Supply chain, logistics, and warehousing cost of Indian healthcare sector is 15% higher compared to other nations: Report

GS1 India, a global supply chain standards organization in its latest report titled “Building resilience in India’s post-Covid healthcare supply chain” revealed that the best-in-class pharma companies globally have an inventory period of 64 days as compared to Indian counterparts that have 98 days.

The report further added that the overall supply chain, logistics, and warehousing cost in India is 15 percent higher compared to other countries.

The report is based on a comprehensive study done by GS1 and the Association of Healthcare Providers (India) (AHPI) on the healthcare supply chain in India.

Highlighting the current challenges of the pharmaceutical and medical devices supply chain the report brings to the surface issues of counterfeit medicines and devices, pilferage, wastage, medication errors, and lack of timely availability putting patient safety at risk. Drug counterfeiting has become a problem of a significant magnitude globally.

As per the study, more than 50 percent of Pharma and medical devices manufacturers lose 1 percent of their sales due to expiry and pilferage. Substandard, Spurious, Falsely Labelled, Falsified and Counterfeit (SSFFC) medical products are often designed to appear genuine and unidentifiable from authentic medical products. Their growth was previously a menace, but with the outbreak of the COVID-19 pandemic, it has only escalated manifold.

The study shows that in the current scenario, over 80 percent of the Pharmaceutical and Medical Devices Manufacturers do not have product visibility till the point of care.

A total of 69 percent of survey respondents (Pharma and Medical Devices Manufacturers) cannot implement product recall beyond the distributor due to a lack of end-to-end visibility.

At the center of the COVID crisis, the healthcare sector has seen numerous challenges from managing a multitude of patients affected, to managing the supply chain disruptions. To navigate through the same, the sector had to continuously innovate and come out with new ways of taking care of patients. Supply Chain disruptions amid the pandemic led to drug and device shortages, which had a severe impact on the patients. This, coupled with reported fake and spurious medical products entering the supply chain, made the task of the stakeholders involved all the more challenging.

“As far as healthcare is concerned, the role of standardization in GS1 standards is going to play a vital role. Healthcare is all about outcomes. It is an industry, it also has financial implications, but what’s the most important are the health outcomes. And the health outcomes are dependent a lot on how the care is delivered. One of the biggest problems in modern health care is errors. And that is something which can be resolved very easily by having this standardized technology and standardization in terms of nomenclature and product information,”

Ashutosh Raghuvanshi, MD and CEO, Fortis Healthcare Ltd

“One of the other important elements in healthcare is traceability. The traceability of implants, medication, etc is extremely important and that is something that has to be done long term. If that is integrated into the digital systems of healthcare delivery systems, that would go a long way to improve the outcomes and also make healthcare safer,” he said.

The report notes that the healthcare supply chain requires end-to-end supply chain visibility through digitalization and the use of global standards which facilitate interoperability to build resilience.

Further, all the stakeholders including the government, the regulators, and the industry need to work together to build a resilient healthcare supply chain, the report said.

Over the last five years, India’s healthcare sector has witnessed rapid growth, exhibiting a compounded annual growth rate of 16 percent since 2016. If it continues to grow at the same pace, the industry is expected to reach a market size of US$ 877 billion (₹65 lakh crores) by 2030. As a result of the rapid and sustained growth, the sector augmented jobs and economic development, directly employing 4.7 million people, the report noted.

The report highlights that India’s healthcare supply chain faces five key challenges: fragmentation, complexity, opaqueness, lack of agility, and inefficiency.

Furthermore, the economic and patient safety cost that result from counterfeiting, pilferage, and product recall is also discussed and supplemented with insights gathered through our primary research with industry stakeholders.

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