Drugmakers focussed on selling medicines in the US are increasingly caught between price erosion and escalation, says Vector Consulting Group (VCG), calling for a dynamic, even daily, system of forecasting.
Mixed signals from the US are confusing drugmakers, and they oscillate between “cost-cutting and growth strategies,” says Shelja Jose Kuruvilla, VCG Head of Knowledge and Research. An accurate forecast, a month ahead, is an oxymoron, Kuruvilla tells businessline. The market requirement may completely change in a month and companies are left with inventories to be destroyed, she adds.
Companies need flexibility and agility in their operations to be able to change tack, depending on the daily market requirement, if need be, she points out. Flexibility does not involve terminating jobs, but requires a mindset change, says Kuruvilla, giving an insight into the 18-year-old home-grown consulting group’s Pharma Vision report. Companies have archaic manufacturing practices that builds inflexibility into the system, she adds.
Supply chains
“There is hidden capacity in plants, they just don’t see it,” says Kuruvilla, adding that companies can become first responders to a situation. Explaining how it could be done, she says, it involves making “quality cleared raw material” available to the company, as a product in a super-market, that can be picked up when required. Supply chains are global and there are other variables, so getting everything in place together at the same time, could bring in delays, she adds.
Similarly, with “short-burst planning cycles with a focus on daily execution, companies can achieve a 30-50 per cent reduction in R&D lead times and a 50 per cent increase in project output,” the report points out.
The report comes, even as the US market witnesses price erosion, alongside a shortage in some products (as a consequence of regulatory action). Companies face a dilemma on whether to invest in capacities to cater to shortages, take a price increase on opportunities that may arise, or take a price hit on other products, the report says, outlining strategies to be nimble-footed.