BY

GROUP LEADER:
Nadiya Rashid

7539

GROUP MEMBERS:
Faiza Farooq

5212

Hammad Amin

5430

Hina Yousuf

5799

Acknowledgment
We would like to thank many people specially our teacher DR. ROSHAN
SHIEKH. He has taught us all priceless lessons in hard work, confidence,
and success.Thanks also to Mr.Rizwan (Manager Supply Chain) , Mr.Naseer
Zia (Head Of Business Development) and Tariq Nawab (Materials Manager)
for their cooperation to provide all the necessary information regarding
supply chain of Novartis. Thanks also to the other Public. We are grateful for
their patience and support.

KEY WORDS

NOVARTIS

PHARAMACEUTICAL COMPANY

SUPPLY CHAIN MANGEMENT

SCOR MODEL

ABSTRACT
As part of our introductory SUPPLY CHAIN MANAGEMENT course, a study has been
undertaken of the Novartis Pakistan pharmaceuticals to identify the supply chain
processes, that involve Their company profile, logistics network and their score model
and to make recommendations on how the company could make a better use of its
resources in order to provide the quality products on right time, right location and the
right quantity to the end customer. .The primary purpose of the study was to make an
analysis of the company, looking at its relevance to the health sector, including
production processes, pricing and turnover performance, and export performance. The
study also looks at the bottlenecks affecting the Novartis pharmaceutical. The study
presents a number of recommendations that could be implemented for the Novartis
supply chain process. .

Novartis was created in 1996 from the merger of Ciba-Geigy and Sandoz Laboratories,
both Swiss companies with long histories. At the time it was said to be the largest
corporate merger in history after the merger Novartis reorganized its activities, and spun
out its chemicals activities as Ciba Specialty Chemicals. In 2003, Novartis created
Sandoz, a subsidiary that bundles its generic drug production, reusing the brand of one of
its predecessor companies. On April 20, 2006 Novartis acquired the California-based
Chiron Corporation. Chiron was formerly divided into three units: Chiron Vaccines and
Chiron Blood Testing, which now combine to form Novartis Vaccines and Diagnostics,
and Chiron Biopharmaceuticals, to be integrated into Novartis Pharmaceuticals. The
ongoing Basel Campus Project has the aim to transform the St. Johann site - Novartis
headquarters in Basel - "from an industrial complex to a place of innovation, knowledge
and encounter".

With more than 10000 associates and operations in 140 countries, Novartis offers a wide
range of healthcare products through its Pharmaceuticals, Vaccines and Diagnostics,
Sandoz and Consumer Health divisions.
The portfolio of NOVARTIS can be described as follows:
Pharmaceuticals: Innovative medicines with improved efficacy and fewer side-effects
Vaccines and Diagnostics: Products to fight vaccine-preventable viral and bacterial
diseases, as well as diagnostic tools
Sandoz: Affordable high-quality generic treatment options following the expiry of
patents

Pharmaceuticals
The Pharmaceuticals division of Novartis is recognized worldwide for the innovative
medicines it provides to patients, physicians and healthcare organizations.
This growing business develops and markets patent protected prescription drugs for
important health needs.
Novartis products are concentrated in major therapeutic areas:
Cardiovascular & Metabolism
Oncology & Hematology
Neuroscience
Respiratory
Infectious Diseases, Transplantation & Immunology (IDTI)
Ophthalmics, Dermatology, Gastrointestinal, Urinary (ODGU)
Arthritis & Bone
Novartis current product portfolio includes more than 45 key marketed products, many of
which are leaders in their respective therapeutic areas. The product development pipeline
involves nearly 140 projectsincluding potential new products as well as potential new
indications or formulations for existing productsin various stages of clinical
development. Industry experts have ranked Novartis as a leader for having one of the best
combinations of organic growth, pipeline opportunities, and low patent-risk exposure
among major companies in the pharmaceuticals industry.

Vaccines and Diagnostics

The Vaccines and Diagnostics division is a leader in providing products to fight more
than 20 vaccine-preventable viral and bacterial diseases, as well as in sophisticated
equipment used to test blood donations for infections. This new division was formed as a
new strategic growth platform following the acquisition of Chiron Corporation in 2006.
The portfolio includes more than 20 vaccines used to prevent most life-threatening viral
and bacterial infections that were once major public health issues.
These

products

include

vaccines

against

meningococcal

infections,

required

immunizations against childhood diseases, and vaccines to protect travelers against

diseases endemic to certain regions. Our division consists of two business units:

Novartis Vaccines, focused on creating innovative products to prevent influenza,

meningitis and other diseases

Novartis blood testing business, which retains the Chiron name, dedicated to
preventing the spread of infectious diseases through novel blood-screening tools

Sandoz
Sandoz is a leading global supplier of generic pharmaceuticals. It develop, produce and
market high-quality medicines that compete with chemically identical, off-patent branded
drugs, often reducing the costs of treatment. Through Sandoz, Novartis is the only major
pharmaceutical company to have leadership positions in both patented prescription drugs
and generic pharmaceuticals. It offer more than 840 compounds in over 5000 forms in
110 countries. Significant product groups include antibiotics, treatments for central
nervous system disorders, gastrointestinal medicines, cardiovascular treatments and
hormone therapies. Novartis offer a wide range of products covering many steps in the
drug production process: basic molecules, intermediates, active
substances and finished drugs. We are an important biotechnological competence center
within Novartis due to our many years of manufacturing experience in this area.
Our name stands for three related values: speed and simplicity, customer and quality
focus, trust and mutual respect. At the same time, we make every effort to stay close to
our customers in local markets with decentralized commercial operations. Ranked as the
second-largest generics company in the world based on sales, we have completed the
integration of a series of targeted acquisitions to strengthen our product portfolio,
improve technological expertise and expand our geographic presence. The acquisitions of
Hexal and Eon Labs was completed in mid-2005.

Novartis Mission
We want to discover, develop and successfully market innovative products to
prevent and cure diseases, to ease suffering and to enhance the quality of life.
We also want to provide a shareholder return that reflects
Outstanding performance and to adequately reward those who invest ideas
and work in our company.

Commitment to Patients
We endorse the right to health. This is our primary responsibility. Novartis has pioneered
an array of programs to enhance both affordability and access to treatment in developed
and developing countries. In 2006, our contributions valued at USD 755 million reached
33.6 million patients globally
Commitment to Ethical Business Conduct
Strong ethical standards are essential to our drive for top performance. We have
established a high-integrity corporate culture based on trust, respect and compliance with
legal regulations. We do so because we are convinced it is the right thing to doand is key
to our business success.
Commitment to Our People and Communities
We endeavor to ensure the safety and promote the health, careers, diversity and
livelihoods of our people. We also strive to be a good neighbor in the communities where
our associates and their families live and work.
Commitment to Environmental Care
We have a clear responsibility to ensure we protect the environment by operating to the
highest standards. We adopt a risk-based approach and focus on minimizing our use of
natural resources, cutting our energy consumption and emissions, and preventing active
ingredients from entering the environment.

10

SUPPLY CHAIN MISSION STATEMENT

Every second brings our customer closer to us because we know the value of time, life
and business. We want to bring our customers closer to us by providing value through our
products and services, committing ourselves to providing the quality, variety and
convenience they expect.

11

Location of plant/ Warehouses & retailers in Pakistan:

Factory
Factory of Novartis is located at JAMSHORO. This factory is not only catering the
demand of Pakistan but also exporting to other countries like Afghanistan and
Philippines.
Business Unit:
Address:

Phone:
Fax:
Site Address:

Consumer Health
Novartis Pharma (Pakistan) Limited
P.O. Box 100 & 7247
Karachi 74000
PAKISTAN
+92 21 2313386to90
+92 21 2311009
Novartis Pharma (Pakistan) Limited
15 West Wharf
Karachi 74000

Regional offices:
Novartis has following regional offices nationwide

Quetta

Karachi

Hyderabad

Sakkar

Peshawar

Islamabad

Lahore

Multan

Faisalabad

Warehouses:
12

Novartis has three warehouses in Pakistan which are located at:

Karachi -West Wharf

Jamshoro

Hyderabad

The Karachi warehouse is use to store raw material which directly come from other
countries or thorough local vendors.
Whereas Hyderabad warehouse is use to store material if they are facing some kind of
storage problem or incase of any problem in the mode of transportation.
They cannot directly send the material which comes through shipment but store them
until it meet the demand for the production .that usually save their transportation cost.

The Karachi warehouse is located at WEST WHARF where it manages all the flow of
Raw material from port to the jamshoro. The Hyderabad warehouse is used to store
13

additional amount of finished good products or raw material. Whereas the warehouse
located at jamshoro is the factory based warehouse which stores all the finished goods
products and Raw Material as per production requirement.
Parazelsus owned 9 warehouses allover Pakistan. The warehouse locations are not owned
by Parazelsus but are hired on rental basis. Most of these depots also comprise of the
office premises for Novartis personnel.
Generally raw materials, finished products, packaging materials and expired or rejected
goods are stored in separate storage areas or separate compartments within a combined
warehouse. Temperature sensitive raw materials are stored in a separate cold storage
room, maintained at the desirable temperature.

Retailers
They have different retailer in different cities. They didnt have much information about
retailer because they are under the control of parazelsus which is not in the control of
Novartis they do their work separately .parazelsus is only working for Novartis .their
distribution channels are divided into six cities and their total customer coverage 25431
of which 53 % are their retailer who sell their products.

Marketing Strategies
14

Strategies used by Novartis in introduction of their new products are as follows. Typically
pharmaceuticals companies dont use advertisement in their product promotion. For
promotions and marketing of their products, Novartis use three types of marketing
strategies.

Medical representatives

Symposium

Seminars

They usually have their sales force called medical representatives who go to different
clinics and hospitals, tell the doctors about their product and motivate them to prescribe
the Novartis products.
They arrange seminars and symposiums to let the people aware about the diseases and
what their product offer to them in fighting against those diseases. They also sponsors
different health related programs.

AN OVERVIEW OF PAKISTAN PHARMACEUTICAL SECTOR

15

Pharmaceutical products in Pakistan range from all kinds of vitamins, anti-allergies, and
Alkaloids to ointments and cough syrups. Around 125 categories of medicines produced in
According to the annual government report the growth in the pharmaceutical sector of
Pakistan in percentage was:

Market growth in volume is14% per year

A majority of Pakistans leading pharmaceutical companies have acquired ISO quality

Certifications, demonstrating their quality standards and vision. Around 15 new productions
Facilities are being established to comply with FDA standards. All this reflects that the
national pharmaceutical companies are aiming at highly regulated markets, such as the
United States and Europe.

Significance of the pharmaceutical industry to Pakistan economy

Local production US$1 billion

Local consumption US$1 billion

Number of manufacturing units 316

Share of MNCs in the pharmaceutical industry 47%

Share of local companies 53%

36 International Trade Centre

Global sales of pharmaceuticals US$317 billion

Pakistans share in the global pharmaceutical market 0.31%

Increase in exports of pharmaceuticals 17% per year

Profile of pharmaceutical industries

16

Number of units 316

Investment PKR 21 billion (US$350m)

Import of pharmaceuticals US$275m (2003-04)

Export of pharmaceuticals US$50m (2003-04)

Following is the list of top ten pharmaceutical companies in Pakistan

1. GSK
2. Pfizer
3. Abbott Laboratories (Pakistan) Ltd
4. Novartis Pharma (Pakistan) Ltd
5. Merck Marker (Pvt.) Ltd
6. Roche Pharmaceuticals
7. Bristol-Myers Squibb
8. Pharmacia and Upjohn (Pvt.) Ltd
9. Parke-Davis
10. Wyeth Pakistan Ltd

17

ORGANIZATION STRUCTURE OF NOVARTIS PAKISTAN

Formal Structure:
Novartis Pakistan has a formal organization structure where Head is the person in charge
of Novartis Pakistan who actually acts as a CEO. There are two main departments, one is
the supply chain department and other is the technical operations department. The head of
these departments are called General Managers. Under operations departments there are
sub departments of solid, liquid, injectibles, quality control, warehouses etc. Supply chain
is further divided into sub departments of Procurement and material management. The
structure overall is centralized. Each decision involves a lot of paper work and
documentation and everything has first to be approved by the General managers.
The general hierarchy of Novartis in Karachi is as follows:
1. CEO
2. General Manager (Operations and supply chain)
3. Manager (Solid, Liquid etc)
4. Manager procurement and Material management.
The sales structure for Karachi is as follows:
Regional sales manager
Sales manager

18

.
Head
Head technical
operations
Head
Eng.
Head solid

Supply
chain
manager

Head procurement

Head liquid

Head semisolid
Head injection
Head QC.

Head warehouse

19

Head MM

Logistics Network
Distribution arrangements:
For distribution of its products, Novartis has a separate entity called parazelsus.
Parazelsus distribution network is made up of two components: warehouses that stock the
pharmaceuticals at various points around the country and the trucks that move the stock
where and when it is needed. The table below is the statistical view of the distribution
network of Parazelsus.

National Statistics
Population

150 Million

# of pharmacies (approx)

35,000

Hospitals/Institution (approx)

1000

Distribution Key Figures

Warehouses
(in all major cities of Pakistan)

Pharmacies covered (approx)

Hospitals/Institution
Towns Covered
Order Bookers
Calls / Day
Invoices per day
Sales per day
Vans

25,000
740
962
221
35 40
2,700
PKR 12.4 mio (USD 0.21 mio)
84

20

INBOUND LOGISTICS NETWORK

INBOUND
LOGISTICS
150
km

JAMSHORO

PORT
(Air/Sea)

VENDOR

WEST
WHARF
WAREHOUS
E

HYDERABA
D
WAREHOUS
E

F
A
C
T
O
R
Y

VENDOR
VENDOR
VENDOR

Hauling approx. 3500 tons annually

The inbound Logistics network of Novartis can be described in following steps.

21

The raw material arrived at port via sea and air which normally transferred to the
factory located at jamshoro.

Sometimes the raw material is of lesser quantity so its not feasible for Novartis to
send it to the factory because it would result in higher transportation cost. To
make sure that their raw material would not get damaged they store it in Karachi
warehouse.

They wait for other shipment of raw material and than collectively send the
previous and the new raw material either to the Hyderabad warehouse or to the
factory.

The vendors can also ship it from Karachi warehouse to Hyderabad depending
upon the situation. If enough raw materials are available in plant warehouse, they
store excess raw material in Hyderabad warehouse.

From Hyderabad warehouse the vendor send it to factory depending upon the
requisition of raw material.

22

Outbound Logistics
Outbound Logistics
EXPORT
TO
PHILIPPIN
ES

EXPORT TO
AFGHANISTA
N

FS
D

EXPORT TO
AFGHANISTA
N

QSD

Dispatch approx. 66.0 mio

packs annually

PSD

LKR

ISD
JHE
GUJ
LSD

MSD
SSD

Premier Depots
10.
NWB
Nawabshah
11.
MIR

NWB
MIR
JAMSHORO

Parazelsus/Premier
Depots
1.
KSD
Karachi
2.
HSD
Hyderabad
3.
SSD
Sukkur
4.
MSD
Multan
5.
FSD
Faisalabad
6.
LSD
Lahore
7.
ISD
Islamabad
8.
PSD
Peshawar
9.
QSD
Quetta

HSD

KSD

Mirpurkhas
12.
LAR
Larkana
13.
GUJ
Gujranwala
14.
JHE
Jehlum

The outbound logistics of Novartis can be described in following steps.

The parazelsus has 11 warehouses and premier depots all over Pakistan which are
used for the effective and smooth supply of products all over the country.

The finished goods are transported all across the country form the Jamshoro plant
and warehouse.

Novartis also export the finished goods to Afghanistan and Philippines.

Philippines is their major export market. Shipment of product takes place from the
Hyderabad warehouse via Karachi airport.

The total dispatch is approximately 66 million annually.

The export to Afghanistan takes places from the Quetta and Peshawar route.

23

SUPPLY CHAIN ORGANIZATION CHART

Head of
Supply Chain

Materials
Manager

Factory
Warehouse
Manager

WW
Warehouse
Manager

Supply Chain
24

Procurement
Manager

Vacant

Doctors
Prescription Order

Hyderabad warehouse

Karachi warehouse

Wholesaler

Emergency
Only
Novartis
Other Hospitals
Hospital Pharmacy

R
x

Retail Pharmacies
Patient

SUPPLY CHAIN

25

Wholesaler

Wholesaler

International
and Local
vendors

Raw material import

Karachi port

Local vendors

Karachi warehouse
Bottle
necks

Hyderabad
warehouse
Production

Finished Goods Ware House

(Imported + Locally Manufactured
Goods)
100%%

Locations / Depots (9)

53%
Retail /
Chain
Pharmacy

32%

8%

7%

Wholesalers

Dispensing
Doctors

100%

Distributors

6%

2%

Retail /
Chain
Pharmacy

Hospitals

100%

100%

Consumer / Patients

26

Others
(Institutio
ns)
100%

This is the overall supply chain process of Novartis pharmaceutical company .this shows
how finished good after passing through production process can be deliver to their final
customers. The distributors which are parazelsus can also deliver product to hospital for
their pharmacy and other institutions
The warehouse locations are not owned by Parazelsus but are hired on rental basis. Most
of these depots also comprise of the office premises for Novartis personnel.
We can describe the supply chain process of NOVARTIS in following steps.
1. The Raw material arrived at Karachi port via sea-route and than directly
transferred to the plant at jamshoro for the production
2. If the Raw material is lesser in quantity than it is deposited in Karachi warehouse
and than either shifted to Hyderabad warehouse or at manufacturing plant.
3. Than this raw material is used in the production of medicines and other products
4. The finished good is than moved to the plant warehouse or to Hyderabad
warehouse depend upon the quantity.
5. Now after Finished goods the parazelsus take the charge and moved the products
to the 9 different locations and depots.
6. From these 9 locations and depots 53% of the products are distributed through
retail/Chain pharmacy, 32% to wholesalers, 7% to dispensing doctors and 85
through distributors.
7. From wholesalers it moved 100% to the retail/chain pharmacist and from
distributors it moved to hospitals and other institutions.
8. From all these distribution channels the end product reaches to the end customer.

27

This process flow diagram shows their exchange process as well as the documentation
process of their goods

First they receive orders

Then they prepare invoicing

In third step goods segregation takes place

Then the segregated good will be loaded into vans to deliver into market place

Finally they receive cash in return of goods.

28

SCOR Model

29

PLAN

30

Planning is the most important part in production as well as success of product in

Novartis the supply chain department organizes meetings on weekly and monthly basis
where different teams are assigned their tasks and they review that whether the tasks or
previous goals were achieved or not. In Novartis, they usually make a plan for 1 month
and for the proper accomplishment of goals and meeting targets they arrange weekly
production meetings. Usually athe accomplishment percentage of targets and goals is less
than 100% but they strive their best to get the maximum achievable targets.
We can describe the planning process in following steps.

2 years plan segregate

on monthly basis

Then it is sub
divided into weekly
schedule

Schedule forecast for

week

Current schedule

Tentative schedule

This process is base on marketing plan which they develop through past years sales as
well as current demand.

31

Procurement process:

Marketing demand
MPS plan according to
Forecast

Imports drug demand

forward to
procurement
Then local MPS demand
forecast

MATERIAL MANAGEMENT FUNCTIONAL FLOW CHART

Marketing
strategy

Market
research

Budgetary
planning

Information flow
Material flow
Production
management

Sales forecast

Product requirement
planning

Production
schedule

Material requirement
planning

Inventory planning
control

Procurement

Quality
assurance

Vendor

Production

RM/PM
Warehouse

FG
warehouse

Distribution

Sales to
customer

Sales
analysis

32

Material management functional flow is not stand alone activity, it is tightly integrated
with Market Demand and sales forecast.

Production schedule is fully dependent on market demand and budgetary planning

Product requirement planning is depend on sales forecast and then based on that
planning MRP department may able to create production schedule.

Material requirement planning for that production schedule is another parallel activity
which is performs by MRP department.

MRP department forward their material requirement to procurement so that

procurement can make sure the availability of required material on right time from
appropriate vendors. The integration of this information reduces the unnecessary
delays and lead time.

When raw material comes, its received in warehouse for inspection and approved
material forward to production as per requirement.

Finally, Finished Goods subsequent to quality assurance, stored in FG warehouse and

ready for distribution where Parazelsus start distribution through out in country and at
the end, product is available for end user.

Sales analysis helps production management to forecast the sales for next year.

Whole Cycle is repeated in the similar approach.

33

Make

34

Process order

Manufacture dispensing
(Issue of all raw materials & packaging
Material)

Manufacturing

Compensation/capsule
filling
Coating
(Tablets coating)

Final packaging

Final release by QA

Transferring to different
depots and F.G

WWAREwarehouses
Major equipment used for production of different pharmaceutical products include:

Mixing & Blending Vessels

Granulating machines

Drying Chambers

Autoclaves and Ovens

Tablets Compression Machines

Tablets Coating Machines

Capsule Manufacturing Machines

Encapsulation Machines

A variety of purpose-built automatic or semiautomatic filling machines forliquids in bottles,

liquids in ampoules vials, powders in bottles and creams &ointments in collapsible tubes
A variety of purpose-built automatic Printing Machines
35

Reactor

Separation

Extraction
Decanting
Centrifugation

Crystallization
Filtration
Purification

Drying

The Make process of Novartis can be described as follows

Raw materials or ingredients, including solvents, used to produce the intermediate or bulk
substances are charged into the reactor vessel. Once the reactor vessels are charged with
the raw materials, the reaction takes place.
Several separation mechanisms are employed by the Novartis including extraction,
decanting, centrifugation, and filtration. These mechanisms may be employed jointly or
individually, in multiple stages, to separate the intermediate or bulk substance from the
reaction solution and to remove impurities
After the reaction takes place, the intermediate or final bulk substance (which is usually
in solid form) can be separated from the reaction solution by crystallization.
Crystallization is one of the most common separation techniques and is often used alone
or in combination with one or more of the separation techniques described above. In
crystallization, a supersaturated solution is created in which crystals of the desired
compound are formed. Super saturation depends on the solubility of the desired
36

compound. If the compounds solubility increases with temperature, super saturation can
be achieved by cooling the solution.
Once the intermediate or the bulk substance has been separated, it may need to be
purified. In vitamin production, for example, there are at least three to four purification
steps. Purification typically is achieved through additional separation steps such as those
described above. Purification is often achieved through recrystallization.
The final step in the chemical synthesis process is drying of the intermediate or final bulk
substance. Drying is done by evaporating the solvents from the solids.

37

Sourcing

38

Raw materials for medicines include active pharmaceutical ingredients, excipients (like
sugar and lactose) and solvents (such as ethylene chloride, dichloride ethane, ethyl
acetate and methanol). Most of the requirements of raw materials are met through import.
Basic raw material used in the manufacturing of empty capsules is pharmaceutical grade
gelatin. Gelatin is a mixture of water-soluble proteins derived primarily from collagen,
which is a naturally occurring protein. Other major materials used in the capsule
manufacturing are dyes, dye -aids, preservatives and glycerin. Variety of packaging
materials like glass bottles, blisters, plastic caps, aluminum seals, polythene/paper bags,
cartons, carton partitions, labels and shrink wrappers are also used by pharmaceutical
industries.

They use FEFO method (first expiry first out)

Sourcing is taken place though shipment as well as through airways

Shipment process takes 5 month and carry large amount of raw material

Through air ways it take 60 days but carry less as compare to shipment

According to them ship is more cost effective for them

frequently the raw material is directly transferred to jamshoro and excess material is
stored in Karachi warehouse

Main imports are from Europe, Switzerland, Germany, Italy, and India.

Major portion of raw material are imported from the countries above.

And their vendors are also located in Karachi, Hyderabad.

Basic raw mat. And packaging mat. Is also imported through other countries almost
95 % because basic manufacturing of these materials are not in Pakistan

39

Deliver

40

Deliver process is take place through parazelsus which is separate company and the
distribution system is also discuss in parazelsus slides.
Parazelsus
Premier
These are the two distribution networks work for Novartis
In starting the distribution system was controlled by Novartis it self form jan. This year
they handed the distribution department to parazelsus

Distribution Operation Overview

Customers Coverage (25,431)

Trade Customers

22,310

Retailers

20,299

Whole Salers

2,011

Others

3,121

Doctors

,363

Hospitals

503

Institutions

255

41

Business Contribution in Total Sales

Trade

85.00

Retailers

53.00

Whole Salers

32.00

Others

15.00

Doctors

7.00

Hospitals

2.00

Institutions

6.00

W. Sale / Retail Ratio in Trade Sales

62.35
37.65

Retailers
Whole Salers

42

43

Return

44

There are three types of return in Novartis supply chain.

Return of product if expired

Return of Product in fault of production process

Return of product due to defective raw material

The products are to be returned to NOVARTIS if they reach to their expiry period. To
safeguard the health and to avoid any severe condition the expiry products can be sent
back to Novartis.
Novartis mainly import raw material form different countries. Sometimes this raw
material has been found defective in quality assurance testing and this raw material is
sent back.
Due to the mishandling of raw material the addition or lesser quantity of certain raw
material in production process would force the company to callback its batch.

45

PROBLEMS
Bottle Necks
Mechanical problems
Novartis has an older plant, due to which not only the cost of maintenance increases but
the production process also slows down.
Some of the maintenance problems are

Machine break downs

Maintenance break downs

Problems with raw material.

Novartis mainly import raw material from Switzerland and India. Most of the time the
shipment didnt reach on time which hurt the production of company. Another problem is
that most of the drivers put grains and wheat with raw material that can damage not only
the raw material but also effect the production process.
Severe limitation of storage space.
The one and the most important factor is the lesser number of warehouses. Novartis is
facing the problem of limited storage space. They have 3 warehouses located in Karachi,
Hyderabad and Jamshoro which are not enough to store the products. So they have to
either rent more warehouses or built warehouses in order to solve this problem.

46

Bullwhip Effect
Fluctuation in the demand of medicine takes place only in the month season of winter and
summer where as in spring there is no fluctuation like summer and winter .In spring the
demand become constant as per their forecast. In summer the demand of calcium increase
by 4 times and the demand for kafkol rises 4 times in winter.
High cost of supply due to low forecast accuracy
Another problem that Novartis is currently facing is of lack of coordination between the
planning and the production departments. In most of the cases the forecast was either
much higher or lower than the actual demand which in turns increases the cost of supply.

High logistics costs due to remoteness of factory and space constraints.

The plant of Novartis is located in interior Sindh at JAMSHORO. On asking the question
from us that why the plant is located in interior remote area the supply chain manager
respond that its due to some governmental restrictions on us. Despite of any reasons
remoteness of factory and limited storage space definitely results in baring high logistics
cost to the Novartis.

47

Recommendations
After detailed view of the Novartis Supply chain management and other departments
associated with it, we have following recommendations that can help Novartis to improve
their system.
Talented and skillful employees required
Novartis has to set the level of skills required by its personnel. One thing that is hurting
pharmaceutical sector is the lack of skills and the expertise require in the relevant fields.
Novartis has to search for the talent and benchmark the skills to be set by them.
Remove Capacity constraints in Production.
Another problem we observe in Novartis supply chain is the capacity constraints. They
have to remove the bottlenecks in their production process to maximize the capacity in
their production.
New machineries required
Novartis has an older plant which in results not only affecting the production of the
pharmaceutical products but in financial terms it increasing the maintenance cost.
Increase number of warehouses
As they have limited number of warehouses so it is suggested that they should increases
their ware houses

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Lack of integration of supply chain functions.

The supply chain functions should be integrated in order for effective and smooth supply
chain process. The planning and production department should coordinate in order to
meet the demand accurately and efficiently.
Wind fall opportunities dying down in Urban markets- look out at rural markets
Novartis is mainly focusing on urban areas although its true that major part of business
comes through the urban route but infact the rural markets cant be neglected. The other
companies like ABBOT and GSK are enjoying the major part in urban market and day by
day the opportunities are dying down. Novartis has an opportunity to capture the rural
markets like many NGOS are opening hospitals in rural areas of NWFP, Punjab and
Sindh.

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