Multi sourcing in the South African pharmaceutical industry

Abstract

EXECUTIVE SUMMARY (ABSTRACT) Pharmaceutical supply chains play a major role in the management of the integrated process from the procurement of raw materials to the administration of the drug or drug product to the patient. This process spans across multiple business units, businesses and industries which can pose challenges to the performance of supply chains within the industry (Kokilam, 2016). This research report was undertaken to look into the challenges of multi-sourcing in the South African pharmaceutical industry with particular reference to sourcing challenges, vendor challenges, compliance challenges and regulatory challenges. Following a review of existing literature, an online survey was generated, specifically targeted at individuals involved in the related roles within the pharmaceutical industry. The survey was sent out to individuals at most of the currently operational pharmaceutical companies in South Africa and involved a combination of multinational organisations and local organisations. The survey data was intended to determine the industry view on the extent of challenges posed to multi-sourcing in the current pharmaceutical environment. The key challenges identified in the literature review were the availability of alternate material, product and intermediate sources; the quality and regulatory requirements and the timelines thereof; the cost implications of the change process; and the disadvantaged state of fully local organisations in comparison to multinational organisations specifically operating in the South African pharmaceutical industry. A total of 90 responses were logged with 74 fully completed surveys. The data used for purposes of this research report was extracted from the fully completed surveys only. The analysis of data was primarily through the use of descriptive statistics and variance testing. The challenges encountered are significant to the local industry, as confirmed by participant responses to the research survey. These challenges may be overcome through the use of networking, the use of agents and increased local pharmaceutical activity. As much as profit is a key commercial driver to the industry, of greater concern for the local market is business continuity and the need for giving the end user a cost effective product that is safe and of good quality. The greatest impact of local pharmaceutical organisations is on the livelihoods of the patients using acute, chronic and life-saving medicines. In a highly competitive generic environment this can be guaranteed through multi-sourcing, making this process a key business practice that should align with the procurement goals of every pharmaceutical organisation operating in the country.