Tim Wright, Editor, Contract Pharma06.17.21
Prior to 2020, historically low-cost manufacturing, with just-in-time production and logistics, was key to staying competitive. In a time of crisis, however, the consequences of this model have become all too apparent. The leadership team at Dr. Reddy's rose to the challenge by adapting quickly, decisively and without hesitation. Identifying opportunities for improvement in supply and building new digital infrastructure helped the company deliver on their promises to customers and established a framework for the new normal. Vin Colicchio discusses the challenges and solutions of maintaining drug supply during the COVID crisis, and how the pandemic has changed the company's business model.
Contract Pharma: How has Dr. Reddy’s coped with supply chain interference from the pandemic?
Vincent Colicchio: Dr. Reddy’s approached the pandemic with the same patient-centric philosophy to continue supplying products as quickly as possible to avoid any supply gaps. We focused on our two priorities to help communities in India and around the world:
1. Safety of our people and their families
2. Produce and supply medicines to our patients and customers
The situation was to meet the challenge of manufacturing and product supply from Dr. Reddy’s India production sites in addition to our network of contract manufacturing organizations (CMOs) and contract packaging organizations (CPOs)—all affected by COVID-19.
We needed to prevent high absenteeism rates for production staff at our production sites to maximize output. To that end, Dr. Reddy’s ensured that its manufacturing sites utilized constant sanitization procedures for the staff and the facilities to maintain the health and safety of our people. We also arranged shuttle buses to take people back and forth to work and provided meals to people.
Immediate actions taken to ensure supply meant that the outbound logistics played a critical role to ship products from our Dr. Reddy’s India manufacturing sites from Hyderabad to North America. These products were shipped to our third party logistics (3PL) providers in the U.S. and to U.S.-based CPOs. Strong competition for outbound air freight carriers from India to the U.S. meant that Dr. Reddy’s prioritized and secured flights and sea shipments every week. Commercial airlines were converted to cargo freighters once commercial air travel stalled. Our logistics and supply chain teams met every day for several months to coordinate demand and shipment priorities.
The supply planning teams worked with global manufacturing, CMOs and CPOs to increase finished goods product volumes wherever applicable. The procurement teams evaluated all of the active pharmaceutical ingredients (APIs) and key starting aterials (KSMs) volumes which were in stock and for those where full supplies were unavailable. Strategies were developed with our partners to reinforce the supply of these materials.
Dr. Reddy’s also leveraged technology for communication and business operations. This was key for aligning all the teams at all times on any given day. This was through MS teams or Zoom. Flexibility with schedules was also important.
The various cross functional teams worked 24/7 to work throughout the pandemic and this included the launch of several new products throughout 2020.
CP: Have some medications been affected more than others, and what can be done about uneven supplies?
VC: It is important to note that the majority of Dr Reddy’s products were in sufficient supply. The goal during the early days of the pandemic was to stabilize the supply output at our Dr. Reddy’s manufacturing sites and at the CMOs and CPOs to avoid disruptions for our customers. Early on, it was apparent that a few KSMs from China were in short supply. This impacted the manufacturing of a small number of API’s and finished products. Our procurement and external manufacturing teams worked closely with our partners to identify the gaps, implement the action plans to procure the materials and eventually resume production.
The key is to have in place a sufficient supply of APIs and raw materials to meet our production demands. Maintaining a high safety stock of critical APIs and other materials is imperative. Many pharma manufacturers and CMOs maintain only two to three months of API supplies and other critical materials on hand. They need to consider increasing the inventory levels to four to six months. Even though the investment is higher, the ability to meet customer requirements is critical during any supply chain disruption. This will provide companies with a competitive advantage and allow the business to continue.
CP: What’s the outlook for the supply chain until the pandemic ends?
VC: Because of our team’s operational diligence throughout the pandemic, Dr. Reddy’s is in a strong position. Its global supply chain team continues to work with our external partners and internal cross functional teams to drive the manufacturing and product supply for our customers. The outlook remains positive as we improve our capabilities and deliver value to our customers and patients. This done through continuous focus, vigilance and maintaining the patient-centric approach.
CP: To what extent can lessons learned from the disruption be applied to your supply chain management in the future?
VC: The lessons learned are invaluable to manage the supply chain and also to improve it on a sustained basis going forward in the future. Constant communication, coordination and diligence between Dr. Reddy’s Supply Chain Management with our internal cross functional teams along with our many CMOs, CPOs and vendors will always drive the business.
It is critical that Dr. Reddy’s executes its materials management plan and maintains adequate safety stocks of API’s and finished goods to specific pre-determined levels to avoid supply disruptions. For API suppliers, it is critical for them to maintain adequate levels of KSMs and APIs. Alignment with the 3PL is critical so product shipments can be made to the customers on time and in full.
Dr. Reddy’s developed the outbound logistics and product supply strategy and followed the game plan consistently. It is vital to communicate, and over communicate, the action plans and expectations to the teams so everyone is aligned. The use of technology and digital tools is invaluable when conducting business and keeping our people connected during challenging times. The technology will continue to be leveraged to add value.
In conclusion, we will continue to drive excellence across the manufacturing and supply chains to consistently deliver products to meet the needs of our customers and our patients.
Vincent Colicchio has over 30 years of manufacturing, supply chain and operations management experience with increasing responsibility in the pharmaceutical manufacturing industry. Experienced operations executive with the ability to provide leadership and vision to successfully execute supply chain strategies to manufacture, package and distribute high quality pharmaceutical Generics and Rx products; direct production planning, materials management and logistics; coordinate technical transfers for full-scale commercial manufacturing and new product launches; provide commercial support to sales and marketing; supervise the design and completion of engineering and facilities projects; establish and implement budget control; and administer cGMP/Regulatory/EHS compliance regulations to achieve the corporate goals.
Contract Pharma: How has Dr. Reddy’s coped with supply chain interference from the pandemic?
Vincent Colicchio: Dr. Reddy’s approached the pandemic with the same patient-centric philosophy to continue supplying products as quickly as possible to avoid any supply gaps. We focused on our two priorities to help communities in India and around the world:
1. Safety of our people and their families
2. Produce and supply medicines to our patients and customers
The situation was to meet the challenge of manufacturing and product supply from Dr. Reddy’s India production sites in addition to our network of contract manufacturing organizations (CMOs) and contract packaging organizations (CPOs)—all affected by COVID-19.
We needed to prevent high absenteeism rates for production staff at our production sites to maximize output. To that end, Dr. Reddy’s ensured that its manufacturing sites utilized constant sanitization procedures for the staff and the facilities to maintain the health and safety of our people. We also arranged shuttle buses to take people back and forth to work and provided meals to people.
Immediate actions taken to ensure supply meant that the outbound logistics played a critical role to ship products from our Dr. Reddy’s India manufacturing sites from Hyderabad to North America. These products were shipped to our third party logistics (3PL) providers in the U.S. and to U.S.-based CPOs. Strong competition for outbound air freight carriers from India to the U.S. meant that Dr. Reddy’s prioritized and secured flights and sea shipments every week. Commercial airlines were converted to cargo freighters once commercial air travel stalled. Our logistics and supply chain teams met every day for several months to coordinate demand and shipment priorities.
The supply planning teams worked with global manufacturing, CMOs and CPOs to increase finished goods product volumes wherever applicable. The procurement teams evaluated all of the active pharmaceutical ingredients (APIs) and key starting aterials (KSMs) volumes which were in stock and for those where full supplies were unavailable. Strategies were developed with our partners to reinforce the supply of these materials.
Dr. Reddy’s also leveraged technology for communication and business operations. This was key for aligning all the teams at all times on any given day. This was through MS teams or Zoom. Flexibility with schedules was also important.
The various cross functional teams worked 24/7 to work throughout the pandemic and this included the launch of several new products throughout 2020.
CP: Have some medications been affected more than others, and what can be done about uneven supplies?
VC: It is important to note that the majority of Dr Reddy’s products were in sufficient supply. The goal during the early days of the pandemic was to stabilize the supply output at our Dr. Reddy’s manufacturing sites and at the CMOs and CPOs to avoid disruptions for our customers. Early on, it was apparent that a few KSMs from China were in short supply. This impacted the manufacturing of a small number of API’s and finished products. Our procurement and external manufacturing teams worked closely with our partners to identify the gaps, implement the action plans to procure the materials and eventually resume production.
The key is to have in place a sufficient supply of APIs and raw materials to meet our production demands. Maintaining a high safety stock of critical APIs and other materials is imperative. Many pharma manufacturers and CMOs maintain only two to three months of API supplies and other critical materials on hand. They need to consider increasing the inventory levels to four to six months. Even though the investment is higher, the ability to meet customer requirements is critical during any supply chain disruption. This will provide companies with a competitive advantage and allow the business to continue.
CP: What’s the outlook for the supply chain until the pandemic ends?
VC: Because of our team’s operational diligence throughout the pandemic, Dr. Reddy’s is in a strong position. Its global supply chain team continues to work with our external partners and internal cross functional teams to drive the manufacturing and product supply for our customers. The outlook remains positive as we improve our capabilities and deliver value to our customers and patients. This done through continuous focus, vigilance and maintaining the patient-centric approach.
CP: To what extent can lessons learned from the disruption be applied to your supply chain management in the future?
VC: The lessons learned are invaluable to manage the supply chain and also to improve it on a sustained basis going forward in the future. Constant communication, coordination and diligence between Dr. Reddy’s Supply Chain Management with our internal cross functional teams along with our many CMOs, CPOs and vendors will always drive the business.
It is critical that Dr. Reddy’s executes its materials management plan and maintains adequate safety stocks of API’s and finished goods to specific pre-determined levels to avoid supply disruptions. For API suppliers, it is critical for them to maintain adequate levels of KSMs and APIs. Alignment with the 3PL is critical so product shipments can be made to the customers on time and in full.
Dr. Reddy’s developed the outbound logistics and product supply strategy and followed the game plan consistently. It is vital to communicate, and over communicate, the action plans and expectations to the teams so everyone is aligned. The use of technology and digital tools is invaluable when conducting business and keeping our people connected during challenging times. The technology will continue to be leveraged to add value.
In conclusion, we will continue to drive excellence across the manufacturing and supply chains to consistently deliver products to meet the needs of our customers and our patients.
