India's strategic sourcing of pharmaceuticals comes under question

Government intervention has been scrutinized by individuals working in both private and public organizations. Aside from debating whether it's beneficial to a national economy, a market research analyst would assert that changes throughout the distribution process are likely to be affected in some manner or another. When authorities intend to drive down the cost of a certain commodity, those manufacturing and transporting those goods undergo the greatest assessments. 

Imposing new rules 

According to The Economic Times, India's Fertiliser and Chemicals Minister Ananth Kumar informed his fellow officials and the public that he would speak with pharmaceutical companies in an attempt to reduce prices of essential drugs by 25 to 40 percent. Biocon Chairperson and Managing Director Kiran Mazumdar Shaw responded by asserting that the government's intention to bring down costs could discourage drug manufacturers from making medicines that are critical to the country's health care needs. 

"Minister Ananth Kumar's mandate to further reduce drug prices can potentially deter quality drug makers from manufacturing essential drugs," said Shaw on her Twitter page, as quoted by the source. 

She further asserted that Kumar needs to factor in the likelihood of pharmaceutical companies delivering cheap products that are not as effective as the quality items India currently imports. 

Analyzing the procurement process 

In order to understand the predicament the Indian government currently finds itself in, it's appropriate to determine how drug manufacturers allocate resources. Paul Ericksen, a contributor to IndustryWeek, noted that organizations factor the effectiveness of their production techniques and distribution procedures into the final price of the products they're selling. It's a metric dubbed as manufacturing critical-path time (MCT). As Ericksen explained, it charts "the typical amount of calendar time from when a customer creates an order, through the critical-path until the first, single piece of that order is delivered to the customer." 

MCT is essentially a measurement of how well a collection of factories, a single facility or an entire operation responds to unanticipated demand by treating the situation as normal. This means that an organization cannot regard the influx as a "hot" job by giving it priority above all other tasks, nor can it satisfy orders by leveraging pre-build, pre-positioned work in processes or finished item inventory. 

The bottom line is that producers have limited capabilities, and the demands imposed by Minister Kumar and his associates may deter pharmaceutical companies from selling to India. Unless the country's government makes use of a robust supplier relationship management tool, the nation may find difficulty procuring necessary goods.