The pharmaceutical market for generic drugs in India is pivotal in making healthcare accessible to millions. However, supply chain vulnerabilities—exacerbated by crises like the COVID-19 pandemic—can lead to critical drug shortages and jeopardise patient lives. In the first quarter of 2020 alone, there was an 8 per cent increase in active drug shortages. To safeguard public health, it is imperative for the state to adopt comprehensive strategies that mitigate these risks and ensure a consistent supply of essential medicines. Efficient state procurement, clear demand forecasting, and data-driven insights are key components in building a resilient pharmaceutical supply chain that benefits not only the procurers but also the companies bidding for contracts.
Efficient State Procurement: The Tamil Nadu model
Tamil Nadu’s Central Procurement Model, implemented by the Tamil Nadu Medical Services Corporation (TNMSC), stands as a blueprint for success in public healthcare systems. By centrally procuring essential medicines, Tamil Nadu has ensured a steady supply of drugs while significantly reducing costs—achieving savings of up to 82 per cent on some medications through a transparent tendering process.
This model guarantees the availability of essential medicines to over 77 million people in the state. Stringent quality checks and systematic distribution have minimised stockouts and inefficiencies, leading to lower out-of-pocket expenses for patients. The success of TNMSC has prompted other states like Rajasthan, Andhra Pradesh, and Kerala to consult with Tamil Nadu to replicate similar systems, aiming to enhance access to affordable healthcare.
Clear demand forecasting: A scientific approach
A major challenge facing most states is the absence of a scientific basis for assessing drug demand. Procurement based on outdated or inaccurate demand estimates leads to drug shortages and wastage. Implementing clear demand forecasting not only helps procurers ensure a reliable supply chain but also assists pharmaceutical companies in better planning and bidding for contracts.
States should integrate advanced analytics to predict drug requirements more accurately. By leveraging data-driven insights, they can optimise inventory management, improve demand forecasting, and proactively respond to potential disruptions. This scientific approach to demand assessment minimises wastage and ensures that essential medicines are available when and where they are needed.
Leveraging data-driven insights
Incorporating data-driven insights is crucial for building a resilient and efficient supply chain. Advanced tools such as big data analytics can help optimise inventory management, enhance demand forecasting, and enable proactive responses to potential disruptions. Digital technologies offer a clear path forward in reducing vulnerabilities in the generics supply chain, benefiting both the government and private sectors.
Case study: PMBI and the Jan Aushadhi Program
The Jan Aushadhi scheme, aimed at ensuring drug security through an affordable pharmaceutical supply chain, historically faced challenges with drug shortages. The Pharmaceuticals & Medical Devices Bureau of India (PMBI) addressed these challenges by enhancing the supply chain’s resilience. By creating new warehouses and utilising analytics to assess supply chain demand based on digitised requirements, PMBI dramatically curtailed drug shortages.
As a result, patients now have better access to quality medicines procured by Jan Aushadhi Kendras from WHO-GMP certified suppliers. This transformation underscores the importance of an efficient supply chain mechanism and the role of data-driven insights in overcoming logistical challenges.
Building a resilient future
To prevent drug shortages and strengthen the generics supply chain, India must adopt a multipronged strategy:
- Embrace successful procurement models: Learning from Tamil Nadu’s central procurement system can help other states enhance their healthcare infrastructure and ensure a steady supply of essential medicines.
- Implement clear demand forecasting: Accurate demand forecasting benefits both procurers and pharmaceutical companies. It ensures efficient procurement and helps companies better plan production and supply, reducing wastage and shortages.
- Leverage advanced technologies: Integrating advanced technologies like track-and-trace systems and digital platforms can streamline supply chains, bring real-time transparency, and optimise inventory management.
- Adopt data-driven decision-making: Utilising data analytics enables proactive responses to potential disruptions, ensuring the reliability of the supply chain.
- Encourage public-private partnerships: Collaboration between the government and private sector can enhance supply chain resilience, as demonstrated by initiatives like the Resiliency Assessment Program developed by the U.S. Department of Health and Human Services.
Lessons for all stakeholders
Ensuring the availability and affordability of generics is not just a governmental responsibility but a collective effort involving all stakeholders in the healthcare ecosystem. Pharmaceutical companies, by participating in transparent procurement processes and utilising data insights, can better align their production with actual demand, reducing wastage and improving profitability.
State governments can enhance healthcare delivery by adopting efficient procurement models, integrating advanced analytics, and fostering collaborations with the private sector. Patients benefit from increased access to affordable, quality medicines, leading to better health outcomes and reduced financial burdens.
A collaborative approach involving all stakeholders—government, industry, and healthcare providers—is essential in creating a robust and efficient pharmaceutical supply chain that ensures the health and well-being of millions.
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