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Digitization in the Pharmaceutical industry

June, 2017

It often helps to build an inspiring vision of the business model, backed by digital initiatives believes Kedar Upadhye, Global CFO, Cipla

Indian pharmaceutical industry is at an interesting juncture today. The promise of serving patients, saving lives and spreading affordable healthcare provides a noble purpose to anyone involved in the value chain. Many also get attracted to the potential to drive innovation and cutting edge technology in attacking life-threatening diseases and promoting patient convenience. Despite all these, the operating environment is getting difficult day-by-day. Be it the uncertainties of regulations, competitive forces, shorter shelf-lives of molecules, the extremely volatile macro-economic and geo-political forces or the consolidation of the channel, there are umpteen factors in the form of head-winds.

However, the single most important hope not only to survive but also grow while managing complexity in these uncertain times is the promise of technology and digitization. Companies have started exploring and deploying cloud-based platforms, mobile-applications and advanced data analytics tools in building a leaner and digitized organization. While this initial flirting with technology obviously simplifies the operations and helps achieve a modern look, the pharma industry needs to go beyond superficial projects, with a strategic digital vision.

The digital strategy would involve following elements:-

- IT and Digital teams to embrace business trajectory and get embedded in business planning and execution

- Each critical area in the value chain – research & development, manufacturing & quality, supply chain, sales & marketing, digital communications, advanced financial analytics & control – ought to clearly define the approach for digitalized operations

- An articulated vision from the leadership on the importance and the expectations of ‘to be’ state in each area - ‘entire global field force to move to digital detailing platform in next 12-15 months, or ’20-30% down-time reduction in global manufacturing set-up’ or ‘cloud based information architecture to support critical commercial and portfolio decisions’ or ‘XX reduction in inventory holding days, receivables to come down by XX’. Specific goals which are embedded in business and are time-bound, give much-needed sense of urgency to the digitization roadmap

- Tactical choices to be made in terms of specific ERP platform, implementation partners, pilot vs full implementation and so on. The organization structure and sponsorship is critical as well

The benefits of digitization are obviously many. In fact, several initiatives such as full-scope ERP or mobile applications are increasingly becoming a hygiene factor in running large-scale global organizations.

- The first and foremost benefit is the availability of real-time information, to facilitate both tactical and strategic decisions. Advanced analytics tools and business warehouse suits are becoming common. Executives are exploring dashboards the minute they enter office to scan the status of key deliverables to better plan the day. These dashboards are often designed to reduce complex and multi-location information into manageable pieces of data and actionable insights. The vast sums of data are converted to KPIs and comparisons are provided against the target, previous period or competition

- The next important benefit in the pharma context is the supply chain automation. Digitization of supply chain enables linkages across plants, warehouses and channel. The back-end supply chain will often constitute API supplies, CMO service providers, loan-licensee or third party vendors apart from own manufacturing set-up. The front-end would include the global distribution set-up, wholesalers, trade, hospitals, pharmacies and dispensing doctors. Digitization helps build strong integrated supply chain networks which are scalable and shock-proof. They help manage efficiencies in the cost of supply chain, service levels to customers and investments in inventories and infrastructure. There are product serialization and track-and-trace regulations to be adhered to as well

- Digitization is also key in developing a robust regulatory assurance infrastructure. In the era of multiple regulatory audits, multiple tools to automate laboratory and manufacturing data are increasingly being sought after. Electronic batch reports are the norm. Organizations are now experimenting with several automation tools for manufacturing, laboratory, quality and warehousing which includes Supervisory Control and Data Acquisition tools [SCADA], Laboratory Information Management System [LIMS] or Automatic storage and retrieval systems. These tools are adding speed, efficiency, robust assurance architecture and confidence to withstand any regulatory scrutiny. The machine learning environment or machine to machine communications, or the daily protocols for loading-unloading, filling, packaging are becoming extremely synergised. Subsequent interventions in the form of robotics or augmented reality will accelerate the next paradigm shift

- Another leverage of digitization is in the critical area of go-to-market processes. Pharma marketing for each type of market and product or service has become heavily competitive. In the branded markets for example, the number of calls to doctors and pharmacies or the time available in the doctor’s chamber is increasingly becoming a significant constraint. Further, the sales and marketing organization works very closely with the distribution organization. Many global organizations have shifted to digital detailing using tabs or similar handheld devices. The hardware and software for call planning and retail customer prescription audit is highly synchronized. That enables a quick assessment of the effectiveness of calls and whether a shift in approach is required to identify key customers and improve the effectiveness. Apart from field-interfacing solutions, companies are also thinking about patient convenience through therapy-specific mobile apps and social media platforms like webinars, information portals or video chats. The whole sales and marketing environment is truly being tech-innovated. From a patient angle, healthcare is becoming more personalized and services are enabling 24X7 digital environment. Many observers believe that in the coming era, patient value will be delivered more through digitized services rather than through products

The promise of digitization doesn’t end here. In fact, companies are investing enormous resources in building corporate brands and strong patient-friendly online presence. Companies find it effective to use the social media to create awareness about their community initiatives. It is also common to see leadership being active on these platforms, creating a direct connect between the company and its stakeholders. All this builds a specific persona for the organization, which is important from the perspective of prospective employees, recruiters or for that matter every stakeholder.

While the digitization has become an imperative and its promise is enormous, it comes with its own protocols, risks, resourcing challenges apart from investment and maintenance considerations. As mentioned earlier, companies start with several small projects and assignments in diverse areas. Many times, the strategic vision is lacking or the senior management sponsorship is absent beyond lip service. This agenda is enormous. Each implementation assignment has its own risks. Hence a long-term commitment is mandatory. The selection of resources both internal & external, starting from the CIO is an important consideration. Also, the implementation strategy needs to start small and scale big. Pilot runs often give several important learnings into the project and hence pilots instead of big-bang launches have become a norm. Several such considerations help an organization capture significant value from the digitization drive.

It could take several quarters to fully scale-up the digital agenda. There are cases where delay can cause a company competitive disadvantages in terms of its inability to respond to sudden surge in the market demand or inability to deal with competitive pressures in the market. However, any successful business model or functional excellence model today needs digitization as a vital component. It often helps to build an inspiring vision of the business model, backed by digital initiatives.

For example, each CIO or CFO should aspire to take CEO to a high-tech ‘War Room’ wherein real-time analytics of business enables tactical and strategic view. This War Room facilitates a 360-degree view of market, competition, prices, market shares, portfolio, capacities, supply chain, human resources and everything else to see whether each part of the business is growing its sales and profits in line with the targets. Such War Room takes away the need for multiple spreadsheets and power-points or synchronization of reports churned out by a large team of analysts. The CEO would then be inclined to allocate time to review and intervene in specific aspects of the organization.

Similar such inspiring vision can create breakthrough and transformational agendas for each area of the organization. At this moment, most of the pharma organizations are dreaming and some even living this vision. Organizations can then unleash their potential and engage more with patients and customers, while innovating their business and commercial models.

The opinions expressed in this article are the author’s own.