India’s warehousing sector is one of the most profitable and consumer-driven industries. It plays an important role between the manufacturers and ends consumers. KPMG India analysis shows that in 2015 the total warehousing market was approximately 550 million square feet. This is expected to increase at an annual compound growth rate (CAGR), of 8-10 percent until 2020. This will lead to a demand for 800 million square feet.
Jaideep Ghosh is a Partner and Head of Transport and Logistics at KPMG India. He stated that pharma logistics only has five percent of India’s total logistics industry. It is however expected to increase to 7 to 8 percent of the total logistic industry over the next five years.
Manish Panchal is Senior Practice Head – Chemicals & SCM, TATA Strategic Management Group. He says that the Indian warehousing market is valued at Rs 750 billion, excluding inventory holding costs. The industry has been growing at a steady rate of 10 percent annually in recent years. The pharma sector contributes about Rs 50 billion to this figure.
Initiatives of the government
The government has made significant infrastructure investments over the past few years to establish logistics parks in India. Government support is evident in the form of subsidies for pharmaceutical manufacturers in Sikkim, Baddi, and port upgrades in Visakhapatnam by 2020, and four-lane road connectivity enhancement between Chandigarh and Baddi.
Panchal explains the Goods and Services Tax (GST), implementation, and impact on warehouses. He says, “The government has developed policy initiatives that revolve around setting up logistics centers in different parts of India that would also house pharma products.” The current setup may be subject to major changes due to the implementation of GST in the near term.
Ghosh says, “The implementation of GST is also expected to be a positive move for the pharma sector.” Companies will be able to consolidate their operations from a few centralized warehouses in order to distribute goods throughout the country by incorporating sales tax and inter-state taxes into GST.
Pharma logistics is not complete without MHRA approved warehousing UK. It allows pharma companies to deliver high-quality medicines to end consumers. The Indian pharma warehouse segment is fragmented. There are three layers to the Indian pharma distribution chain.
a) Pharma companies that have their own warehouses in the country or region, and which supply products to Carrying and Forwarding Agents in each state to keep within the current Central tax-State tax system
b) Larger companies may have up to three CFAs exclusive, while smaller companies might have several CFAs that carry products from multiple smaller companies
c) The CFAs supply the wholesalers/ distributors of each city/ district who service the retail pharmacies.
Panchal commented on the involvement of the government in the process. He said, “The government’s involvement is in production, distribution, and procurement from the markets through tender operations for various Central or State government medical service organizations.” India has several government-owned warehouses that stock pharma products.
The government also supports companies in setting up pharma hubs/ zones.
What are the regulatory requirements for setting up Indian pharma warehouses?
Ghosh explains that pharmaceutical warehouses must adhere to all regulatory compliances. These regulations focus on product safety, traceability, quality, and security. A few key aspects of a regulatory perspective are GxP compliance, fire safety equipment, quality-trained champions, technology to support traceability, awareness, and expertise of products being handled at-site, and proper disposal of expired stocks. Waste management and many other aspects. In India, logistics spend is 5 to 7 percent of revenue. However, when you consider the delays in clearances, handling, and other inefficiencies, it can rise to 10-12%.
Gulshan Bakhtiani is the Director of Wellness Forever. He has a pharma warehouse that ensures no error product handling and disbursement to Mumbai. He explains the essential elements that must be considered when setting up a pharma warehouse. He explains that there are many licensing, storage, and compliance requirements to set up a pharmacy warehouse. CNF agents or distributors are the two main types of pharma warehousing. Both work on a per-pallet basis and have a primary focus on cost optimization.
He says, “Quality control and process automation are the two main areas to focus on when designing a pharmacy warehouse.” Warehouses can also be reliable by incorporating other factors. Automation is also a great way to reduce costs and stay competitive in this highly regulated and price-sensitive industry.
Ghosh outlines the essential features that must be considered when designing a pharmacy warehouse in order to make it reliable and competitive. These features will make a warehouse more reliable and more compliant to handle goods. If placed well, they could increase the overall competitiveness of logistics providers.
He explains, “When designing a pharmacy warehouse, it’s important to consider the location of consumption and distribution. It is important to ensure that the warehouse’s approach roads, parking spaces, and other elements are in line with GxP requirements. GxP guidelines recommend that appropriate flooring, storage-box designs, handling procedures, temperature monitoring be followed. For example, data loggers should have sufficient docks and material storage racks to store pallets, boxes, and units. This is essential for the success of the pharma warehousing business.
Logistics is a driving force
Rajsons Pharma Director Dinesh Kothari says, “The warehousing sector is one of most important in any industry, for matter as many key players such as DHL, VRL, and DTDC. We have always been able to provide the highest quality service while meeting the needs of various industries around the country and the world. “The warehouse industry has yet to set the standards for micro-level operations.”
Many logistics companies have established pharma zones in their warehouses. It is essential to have a well-structured warehouse, especially with the government’s focus. How do you ensure that the products are of high quality?
Ghosh recommends that the ground team be trained in product knowledge, storage specifications, and handling. The use of technology such as GPS, dataloggers, supervision cameras, and software
– Warehouse Management System and telematics, among others — that can trigger important notifications for people for deviations, would allow you to track, trace and monitor the activities on products during their logistic movements.
The unorganised players dominate the pharma warehouse market. There are many things that need to be done in the future.
Bakhtiani emphasizes that “Warehousing” is an important qualitative factor. It should be based on the demand for high-quality, hi-tech warehouses that are temperature sensitive and specific to each product.
The Indian pharma industry will have more opportunities after 2017, as more patent drugs will be exempted from patent, opening up new export opportunities and creating more opportunities for generic drug makers. This will increase the demand for organized warehouse facilities.
Panchal states, “To be able to serve the global market, in addition, in India, pharma products need climate cGMP warehouses that will reduce product loss in storage and transit for companies. This will help reduce the cost of the drug.