Industrial buying in pharmaceutical industry


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The presentation gives a brief idea of how a pharmaceutical industry carries out industrial buying and what are the specific requirements as per industrial goods classifications

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Industrial buying in pharmaceutical industry

  1. 1. Pharmaceutical Industry Presented by: Avinash Geerjamundo
  2. 2. Introduction:• The pharmaceutical industry develops, produces, and markets drugs or pharmaceuticals licensed for use as medications. Pharmaceutical companies are allowed to deal in generic and/or brand medications and medical devices. They are subject to a variety of laws and regulations regarding the patenting, testing and ensuring safety and efficacy and marketing of drugs. The word pharmaceutical comes from the Greek word Pharmakeia. The modern transliteration of Pharmakeia is Pharmacia.
  3. 3. Global Pharmaceutical Industry• The earliest drugstores date to the Middle Ages.• The first known drugstore was opened by Arabian pharmacists in Baghdad in 754,and many more soon began operating throughout the medieval Islamic world and eventually medieval Europe.• By the 19th century, many of the drugstores in Europe and North America had eventually developed into larger pharmaceutical companies.
  4. 4. Global Pharmaceutical industry• Most of todays major pharmaceutical companies were founded in the late 19th and early 20th centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became mass-manufactured and distributed. Switzerland, Germany and Italy had particularly strong industries, with the UK, US, Belgium and the Netherlands following suit.• in the USA, Pfizer was founded in 1849, by two German immigrants, initially as a fine chemicals business. They expanded rapidly during the American civil war as demand for painkillers and antiseptics rocketed
  5. 5. Top10 International pharmaceutical companiesName of Company Country of Origin Total revenues million ($)1. Pfzier USA 678092 Novartis Switzerland 533243 MERCK and Co USA 459874 Bayer Germany 442005 Glaxo and SmithKline United Kingdom 428136 Johnson and Johnson USA 370207 Sanofi France 356458 Hoffman-La Roche France/Switzerland 335479 Astra Zeneca United Kingdom 2647510 Abbot Laboratories USA 22476
  6. 6. Indian pharmaceutical Industry:• Bengal Chemicals & Pharmaceuticals Limited (BCPL), established in 1901, is a Public Sector Undertaking (PSU) of the Government of India and is Indias first pharmaceutical company• The number of purely Indian pharma companies is fairly low. Indian pharma industry is mainly operated as well as controlled by dominant foreign companies having subsidiaries in India due to availability of cheap labour in India at lowest cost.• In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia.• Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market.• Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago.
  7. 7. Top 10 Indian Pharmaceutical companies Name of Company Revenues millions(USD) 20121 Abbott India Ltd 1348.512 Ranbaxy 1327.563 Dr Reddy’s Laboratories 11784 Lupin Ltd 929.845 Aurobindo Pharma 865.196 Dabur 700.37 Sun Pharmaceutical 673.998 Cadila Healthcare 629.459 Jubila lifesciences 561.0310 Piramal healthcare 480.26
  8. 8. Overview of a pharmaceutical company (Astra Zeneca)• Currently ranked 9th worldwide and having got a total revenue of $26475 million.• Astra AB was founded in 1913 in Södertälje, Sweden by 400 doctors and apothecaries. n 1993 the British chemicals company ICI demerged its pharmaceuticals businesses and its agrochemicals and specialties businesses, to form Zeneca Group plc,and in 1999 Astra and Zeneca Group merged to form AstraZeneca plc.
  9. 9. Core competencies• AstraZeneca develops, manufactures and sells pharmaceutical and biotechnology products to treat disorders in the gastrointestinal, cardiac and vascular, neurological and psychiatric, infection, respiratory, pathological inflammation and oncology areas.• AstraZenecas pipeline, and patent cliff, was the subject of much speculation leading to pipeline-boosting collaboration and acquisition activities.
  10. 10. Products provided by• – Anaesthetics• Carbocaine (mepivacaine)• Citanest (prilocaine)• Diprivan (propofol)• EMLA (lidocaine/prilocaine)• Marcaine and Sensorcaine (bupivacaine)• Naropin (ropivacaine)• Xylocaine (lidocaine)• Xyloproct (lidocaine/hydrocortisone)
  11. 11. Other Core competencies• The companys most successful medication is esomeprazole. (Nexium)Two years before the omeprazole patent expired AstraZeneca patented S- omeprazole in pure form, pointing that since some people metabolise R-omeprazole slowly, pure S- omeprazole treatment would give higher dose efficiency and less interindividual variation.
  12. 12. Company’s strategy• Their business strategy centres on enhancing our R&D, expanding footprint in emerging markets, boosting efforts to source innovation from outside AstraZeneca and increasingly working in partnerships that broaden the base for success in improving healthcare.• Everyone in AstraZeneca, wherever they are located, is required to work to global standards of ethical sales and marketing practice.
  13. 13. • This is especially important as our business in emerging markets, such as China and Russia, alongside our continued efforts in established markets, including the US and Japan continues to grow.
  14. 14. Industrial GoodsDefinition:Industrial goods are products that companies purchase to make other products, which they then sell. Some are used directly in the production of the products for resale, and some are used indirectly. Unlike consumer goods, industrial goods are classified on the basis of their use rather than customer buying habits. These goods are divided into five subcategories: installations, accessory equipment, raw materials, fabricated parts and materials, and industrial supplies.Industrial goods also carry designations related to their durability. Durable industrial goods that cost large sums of money are referred to as capital items. Nondurable industrial goods that are used up within a year are called expense items.
  15. 15. Classification:• Installations :• Installations are major capital items that are typically used directly in the production of goods. Some installations, such as conveyor systems, robotics equipment, and machine tools, are designed and built for specialized situations.• Examples of installations in pharmaceutical industry:• Manual, semi-automatic, and automatic packaging machinery is commonly available. Product types include:
  16. 16. Classification• Accumulators gather goods or items for processing.• Batching machines prepare material for processing or packaging.• Bagging machines place product in a bag, sack.• Banding machines and sleeving machines secure products together with a band or sleeve.• Box making machines build boxes from cardboard.• Bundling machines form goods into piles for subsequent banding or wrapping.• Capping machines place, snap, or screw caps onto containers.• Cartoning machines create cartons or boxes from cardboard.• Closing machines are designed to close packages with a tying wire, narrow metal strap or tape around the neck of the bag; by placing a lid on a can or drum; and closing a box or other type of package.
  17. 17. Classification:• Cleaning machines sanitize containers or packaging devices.• Collating machines package or assemble product in proper numerical or logical order.• Combining machines form containers into a single line for subsequent filling operations. Counting machines count products before, during or after a process.• Decorating machines decorate packages.• Packaging machines build packages such as cartons or boxes.• Filling machines and packer machines fill bags, bottles, and cans with a predetermined volume of product.• Forming machines are used to form containers or packages.• Inspection machines review products for blemishes, leaks, consistency or types.
  18. 18. Example of capital items
  19. 19. Suppliers of Capital items:• Recoo Technology Co. Limited (mainland china)• Excel Plants & Equipment Pvt Ltd, Pune• Red rack manufacturers United kingdom• Sulzer Metco Inc. USA• Surmech Engineers Private Limited, Indore
  20. 20. Methods involved in procurement:• Industrial purchase: Usually straight rebuy is donefrom a list of approved existing limited vendors as pharmaceutical items are capital items and are high involvement usually one time buying• Bidding• Leasing• Tendering
  21. 21. Accessory Equipment Goods• Accessory Equipment Goods that fall into the subcategory of accessory equipment are capital items that are less expensive and have shorter lives than installations. Examples include hand tools, computers, desk calculators, and forklifts. While some types of accessory equipment, such as hand tools, are involved directly in the production process, most are only indirectly involved.• Examples of Accessory equipment Goods:
  22. 22. Classification• TrolleysTrolleys for load handling inside the plantTrolleys for load handling outside the plant• Trays/baskets/cassettes to house productTrays, baskets, plastic bags to house product• Integrated systems for load full handling:Lifts, sensors ,air-conditioners, generators , shelves, sealing tapes , rubber closures, vials, syringes, burettes , pipettes ,test reagents, air extractor, air purifier (HEPA filters), wire gauze, caps,
  23. 23. List of suppliers:• Valiant Pharma Equipments, Thane• R Modi Group, Ahmedabad• Semrad international• C. S. Aerotherm Private Limited
  24. 24. Method of procurement:• Industrial purchase: Usually straight rebuy is done from a list of approved existing limited vendors as pharmaceutical items are capital items and are high involvement usually one time buying• Bidding: usually at lowest price quotation• Leasing• Tendering
  25. 25. Example of accessory items:
  26. 26. Raw materials• Raw Materials Raw materials are products that are purchased in their raw state for the purpose of processing them into consumer or industrial goods. Examples are iron ore, crude oil, diamonds, copper, timber, wheat, and leather.• Examples of Raw materials involved in pharmaceutical industry:
  28. 28. List of Suppliers:• S. Zhaveri Pharmakem Pvt. Ltd. – India• Indus Pharmaceuticals – India• Stellar Pharmatech Pvt. Ltd.
  29. 29. Method of Procurement:• Raw materials are supplied in the following forms• Technical• Industrial• Pharma Grade• Purchase is carried out by bulk buying and straight rebuy method. In case of Pharma grade products, modified rebuy is carried out with taking into consideration specific parameters such as percentage purity, limits of quality controletc..• Other methods of procurement include bidding, tendering and sub contracting.
  30. 30. Fabricated Parts and Materials• Fabricated parts are items that are purchased to be placed in the final product without further processing. Fabricated materials, on the other hand, require additional processing before being placed in the end product. Many industries, including the auto industry, rely heavily on fabricated parts. Automakers use such fabricated parts as batteries, sun roofs, windshields, and spark plugs. They also use several fabricated materials, including steel and upholstery fabric
  31. 31. Examples of fabricated materials:• Cryogenic Mill• Series Mixer• Precision Sheet Metal Fabrication• Metal Laser Cutting Parts• Induction Heating Machine
  32. 32. List of suppliers• Higao Tech. Co. Ltd.• China (National) Abrasives I & E Corp• Hebei Africa Machinery Co., Ltd.
  33. 33. Method of Procurement:• Industrial Buying: Modified Rebuy with specifications involved• Tendering• Bidding
  34. 34. Industrial Supplies:• Industrial Supplies Industrial supplies are frequently purchased expense items. They contribute indirectly to the production of final products or to the administration of the production process. Supplies include computer paper, light bulbs, lubrication oil, cleaning supplies, and office supplies.
  35. 35. Examples of Industrial supplies:• Lightning facilities uv tube lights• Detergents• Antiseptics• Gloves• Office supplies• Aprons/masks• Goggles
  36. 36. List of suppliers• Pharma med• Barrs pharmaceutical Industries Cc• Schering (pty) Ltd