents an opportunity, but much more work needs to be done by the gove rnment and industry stakeholders. The value of pharmaceuticals sold in 2007 exce eded $1.4 billion, which equates to per capita consumption of less than $10 per year and value of medicines sold is expected to exceed $2.3 billion by 2012. Pakistan is a developing pharmaceutical market, with a large population and econ omic progress evident, but per capita drug spending was rather low at around $9. 30 in 2007. Private spending accounts for 65 per cent of total healthcare expend iture sourced through out-of-pocket payments, international aid and religious or charitable institutions. Pharmaceutical spending accounts for less than 1 per c ent of the country s GDP, comparable to levels in some neighbouring countries. T he forecast period is likely to witness the marginal strengthening of the generi cs sector, albeit more in terms of volumes than values. The share of generics is also likely to increase further as major drugs come off the patent in the near term, to the likely benefit of the generics-dominated local industry. The Pakistan pharma industry is relatively young in the international markets wi th an export turnover of over $100 million as of 2007. Pakistan Pharma Industry boasts of quality producers and many units are approved by regulatory authoritie s all over the world. Like domestic market the sales in international market hav e gone almost double during last five years. The pharma industry is focusing an Export Vision of $500 million by 2013. In the meantime, exports are also likely

 

 

 

to boost due to new regional and global opportunities. The Pakistan Pharmaceutical Industry is a success story, providing high quality essential drugs at affordable prices to Millions. Technologically, strong and se lf reliant national pharmaceutical industry is not only playing a key role in pr omoting and sustaining development in the vital field of medicine within the cou ntry, but is also well set to take on the international markets. The country s pharmaceutical exports were $101 million in 2006-07 and growing at an annual rate of 22 per cent. In 2005-06 exports hit the mark of $83 million. Export target for FY2008 had been projected at $125 million. On the other side of the border, Indian pharmaceutical exports stand at $6 billi on, growing at a pace of 20 per cent. Country s spending on health as percentage of GDP was only 0.8 per cent as compared 5-6 per cent in Sri Lanka, 3-4 per cen t in Bangladesh, 6-7 per cent in Algeria, 5-7 per cent in Mexico, 6-9 per cent i n Iran and 10-15 per cent in Costa Rica and Cuba. Economy contribution and Importance Being one of the major indicators of economy, pharma industry has contributed po sitively so far and has somehow managed to increase production by a meager 1 per cent. Similarly industry contribution and weightage surged to 6.7 per cent in t otal Large Scale Manufacturing (LSM) production during 1QFY09. On the other hand, LSM posted 6.20 per cent negative growth in 1QFY09 over the c orresponding period of previous year mainly due to deteriorating economic of the country. Challenges The fast-deteriorating business environment especially for the pharmaceutical co mpanies in the wake of high cost of production has been burdening the local phar ma sector. Also, the cap on drug price by the government for the last seven years has aggra vated the situation further. Last price increase, which was of 3 to 4 per cent, was allowed by Ministry of Health in December 2001. The prices of the Active Pharmaceutical Ingredients (APIs) used for the manufact uring of drugs as well as of other raw materials like paper, plastic, glass, rub ber, etc. have increased manifold since 2001. The cost of oil, gas, electricity, transportation and labour has also spiked dramatically during this period. Bristol-Myers Squibb (BMS) has an annual turnover of around Rs 1.5 billion and i s the second multinational pharmaceutical, which is going to kiss Pakistan goodb ye. Earlier, Merck Sharp & Dohme (MSD) closed down its operation in Pakistan som e months back and was acquired by a local pharmaceutical firm Organon Bio Scienc es (OBS). "It is not the end but a new beginning for the pharmaceutical firms", said a pha rma industry lynchpin. "Especially MNCs are shutting down business because of to ugh business conditions," added he. He also pointed out that more and more MNCs are mulling to close operations in Pakistan. "After MSD and BMS, two more firms will follow suit in the near future," he said and added that the local pharmaceutical companies are also facing hard times as well and they are opting for mergers to survive in the present situation. Recen tly two local pharmaceutical companies Hilton Pharma and SAMI Pharmaceutical con solidated their operations in order to survive in the current situation.

 

 

SUPPLY CHAIN DEPARTMENT THEORIES LEARNED AND THEIR APPLICATION SUPPLY CHAIN PROCESS [SUPPLY CHAIN MANGEMENT] LISKO basically operates on quota system basis. On country level, planning is do ne and the budget is prepared. How much demand is there to be met is the questio n that is to be answered. For example, providing vaccines for swine flu. Another example relating to Pakistan is that of Hajj Mencevax. Vaccine tender is placed every year before Hajj around august. Normally, LISKO Pakistan wins the tender. Then further preparations are made by LISKO Pakistan. When do they have to supp ly the vaccines, in which quarter? The demand is to be met across the globe for the Hajj Mencevax Vaccines. CEVA is the clearing agent for LISKO. CEVA works with Cargo Lux. They work only wherever Cargo Lux is operating. For example, the product is manufactured at Bel gium site. It is then to be transported by road to the airport. Then the flight and the destination the product has to arrive at. Furthermore, there are differe nt shipping terms and regulations present in different countries and they vary f rom country to country. Now LISKO has its global insurance partners which manage its CIP (Carriage and I nsurance Paid). They believe that keeping a central insurance company backing th em would save the premium that has to be paid, would result in further cost savi ngs and other advantages that come as a result of the pooling in. However in Pak istan, insurance is to be done locally. It is a one of the biggest challenges fa ced by LISKO Pakistan. For example, there might be an insurance claim that may a rise because of the supplier’s mistake. So the local insurance company won’t be will ing to accept the claim as it the problem occurred at the end of Belgium when su pplying the product The vaccines LISKO produces normally are to be kept in the temperature range of 2C– 8C. For the vaccines, an order has to be placed at least 2 months to 3 months in advance on the JD Edwards system being used at LISKO. Once all this is done, the shipment takes place. The shipment has to change hands. For this to happen, very crystal clear documen tation system has been implemented by LISKO. There are certain documents a perso n should have before the shipment can change hands. The requirements include the invoice, Bill of Label, Certificate of Analysis, Batch Certificate (it includes the expiry, technicalities of the product, its components). Furthermore, the lo cal approval for the shipment is required. Country approval maybe required, whet her the vaccines have been approved in Pakistan. After this the logistics gets i nvolved and take it a step further. Cold Chain Management is an important part o f it. Cold Chain Management (CCM) requires active monitoring. LISKO recently has accepted DHL’s services. DHL provides LISKO with end to end services. DHL is well equipped and acquainted with latest technology. From the time a particular cart on of vaccines is lifted from the factory to the time it reaches the warehouses here, DHL provides tracking services and keeps LISKO updated on the transportati on status. LOGISTICS: [SUPPLY CHAIN MANGEMENT] When logistics is brought up, LISKO recently did a very thorough route analysis. It wanted to minimize its transportation time. LISKO wanted to find out the fas test possible route. They evaluated airlines they were using for the transportat ion of medicines from one country to another it was operating in. Cargolux fligh t frequency was lesser than Emirates which flew 4 times a week, twice as more. F urthermore, there was another advantage associated with Emirates. Sometimes ther e might be a few small packages to be transported. Emirates took these few small packages even on its commercial flights. Other than this, the time it took for the vaccines or medicines to be transported to reach the airport was also calcul ated taking the shortest route possible by road. QUALITY MANAGEMENT: [SUPPLY CHAIN MANGEMENT] & [PRODUCTION MANAGEMENT] LISKO made its documentation robust. How did it do this? Lets take their vaccine s. The vaccines required a temperature between 2C to 8C. The vaccines can’t be exp osed to less than 2C temperature for more than 10 minutes or it becomes useless.

They are Do-Not-Freeze products. The vaccines are very costly and special care needs to be taken of them. So on the cartons which carry these vaccines, it is v ery clearly stated “DO NOT FREEZE”. So in the transit, everyone putting their hands on the package read the instruction and act accordingly and deal with it more de licately. The same way for fragile goods it has a warning that they might break. Furthermore, these instructions are important as incase of something going wron g, LISKO can place a claim against the airline as clear instructions were issued from their end about the product. Local surveys were done with the objective to reduce cost. Ground handling opera tions were checked, the facilities they had and were using. CargoLux are using S APS (Shaheen Airport Services) while Emirates is using Gerrys DNATA. The costs o f using them were evaluated. Inspection was done. They checked for things like i f the Temperature System was present or not and of what quality? Is there any Te chnical staff? The Automation level present? The insurance policy that LISKO has for vaccine insurance is a separate from the marine insurance. The marine insurance does not cover all of it. The premium pa id for such insurance is higher. Furthermore, there are some complications. Clai ms less than $1,000 can’t be claimed for. The company doesn’t want to waste its reso urces on small claims as evaluating the claim is costly and time consuming. The good thing that LISKO Pakistan experiences now is that this comes under the glob al coverage provided by the multinational. LISKO doesn’t like its shipment lying at airports overnight. They believe they can take better care and handle the shipment better than anyone as they have the st ate-of-the-art technology. So they contact DHL, which then heads to the airport with its containers and transport the shipment to LISKO warehouses. LISKO made D HL place automated temperature devices in its containers because the product cou ld be damaged if the right temperature is not maintained. They have USB devices which form graphs as soon as they are plugged in. The person at the warehouse se es all these temperature logs before signing the receiving. The insurance firm i s contacted before every shipment. They are kept in the loop on every stage and this shows us that LISKO shares it information in an efficient manner with its p artners. Once the product comes to the LISKO warehouse, they take good care of it. The wa rehouses LISKO has in Pakistan were made in accordance to the World Class standa rds and have hi-fi cold chain management facilities. There are several measures which check that the product is not tampered and is i n its original state. Electronic measures are placed in such as the 3M monitor w hich displays graphs on a scale of 10 and can be programmed for updates every 10 seconds or 20 seconds. Other than this, there are chemical measures which ensur e the validity. If the product is exposed to the temperature of less than 2C for more than 10 minutes, it freezes. So the color would change automatically as so on as the product freezes. Furthermore in case of vaccines, q-tags (above 8C for max are than 10 min) and freeze tags (below 2C for more than 20 min) are used. LISKO places a strong emphasis on quality and practices GQMS. The process it use s are following European Quality Laws When choosing an airport, LISKO always checks whether the ground handlers its us ing are IATA certified or not? Are they ISO certified or not? DISTRIBUTION: Vikor Distributor is a provider of normal finished goods. LISKO does business wi th it for backup purposes. There was a time when there were a lot of freezing cl aims come up. LISKO decided to look into it in depth. They re-evaluated and chec ked the packaging that was being used. Previously, they were using cartons and o ther packages but now they have decided for vaccines, pallet shippers are the be st for this purpose INVENTORY MANAGEMENT [SUPPLY CHAIN MANGEMENT] Inventory management at LISKO is efficiently managed with a vast area of warehou se, having separate portion for raw materials inventory, cold storage room for f inished products, and a shelf area for the products to be dispatched in a short time. The raw material

INVENTORY PLACEMENT [SUPPLY CHAIN MANGEMENT] Several techniques for inventory placement are used by LISKO in order to fulfill the demand on time, as they believe in On-Time-delivery. As said by their produ ction manager and Supply Chain manager; “We do not believe in delays”. The methods used for inventory placements are; • Centralized Placement • Inventory pooling • Vendor managed inventories • Forward placement with wholesalers • Continuous replenishment • Radio Frequency Identification ( about to introduce in near future) AGGREGATE PLANNING [SUPPLY CHAIN MANGEMENT] & [PRODUCTION MANAGEMENT] Unlike food and other products, products of pharma are taken special care of exp iry. Hence products cannot be manufactured pre-schedule years in advance in anti cipation or through aggregate planning. Medicines made 6 months in advance are a lready 6months short of its 2 year life when it is supplied at the shop, shop ke epers do not accept. Hence products are started with the process of manufacturin g 2 months before the month’s demand, as the process takes 55-60days. Though for c yclic demands products are produced as demand is forecast are 95% above probable . Products for winter season such as cough, Anti-allergic etc. For winter season , demand peaks, hence RM is imported 2 months in advance to meet the demand. In addition, government tenders for supply takes months to finalize, and production is started before their finalization in order to be to supply the products on t he first day of the contract. Figure 1: Demand and production schedule of cough syrup Months Forecasted demand (,000)(in units) Raw material import order January 3047 1012 February 2034 1045 March 1012 1056 April 1045 1002 May 1056 1098 June 1002 1007 July 1098 1506 August 1007 2200 September 1506 3500 October 2200 3002 November 3500 3047 December 3002 2034 However, LISKO operates on quota system basis. On country level, planning is don e and the budget is prepared. How much demand is there to be met is the question that is to be answered. For example, providing vaccines for swine flu. Another example relating to Pakistan is that of Hajj Mencevax. Vaccine tender is placed every year before Hajj around august. Normally, LISKO Pakistan wins the tender. Then further preparations are made by LISKO Pakistan. When do they have to suppl y the vaccines, in which quarter? The demand is to be met across the globe for t he Hajj Mencevax Vaccines. VENDOR EVALUATIONS PROCESS [SUPPLY CHAIN MANGEMENT] Different vendors have different reliability tests at multi nationals while in l ocal firms, most business is on the terms of goodwill and trust. • Printer vendor: Some offer cheap rates and good package, then check by giving or ders of small quantity to check reliability. Choose the best by trial and error • Distilled Water vendor: Water of charge 2+ is requirement. Check consistency of water charge through different segments and different weeks. • Carton pack vendor: Check strength of carton, if matches by 6layer and 4 layer s pecification quoted. Variation in the amount of layers will cause deformity. Ski

lled workers check for carton strength, if variation then vendor dumped as black listed. According to Amir Idrees head of Supply Chain at LISKO “At LISKO there is very com prehensive set of forms, involving many requirements such as educational backgro und, skilled labor. The vendors are requirement to submit three quotations among st which the best one is chosen.” Explaining further he stated that there is different vendor for fixture and fitt ings, gifts, printing, packaging, toll manufacturing etc. The evaluation process is so strict that only handfuls are able to qualify. His major concerns were that at LISKO the supply chain it is lacking with a cons istent value chain, from the procurement and distribution side both. For e.g. Pr oducts used for dialysis and cancer patients are stored in refrigerated rooms wi th temperature maintained at 2-8 Degree Centigrade, but when it comes to distrib ution, the distributors does not have temperature maintained carriers, and ice j elly slabs are used to cool the product during transport to end users. Hence one the primary concerns to improve in value chain because of which they are lookin g for distributors which offer these kind of services. ADEQUACY OF FECILITIES AT THE WORKING ENVIROMENT [SUPPLY CHAIN MANGEMENT] Land: Industrial area is an expensive area from the start to establish a plant at. Fur thermore the area should be separate and away for contaminated areas like sewera ge areas, poultry farm, cow shelter, waste dumps etc. An approximate of 2000sq y ards is to be purchased to fulfill the minimum requirement. Layout plan A layout plan would be of only 3 batches, tablet, capsules, and syrup as a minim um requirement. This would be guided and approved by the ministry of Health, Isl amabad. Where a drug manual is provided according to which all the production ac tivities take place. Tablet dept requirement900 sq yards/min requirement Capsule dept requirement300 sq yards/min requirement Syrup dept requirement 600 sq yards/min requirement Machinery As a standard specification and regulations separate machines are requirement fo r each department, where one cannot be used for the other. The cost of machines double as every unit has be of pure Aluminum to prevent rot ting and unstable compounds. Labor Essentials of labour have to be fulfilled before the task of the labor starts it self. Hire production manager Quality control staff Pharmacists In actual the expenses of labor start before the actual production or sales itse lf. Lab equipment The entire production and experimentation lab has to built from pure stainless s teel to avoid content dilution and compound instability while the experimentatio n process. This almost doubles the costs of setup. Registration file Before any production process or transactions start a registration file has to c ome into being involving testing methods, types and specifications of equipments and machinery etc. This provides all the essentials of what the firm’s assets com prise of and how will the firm go about the manufacturing process. Unlike any consumer good production firm, which can switch its line of productio n by extending the brand name and diversifying, the pharmaceutical industry cann ot deviate an inch in its batches, areas of production, methods of production an d product category etc. Registration of syrups and capsules requirement is pre-s

pecified by this manual. Official registration charges comprise of almost Rs 8000/product. License application Federal drug inspector with its panel of inspection pays multiple visits to the facility to inspect the line of process. After thorough observation and audit th e decision is carried out under licensing board meeting. Special report is publi shed which is then approved later. Special requirements: HVAC ducting & Power plants In compliance with the WTO standard protocols, the HVAC (Heating, ventilation an d Air Conditioning) is a compulsory requirement for all pharmaceutical productio n facilities in Pakistan. Ducting around the premises and around every departmen t and operation room forms the initial process. Further, chiller plants generati ng cool air through the duck are the second step, of almost 24-30 tones power. Generators Power generation plants have also been occurred to be of essentiality due to exc essive power failure upsetting the whole process of production. Standby generat ors to ensure smooth electric supply and continuous operations are necessary ens uring lesser problems. A minimum requirement of 200KW. De-ionizer water plant High capacity water deionizer plant is necessary, due to high water requirement in cleaning floors, washing bottles, cooling, etc. This is installed in case pur chased de-ionized water falls short of requirement. Category Land Requirement(Minimum) Cost/Unit

2000sq yards Rs 20 Million Layout plan 3 batches Rs 5 Lakhs Machinery Aluminum made Rs 10 Million Labor Pre operational staff Rs. 5 Lakhs Lab equipment Stainless steel Rs 8 Lakhs Registration file Procedure and product registration License application Panel inspection Special requirements: HVAC ducting & Power plants Standby generators De-ionizer water plant Chiller Plants Continuous power supply Hi-capacity Rs 15 Million Rs. 15lakhs Rs 10lakh Total cost of facilities

Rs 16 Lakhs Rs 1lakh

Rs 45,580,000

OUTSOURCING [SUPPLY CHAIN MANGEMENT] Mainly three categories of outsourcing activities are being carried out: 1. Distilled water Plants used to purify water have a high cost of setup. These activities are outs ourced due to shortage of water at the source of industrial spots. The water providers have access to plentiful amount of water as their stations a

re at commercial spots and near pumping plants. Their costs are low due to plent iful supply and no pumping issues, as the water is pumped at high pressure from the source. 2. Toll manufacturing Four words are enough to describing this phenomenon, “From manufacturer to manufac turer”. This is carried out in two typical cases: 1. Incase when more burden of supply and capacity limit has been achieved, then other manufacturers are contracted with to produce the required material/pr oduct. Only labor charges are requirement to be paid though. Standard processes are followed hence no manufacturing constraints are encountered 2. If you are making capsules and have not yet been authorized to make liqu ids. Hence you can toll manufacture it from some other producer and start market ing and supplying your products by the time you get authorization from the minis try, an estimated time of 6months. Once you have achieved the authorization, you will be in the market 6months earlier, and will have market stance, gained mark et recognition and share already, increasing competitiveness. 3. Logistics Typically small company owned transports, mostly Shehzor and Suzuki Pickup are u sed within the region to fulfill the material flow requirement. However, for cross regional supply requirements automobiles are needed which can carry bulk of material allowing lower per unit costs. 40 wheeler trucks are ideal, but are not feasible to be purchased because of hig h cost and infrequent usage. In addition, it proves to be cheaper as only one wa y petrol charges need to be paid. Whereas if the truck was company owned 2 way p etrol charges would have been incurred. This leads to significant cost savings i n case of long journeys. I.e. Quetta, Peshawar, Khyber Pakhtunkhuwa etc. PRACTICES FOR LOWERING COSTS AND INCREASING SALES [Supply Chain Mangement] & [Pr inciples Of Marketing] o Lowering costs: Achieve economies of scale Search for different RM sources around the world. Different rates/Kg allows more competition dragging down prices and lowering costs. Difference of 1 rupee save s millions. o Increasing sales: Direct marketing is not allowed. Indirect promotion through doctors convinced by Medical reps, to prescribe a par ticular product Heavily invest in promotional activities, discount packages, free gifts, 100 on 100 offers (sell 100, the next 100 go free to you), Pakistan tour packages. SOCIALLY RESPONSIBLE PRACTICES [SUPPLY CHAIN MANGEMENT] Great lists of corporations are involved in socially responsible practices, some fund to the NGO’s, while some randomly all over the world. However they: Donate appreciable amounts of funds to NGO’s such as Behbud, Dar-ul-sukun etc. The y are also up whenever the country faces crises, like in the recent flood havoc, the firm donated many good quantity of painkillers, anti-allergic and anti-sept ic. There are a list of programs carried out at these frims. The list of activities include the: GIPAP program, Glivec International Patient Assistance program Glivec is a breakthrough product by LISKO used for breast cancer treatment and M yeloid leukemia patients. One pack the product of which costs around Rs. 1.5 lak hs. But still worth millions of dollars are being donated to NGO’s and cancer trea tment hospitals and patients to help establish a company-patient connection. LEPROSY programs for assisting people in need LISKO active partner of WHO and is also working in collaboration with WHO to tre at anti-malaria patients. An

Exfal program involving providing patients with medicines at subsidized rates or free of cost to some E-COMMERCE: [SUPPLY CHAIN MANGEMENT] LISKO and LISKO are working actively to perfect their process of supply chain, i n collaboration with IT world forum. This will enable them to get more and more organized, systematic and efficient in their value chain synchronization. SAP has also been implemented in LISKO throughout the world since August 2006. O ther software’s include Oracle financial planning. LISKO has its own software for forecasts and predicting future trends for produc tion and sales known as “FUTURE CAST SOFTWARE” implemented around 150 countries. FCS has been pushed to produce results with an accuracy of 85%, currently LISKO is operating at 83.9% accuracy. FCS predicts keeping past trends, market plan strat egies and cyclic trends in focus. Quantity levels are forecasted for the next 72 months, updated each quarter. E-commerce has enabled to operate at less than 3 months of inventory level and struggling to get it to 2months According to Amir Idrees, “It is our vision to use inventory at the optimal level.” TOTAL QUALITY MANAGEMENT [Supply chain mangement] Total Quality Management forms the essential of every firm irrespective of the t ype of industry. Amongst the locals not many practices are popular but in MNC’s Six sigma has been implemented at Production and warehousing departments Kaizen approach has been thoroughly used in logistics Lean manufacturing has been introduced as a new practice. This involves sending associates and employees abroad for training purposes, after which they come bac k here and train the local employees. Popularly known as “Trainee to trainer” approa ch Amongst special practices are: cGMP (Current Good Managerial Practices), which continuously improves it policie s and managerial approaches in line with the new developments in the field of ma nagement. Famously new theoretical reviews made by Harvard and Stanford. GWK (Good warehousing practices) HSE (Health Safety Environment): Many standards are being followed in obligation s with LISKO International and WHO. For e.g. Previously the supply containers wh ere not protected properly and only a sheet was used to cover the RM. But now al l of the imported material is heavily cushioned with loose fill or raw-paper, wi th containers being used for cross regional transport. The containers provide sa fety against rain and are dirt free either surface or inside. POO (Process Oriented Organization) ENTERPRISE RESOURCE PLANNING [SUPPLY CHAIN MANGEMENT] LISKO believe in providing ease of understanding to their lower level workers an d staff. This is highlighted in the case of their ERP system even, where they ha ve introduced a simple and easy form of ERP system i.e. VISUAL FOX PRO 9 in orde r to link all departments together and to enhance the pace of communication betw een each department. Enterprise resource planning is carried out throughout the system and has been a n essential part of working. Helps keep track of daily procurement process, ware housing, level of inventory, material checking in and out, on the basis of which other decisions are based which is more realistic. LISKO and multi-national corps is struggling for a consistent value chain. Their concern revolves around the improper synchronization with their supplying partn ers. Only if the distributors also had the ERP software’s implemented which was sy nced with the firms and suppliers, a more realistic view of the whole data would be reflected, facilitating market scenario analysis and easing decision making. WORKFORCE COSTING [SUPPLY CHAIN MANGEMENT] & [ORGANIZATIONAL BEHAVIOR] To meet the demand and production needs a number of strategies are followed: Chase Strategy

Level work force plus overtime strategy A mix of both strategies is followed to fulfill the requirements in different de partments. as an overall process. Overall labour requirement is revised every qu arter, allowing recruitment and layoffs of contractual workforce. Overtime and b onuses are a part of strategy allowing meeting the divisional requirement of log istics, warehousing, production etc. PERFORMANCE GAUGING: [PRODUCTION MANAGEMENT] • Sampling is part of the practices to ensure consistency in the functions and pro cesses. Involves Key Performance Indicators that allow gauging performance and m easuring its progress. Some KPI’s are Days Inventory Outstanding [DIO], Months of coverage [MOC]. • This sampling is been carried out every year, as a part of the company policy an d Regulatory Compliance which differs from country to country, as every country has different regulations and standards to abide by. • Warehousing and distribution costs/ freight are also kept in mind. ENVIRONMENTAL MANAGEMENT SYSTEM: [PRODUCTION MANAGEMENT] EMS system of Genix is in line with the international standards of ecology in or der to highlight and promote ethical business practices by keeping the importanc e of concern for ecology. They have a unique system for effluents drain out by the Genix. The drain situat ed in korangi area always showed a high reading of COD in it. The genix decided to dump out their solid materials by vendor management while the liquid flowing out of Genix is now stored and tested on material sheets to check the hazardous chemicals. This way, Genix is now incorporating a system of flowing out the wast e in the drain in an efficient and meeting the standards of environmental concer ns as laid down by NEQS. The liquid draining out of Genix is stored in a container before leaving the pre mise, which is then tested and the most hazardous material are fetched out by th e management. The system is redesigned and now the quality of raw material used at Genix ensures the least hazardous materials in it. The process is re-engineer ed in a way that now the chemicals draining out of the production and quality co ntrol are now been reduced by using the methods of material testing by sheets. T he process of EMS has been certified by ISO: 140

BALANCED SCORECARD: [SUPPLY CHAIN MANGEMENT] & [ STRATEGIC MANAGEMENT] Strategic Theme: Operations Excellence Objectives Measures Targets Initiatives Financial • Cost recovery • Profitability • Increased market share in the category of cancer medicine • Increase return on investment • Recovery of costs by June 2012 • Controlling cost of manufacturing, warehousing, transportation Customer Retain existing customers and attract new ones

• Sustain top 5 position on anti-biotic market • Design products (service packages) according to usage patterns in the past and t he future demands of customers

• Cater to customers according to needs: o Need o Perception • Market research for the purpose of usage patterns • Product Development Programs • TICSS service quality program • Order Fill Rate, Backorder Levels, OnTime Delivery Internal

Continually struggle to improve the skilled people and processes • Recruit, growth and retain • Continually work for process improvement • Increase standards and training processes • ASPIRE (Achine sustained productivity through innovation and recognition enforce ment) program Learning

Innovation of product and service • • • • • • rograms • Employee training and development Emphasis on technicians and engineers ‘x’ employees to be hired ‘y’ employees to be trained Senior technicians to be trained through external training programs Subordinates to be trained by the senior technicians through in-house training p APICS Membership

FAILURE MODE AND RISK ANALYSIS: [SUPPLY CHAIN MANGEMENT] Occurrence: Severity: Detection: High no. Low no. High no. Low no. High no. Low no. High severity Low severity Unlikely to detect Likely to detect Likely Unlikely

Process analysis [PRODUCTION MANAGEMENT] The firm produces a number of products categorized according to their diseases. However there are four major categories of medicines, processes of which will be analyzed below. For TABLETS: 1. Weighing For the mixture to be prepared the right amount of active and inactive ingredien ts shall be mixed together. Hence they are weighed before mixed to ensure a fix percentage of each ingredient. 2. Sieving Before any mixture is prepared it is filtered for any impurities. Only when thes e impurities are removed, the content is ready for manufacturing. 3. Mixing and Blending

4. Wet granulation Wet granulation is a process of using a liquid binder to lightly agglomerate the powder mixture. The amount of liquid has to be properly controlled, as over-wet ting will cause the granules to be too hard and under-wetting will cause them to be too soft and friable. Aqueous solutions have the advantage of being safer to deal with than solvent-based systems. • Procedure o Step 1: The active ingredient and excipients are weighed and mixed. o Step 2: The wet granulate is prepared by adding the liquid binder–adhesive to the powder blend and mixing thoroughly. Examples of binders/adhesives includ e aqueous preparations of cornstarch, natural gums such as acacia, cellulose der ivatives such as methyl cellulose, gelatin, and povidone. o Step 3: Screening the damp mass through a mesh to form pellets or granul es. o Step 4: Drying the granulation. A conventional tray-dryer or fluid-bed d ryer are most commonly used. o Step 5: After the granules are dried, they are passed through a screen o f smaller size than the one used for the wet mass to create granules of uniform size. Low shear wet granulation processes use very simple mixing equipment, and can ta ke a considerable time to achieve a uniformly mixed state. High shear wet granul ation processes use equipment that mixes the powder and liquid at a very fast ra te, and thus speeds up the manufacturing process. Fluid bed granulation is a mul tiple-step wet granulation process performed in the same vessel to pre-heat, gra nulate, and dry the powders. It is used because it allows close control of the g ranulation process. 5. Drying Dry granulation processes create granules by light compaction of the powder blen d under low pressures. The compacts so-formed are broken up gently to produce gr anules (agglomerates). This process is often used when the product to be granula ted is sensitive to moisture and heat. Dry granulation can be conducted on a tab let press using slugging tooling or on a roll press called a roller compactor. D ry granulation equipment offers a wide range of pressures to attain proper densi fication and granule formation. Dry granulation is simpler than wet granulation, therefore the cost is reduced. However, dry granulation often produces a higher percentage of fine granules, which can compromise the quality or create yield p roblems for the tablet. Dry granulation requires drugs or excipients with cohesi ve properties, and a dry binder may need to be added to the formulation to fac ilitate the formation of granules. 6. Sieving according to required mash size 7. Weight of granules according to formulation 8. Final mixing and lubrication After granulation, a final lubrication step is used to ensure that the tableting blend does not stick to the equipment during the tableting process. This usuall y involves low shear blending of the granules with a powdered lubricant, such as magnesium stearate or stearic acid. 9. Compression(Quality control check) This is achieved using tablet presses machines. The tablet press is an essential piece of machinery for any pharmaceutical and nutraceutical manufacturer. Commo n manufacturers of tablet presses include Fette, Korsch, Kikusui, Manesty and Co urtoy. Tablet presses must allow the operator to adjust the position of the lowe r and upper punches accurately, so that the tablet weight, thickness and density can each be controlled. 10. Cleaning and de-dusting(Quality control check) Once the tablets have been compressed, the tablets are de-dusted to remove any g ranules present on the surface on the tablet. This is all done under the supervi sion of the quality control staff. 11. Weight check for variation(Quality control check) The final product is eventually weighted for any variation in the mixture. This

 

 

process is carried out under the International standard requirment. If the varia tion is above 105% or below 90%, then the product is discarded and has to repeat the whole process again. 12. Blister(Quality control check) Many tablets today are coated after being pressed. Although sugar-coating was po pular in the past, the process has many drawbacks. Modern tablet coatings are po lymer and polysaccharide based, with plasticizers and pigments included. Tablet coatings must be stable and strong enough to survive the handling of the tablet, must not make tablets stick together during the coating process, and must follo w the fine contours of embossed characters or logos on tablets. Coatings are nec essary for tablets that have an unpleasant taste, and a smoother finish makes la rge tablets easier to swallow.

Process Evaluation Matrix [PRODUCTION MANAGEMENT] S.NO EVALUATION IN TERMS OF: TABLETS(GENERAL) SYRUP(LIQUID) INJECTAB LES(VIALS & AMPULES) OINTEMENT 1. TIME 2 DAYS/BATCH 2 DAYS/BATCH -2 DAYS/BATCH -Exception with regard to the evaluation of stability studies 2 DAYS/BATCH 2. MACHINERY/ WORKERS 50% Machine 50% Worker 50% Machine 50% Worker 50% Machine 50% Worker 50% Machine 50% Worker 3. EFFECIENCY Efficiency requirement met under United States Pharmacop ia, British Pharmacopia United States Pharmacopia, British Pharmacopia United S tates Pharmacopia, British Pharmacopia United States Pharmacopia, British Pharm acopia 4. DEFECTIVE PERCENTAGE 4-5% 4-5% 4-5% 4-5% 5. CAPACITY 20000/8Hrs 50000/8Hrs 24000/8Hrs 20000/8H rs 6. ENVIROMENT Heating, Ventilating, and Air Conditioning Heating, Ventilating, and Air Conditioning -Most sensitive -Heating, Ventilating, and Air Conditioning Heating, Ventilating, and Air Co nditioning

CONCLUSION AND RECOMMENDATIONS Not much can be recommended of this industry. The processes are very fixed, all the final products tested and approved under the same standards. In the pharmaceutical industry, the manufacturing process is precisely defined a nd hence the productivity of labor cannot be increased by offering more incentiv es. This is because production time is fixed, and the worker cannot take out the product before time to increase productivity, as it would affect the quality of the product. However there are certain factor, which can make a difference on t he standards the firm operates in: • Technological reforms should be brought in the firm/industry. Our pharmaceutical industry lacks latest equipment and machinery, which handicaps the industry fro m the manufacturing of latest ointments and medicines which then eventually have to be imported. If the latest machinery are bought, they would increase the pro duction capacity of the firm and also enable the production of low cost groundbr eaking medications which have to be imported at high cost. • A good working environment always supports the business environment. If the work ers are offered a clean and cool working environment the productivity of the wor kers would increase, the workers would require less breaks, in addition they wou ld even fall less sick and hence take fewer leaves. • Only if the raw material used are of good quality standards and provides a high quality output, then the industry can boost its performance. Most of the local f irms today are producing low quality products with the exception of some for e.g . Getz pharma.

REFERENCES Nazar Talib Chief Executive Sohail Talib Director BIBLIOGRAPHY WWW.WIKIPEDIA.COM WWW.LISKOPAKISTAN.COM

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