Patenting growth

Patenting growth

Patenting growth

From ERP solutions to employing sales force automation tools, pharma majors are leaving no stone unturned in getting the most out of IT, says Sushma Naik

SUSHMA NAIK
Posted online: Monday, May 23, 2005 at 0046 hours IST




The $25 billion chemicals and pharmaceuticals sector in India comprises companies that manufacture petrochemicals, organic chemicals, agro-chemicals, bulk drugs and paints & dyes. Indian pharma companies have had to adjust to the changes in patent laws that replace the older system of process patents where patented drugs could be manufactured using a different process. Indian companies can no longer depend on reverse engineering techniques to manufacture drugs.



This has influenced two trends. First, Indian companies can use their low-cost manufacturing operations to offer contract manufacturing facilities to MNCs. Analysts believe that India with its skilled manpower and low cost skills both in research and in manufacturing will attract global players. The second is about creating new business opportunities. Forced out of the generics business, big Indian pharmaceutical companies are left with little option but create new drugs or target the market for blockbuster drugs that are going off patent. An estimated $45 billion worth of drugs are expected to go off patent by 2007 in the US alone.

This has led to the industry spending more on R&D and globalisation initiatives. These are validated by the findings of the survey which highlights that 67 percent of companies in this sector plan to launch new products. What’s interesting is that 33 percent of the companies say that their top IT priority is investments in new technologies. As Indian companies venture into global markets, IT is expected to help pharmaceutical companies comply with regulations.

For FY 2005-06, companies in this segment will spend Rs 6.86 crore compared to Rs 13.07 crore for the average spend of large businesses. Of the total IT spend, organisations in this sector spend 22 percent of their IT budget on enterprise hardware, 16 percent on bandwidth and another 16 percent on enterprise wide applications.

The projected areas of investment show increased allocation toward storage and bandwidth. Investments in storage are expected to increase from 7 to 20 percent of overall IT spend. 67 percent of respondents who have invested in storage have deployed SANs while another 40 percent have opted for NAS. Similarly, investments in bandwidth are expected to increase from 16 percent to 27 percent of the IT spend.

ERP is Pharma’s oxygen

As the pharmaceutical industry follows strict guidelines and regulations, every system needs to be validated as per existing laws and regulations. Complying with regulations means that companies need extensive control over production, stores, QC processes and data. Hence, an ERP system is an absolute necessity for pharmaceutical companies to keep track of data. An ERP system for pharmaceutical companies enables them to comply with regulations such as the 21 CFR Part 11 of the US FDA. The need for an ERP system is even more critical in the pharmaceutical industry than it is in others since products in this sector cannot be defective. Any defect can mar a company’s reputation.

Features like electronic batch record management and multi-location warehouse management system are a necessary part of an ERP system for pharmaceutical firms. Most companies in this sector realise the importance of an ERP system and 89 percent have an ERP system as part of their IT infrastructure. An example of the benefits of using an ERP system can be found at Chennai-based Orchid Chemicals & Pharmaceuticals. The company implemented a SAP solution that has ensured the integration of operations across units. Operational efficiencies have also risen. For instance, capacity utilisation after the ERP implementation has increased to 93 percent from 85 percent, while raw material shortage is down from 8 percent to 5. Additionally, Orchid Pharmaceuticals is now able to respond to customers within a day instead of 10 earlier.

Another pharmaceutical major, Torrent Pharmaceuticals, has deployed SAP and expects to increase its operational efficiency. Says Jyoti Bandopadhyay, Vice President-Information Technology, Torrent Pharmaceuticals, “We expect to increase our operational efficiencies by a significant margin post-deployment of the ERP solution.” The company has integrated the ERP system with its home-grown sales force application. As this represents a huge market, Indian vendors are trying to woo Indian customers with customised ERP packages.

Mobilising the sales force

Sales force automation (SFA) is a key application for pharmaceutical companies with some arming their medical representatives with notebooks. These notebooks are being used to give product representations, and for writing sales records that can be later be uploaded to the company’s central server. This can be seen from the fact that 67 percent of respondents plan to invest in notebooks for FY 2005-06. Another 38 percent plan to invest in PDAs. This is a logical result of automating pharmaceutical sales forces. For example, Dr Reddy’s Laboratories has purchased over 500 handhelds from Acer India as part of a larger project to promote front-end sales force automation. This will enable the company’s sales force to access topical and relevant information on new formulations, check stock availability, submit daily reports from the field and provide market and competitor intelligence. Similarly, Torrent Pharmaceuticals, the flagship company of the Ahmedabad-based Rs 3,000-crore Torrent group, has deployed SAP and integrated it with its sales force automation solution.

The SFA solution caters to a 2,000 strong force that uses it on a daily basis to access relevant data from the ERP system. With the costs of mobile phones dropping significantly, some companies are looking at using these ubiquitous devices for SFA. Sun Pharmaceuticals has deployed a mobile-based sales force automation application from Base Information Management. Sun had a large sales force, which needs to interact with busy physicians. The need of the hour was to keep the sales force updated so that they could be well prepared to answer doctors’ queries. Sun Pharmaceuticals’ sales force can use the mobile SFA application to access corporate information and file activity reports from any Java-enabled mobile phone. Hence, its marketing team does not have to look for a cyber cafe at odd hours or locations to send in call reports.

Encrypted security

All respondents from this sector have invested in anti-virus systems, 85 percent in firewalls and another 50 percent in intrusion detection systems. 27 percent review their security policy once in three months, 13 percent in six months while 33 percent review it once a year. The need for a secure system is more important in the current product regime as a host of firms are involved in drug discovery. While the R&D expenses of each new drug are substantial, only a few generate significant returns.

Consequently, there is a need to keep bringing new drugs to market and ensure that returns generated by these products justify the investments made and make up for the cost of R&D for products that bombed. A data leak can cripple a company’s chances of patenting a drug.