Supply Chain Management of Global Pharmaceutical Companies: A Case Study Approach

• Main Authors: Pasteur Lin, 林俊良
• Other Authors: Anthony F. Han, Ph.D.
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/17131324887663690062

碩士 === 國立交通大學 === 管理學院高階主管管理碩士學程 === 92 === ABSTRACT: Pharmaceutical is a highly globalized industry; the products are sold around the world. The expense of R&D as well as the entry barrier is quite high. The global supply chain in this industry usually is vertically integrated. In the present, Supply Chain Management (SCM) has been applied in a lot of industries, but little literature can be found on SCM in pharmaceutical industry. This is the first study on SCM in pharmaceutical industry in Taiwan. The purpose of this study is to study how SCM applied in pharmaceutical industry using a case study approach. Big pharmaceutical companies are globalized and highly vertically integrated. They integrate R&D, synthesis of active ingredients, manufacture and package products and sales. The period of years from 1950 to 1990 is the Golden Era of Pharmaceutical Industry. They enjoyed great power in medicine market with the protection of patent. They got the great profit margin and high entry barrier. The tariff duty was a barrier of global trading at that period. So they built a lot of under-utilized facilities in different countries. In addition to idle capacity, there were many other problems in the supply chain of pharmaceutical companies. However, those problems were ignored due to high profit margin at that Era. After 1990, the industry environment changed a lot. Owing to increasing R&D expenses, health insurance system, competition of new drugs and generic drugs, the Era of high profit margin is gone. Pharmaceutical companies then must come out solutions for those supply chain problems in order to survive. The case company is a typical world-class pharmaceutical company, and also faced such problems in the late 1990s. Base on this study, the case company applied various initiatives to improve its SCM. The company implemented Sites Management Project, SMP, to redesign the whole global supply chain. They identified the most cost-effective sites and rearranged those sties as global manufacturing centers and shut down those sites which were non-cost-effective. They set up a packaging center in Australia and conduct postponement operation for small markets to reduce the inventory of finished goods and improve the efficiency of big manufacturing center. They implemented a computer system of Global Supply Chain to collect daily information of sales, inventory and forecast and to run Replenishment Planning daily. GSC system reduced the safe stock effectively. The company also implemented the operation of Vendor Managed Inventory, VMI. In addition, they merged the other companies to upgrade their R&D capability and expand their product pipeline. Results also show that the case company had successfully reduced their inventory level, and upgrade the competitive advantage. The success of the case company not only represents good practice in SCM of pharmaceutical industry, but may also provide good lessons or inspirations to companies in other industries.