Industry Overview

The COVID-19 pandemic, rising per capita healthcare costs, rising prevalence of chronic diseases,
growing geriatric population, and increased drug approvals will all contribute to the global
pharmaceutical manufacturing industry's $673.6 billion global market value by 2027, growing by
12.5 percent annually over 2020-2027. The introduction of new technology and more economical
and effective manufacturing techniques has drastically altered the pharmaceutical industry. Robotics
and artificial intelligence (AI) are being used to reduce product waste and manufacturing floor
downtime. Additionally, the paradigm change towards innovative, data-rich, integrated, and
paperless operations has led to accurate and error-free production.

Company Overview
Piramal Pharma Solutions (PPS) is a Contract Development and Manufacturing Organization (CDMO)
offering end-to-end development and manufacturing solutions across the drug life cycle. Through a
worldwide integrated network of locations in North America, Europe, and Asia, they provide client
service. Their ability to offer a wide range of services, such as drug discovery solutions, process, and
pharmaceutical development services, clinical trial supplies, commercial supply of APIs, and
completed dosage forms, is made possible by this. Along with general services, they also provide
specialized ones, including the creation and production of highly effective APIs, antibody-drug
conjugations, sterile fill/finish, peptide goods & services, and powerful solid oral medication
products. They are a partner of choice for innovator and generic firms worldwide due to our
reputation as a dependable service provider with experience working with a variety of technologies.

Pharamaceutical Industry and overview of Piramal’s supply chain

Piramal is a contract development and manufacturing organization (CDMO) that manufactures two
types of products for its clients, i.e., large pharmaceutical companies, on a contract basis:
1. Drug Products: Pharmaceutical drugs in their final consumable format, i.e., tablets, syrup,
etc.
2. Active Pharmaceutical Ingredients (APIs): The biologically active component of a drug
product that produces the intended effects for its clients
Piramal’s products are primarily in the oncology space.

Piramal’s Supply chain

Being a manufacturer, Piramal’s concerns include procurement and manufacturing. Distribution is
handled by the clients entirely.

Vendor(s) selection
1. Since the pharmaceutical industry is heavily regulated, the number of suppliers to choose
from is limited.
2. Types of material needed for every product:
a. Starting Material: Material/chemicals that actually go into the reaction
b. Raw materials: Material that involves reagents,
catalysts or some sort of consumables
3. Vendors of starting materials need to be filed in FDA filings. Hence, it needs to be made sure
that the vendors have minimal risk in their business continuity and can supply the material
for the foreseeable future. For risk-hedging, a secondary vendor is also present and filed as
well.
4. For raw materials, the only major factor is whether the required specifications of the
material are met by a potential vendor or not. Piramal has a set of preferred vendors, and
can make changes to this set as and when required.
a. Vendor Qualification Process: Piramal has a predefined process to evaluate potential
vendors, called VQP, which includes conducting surveys and background checks,
evaluating their size, manufacturing processes, and their compliance with GMP 21
CFR, which refers to a set of safety regulations in pharmaceuticals.
b. In order to minimise the risk posed by vendors, the following steps are in place:
i. Alternate Vendor Development
ii. Safety Stock Maintenance iii. Reorder Point
Levelling

Inventory Management
Piramal manufactures on a make-to-order basis, and performs Material Requirements Planning
(MRO) using SAP
1. Planning and purchase orders take place 3 months before manufacturing starts, though
some exceptions with high lead time are taken care of separately in MRP (purchase orders
placed much ahead in time)
2. Target days of inventory: 90-100 days
a. Able to do so because Piramal deal with value added products which are very
specialised in nature and have a short lead time since the vendors custom
manufacture the material for Piramal. Since the stock’s value is high, large safety
stocks are expensive to maintain and hence not kept.

The pandemic’s effects on Supply Chain

Pre-COVID, Piramal operated on a single-source basis and had sole suppliers for most of the required
materials. This led to severe shortages of critical chemicals such as methanol during the pandemic.

Post pandemic, Piramal has shifted to a target of 5-6 suppliers (alternate vendors) for most
materials. An effort is in place to optimise the sourcing with respect to the price and time of delivery
(earliest) while maintaining multiple vendors.
 ○ Since starting materials specifically had a single source earlier that had been filed with the
FDA, alternate vendors have not been adopted for these materials due to the current sources
being the only ones filed. This is a current issue that is adding to the risk of shortages of
these materials.

Modernisation/Tech usecases
1. SAP/ERP- Piramal Pharma uses SAP/ERP for planning exercises in the supply chain. The 3
month rolling plan is auto generated using ERP with manual intervention for edge cases.
2. Warehouse module- For inventory management piramal pharma has adopted a warehouse
management system. They maintain their inventory in form of Bins inorder to track
inventory. To facilitate the tracking of inventory items across the site they have adopted the
RFID trackers and usage of barcodes
3. Sales and operations Platform- Connexis is being used to perform sales and operations
planning.
4. CRM software- Salesforce is being used as the customer relationship management tool. This
helps in maintaining a digital record of the customers requirements while simultaneously
helping in post-sales interactions with the customers.
5. Digital Planning- Smartsheets is being used as a project management tool, to minimise the
communication gaps in the planning team. This helps by improving the visibility of plan to
the team so that there is single source of truth for the entire team while making plans.
6. Integrated Solutions- All the drug substance and drug product sites are well integrated with
each other. The integrated approach reduces delivery timelines and improves time to market
for our customers, allowing customers to monetize time savings and reap the value of early
and on-time product launches. Our Integrated program managers serve as the single point of
contact for customers whose projects run across multiple sites. Piramal’s strong integrated
network of drug substance and drug product capabilities has resulted in over 100 successful
integrated projects.

Challenges
1. Demand Uncertainty- With the growing demand the capacity is sometimes constrained. The
change of equipment needs customer approval. So, the documentation process acts as a
challenge in allowing the interchangeability of the equipments. Equipment train is ~90%
occupied.
2. Geopolitical Influence- Since the Raw material suppliers are concentrated in India and
majorly China, any disruption in Chinese market has huge repercussions on the firm. This
often leads to shortage of raw materials and addition to backlog of planning.
3. Cold Supply Chain: Some of the products have to be stored at very low temperatures to
ensure that the potency and formulation remain intact. This needs pharmaceutical supply
chains equipped with refillable dry ice containers or specialized freezers, both of which have
high capital requirements
4. Contract Design: This also ties in with demand uncertainty issue. Vendors manage their
supply chain independently with respect to Piramal. Now any shocks to the demand can
cause bottlenecks to both Piramal and vendor’s supply chain leading to inventory build-up
on both the ends.
5. Sustainability: Carbon emission in US
6. Regulatory landscape: FDA approval-time taking- limited suppliers – supply shock
7. Resilience: Mck report, 2x2 matrix
Solutions:
1. Exclusivity of Contracts:
2. Lobbying- Have to come from pharma industries
3. Sustain
4. Resilience

Innovative:
1. Contract designing through blockchain:
2. Mithun: