Enterprise Risk Management (ERM): A critical imperative for India's pharma sector

Gurmeet Singh, Procurement Director at Alfa Pharma, highlights how risk-resilient practices can strengthen the Indian pharma sector's global standing

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The Indian pharmaceutical industry is one of the largest globally, known for its significant role in the production of generic drugs, contributing around 20 per cent of the global supply by volume. The industry is crucial in meeting global healthcare needs, especially in producing affordable medicines. However, the sector faces several supply chain challenges, affecting both domestic and international operations. However, the sector faces numerous risks and disruptions, including geopolitical tensions, pandemics, supply chain failures, and regulatory challenges. To address these challenges, there is an emergent need for the sector to develop and embrace a comprehensive Enterprise Risk Management (ERM) framework tailored to the unique needs of Indian pharma companies. Some of the key challenges faced by Indian Pharma are the following:

1. Dependence on China for imports of basic chemicals and input raw materials.

2. Regulatory hurdles and need to comply with USFDA and European Medicine Agency regulations.

3. Logistical bottlenecks, the complex transport network, port congestion, road conditions and inadequate cold chain infrastructure.

4. Quality control issues arising from deviation from the Standard Operating Procedures resulting in product failures and product recalls impacting the company’s reputation and revenues.

5. Supply chain disruptions arising out of unforeseen pandemics, further getting compounded by sudden price increase, contract cancellations and non-availability of critical raw materials.

6. Inadequate technology integration, lower focus on innovation and minimal R&D spend. Indian companies lag in adoption of advanced technologies like block chain, AI in drug discovery and use of robotics.

7. Environmental impact due to pollution from pharmaceutical waste. Many units face a sudden stoppage due to non-compliance and risks thereof.