Report reveals solutions to boost agility in US generic drug market

New Delhi: Vector Consulting Group has released an in-depth report analyzing recent industry developments and offering actionable insights for pharmaceutical companies.

The report focuses on enhancing agility and cost efficiency in response to the dynamic challenges posed by the US generic drug market.

The Pharma Vision report provides comprehensive solutions designed to help companies amplify operational agility, ensure perpetual quality readiness, and build rapid research and development (R&D) capabilities. By adopting these strategies, pharmaceutical firms can enhance competitiveness and ensure long-term profitability.

Pharmaceutical companies are encouraged to transition from traditional forecast-based inventory models to dynamic, constraint-based production systems. This shift aims to improve responsiveness to market changes, reducing lead times by 25%-50% and inventory levels by 20%-40%. Integrating active pharmaceutical ingredient (API) suppliers into the supply chain with visibility and collaboration strategies further optimizes operations, leading to significant cost savings and efficiency improvements.

Ensuring perpetual quality readiness involves embedding regulatory compliance as a daily operational norm rather than merely preparing for inspections. Standardizing quality practices across all manufacturing plants and conducting rigorous root cause analysis (RCA) and preventive measures can reduce invalid Out of Specification (OOS) incidents by more than 70% and lab incidents by 50%-70%. This proactive approach mitigates compliance risks and enhances operational efficiency.

To build rapid R&D capabilities, the report suggests adopting project flow management principles and incorporating objective capacity definitions to stagger project introductions without overburdening the system. Implementing agile planning cycles, along with practices like ‘full kitting’ and short burst planning cycles focused on daily execution, can reduce R&D lead times by 30%-50% and increase project output by 50%.

The Indian pharmaceutical sector heavily relies on the US generic market, valued at approximately $86.9 billion. This market faces continuous price erosion despite its size due to intensified competition. Recently, some drugs have experienced price increases due to supply shortages, complicating market trend forecasting and placing companies in a strategic dilemma: prioritising cost-cutting to maintain profitability or investing in growth opportunities for emerging market dynamics.

Dr. Shelja Jose Kuruvilla, Head of Knowledge and Research at Vector Consulting Group, commented, “Indian companies with a significant presence in the US generic drug market often find themselves uncomfortably oscillating between cost-cutting and growth strategies. This dilemma arises because the market experiences periods of margin pressure alongside occasional opportunities for price escalations due to supply scarcity. Currently, certain drugs are defying the general trend of price erosion by increasing in price due to supply shortages. This caught some firms off guard, as they had been trimming capacity in their plants, R&D, QC, and supply chain to cut costs in response to margin pressures. Conversely, failure to optimize costs may lead to profitability issues. The solution lies in developing the ability to amplify supply chain agility significantly, rather than incrementally, while also enhancing cost efficiency.”