The Germany-based DHL, the world's leading logistic company, is considering to set up its life sciences supply chain business in India to offer logistics services from manufacturers to retail shops by eliminating most other intermediaries in the current distribution chain, it is learnt.
The company has been in talks with the major MNCs for last three years, informs sources from MNCs in India. DHL is expected to announce the new business under the DHL Life Sciences and Healthcare division early next year, according to a senior official with a DHL arm. The company expects to launch the business with contracts with MNCs and then rope in the Indian companies to the chain.
Talks with the pharma companies are on an advanced stage and DHL is designing a strategy as against the current distribution system and plans are to follow the supply chain system introduced in other countries like Australia. In Australia, DHL's services are claimed to be ensuring reach of the drug from the manufacturer to the customers overnight.
However, the plans and the financial matters are yet to be finalised. Bringing in such a system in India will be a big task including the infrastructure development, said the DHL source. The company will rope in Blue Dart - its' Indian courier service arm - to deliver the product to the retailers.
Of course, the pharma supply chain experts in India are positive about the new development, but does not score out the challenges in implementation. They also recall the fate of Zeullig Pharma, one of the major Asian pharma distributor's failed attempts to launch a supply chain in India, owing to the strong opposition from the pharma traders' organisation - All India Organisation Chemists and Distributors (AIOCD).
"On one side the DHL's idea is encouraging, as this is a very good supply chain initiative in the pharmaceutical segment and will benefit the manufacturers especially those with cold chain products, but on the other side we expect a lot of challenges in getting this plan up and running," said B Ashok, associate director, supply chain and manufacturing, Eli Lilly and Company (India) Pvt Ltd.
"This is definitely a positive move from the DHL. But, considering the limited experience of DHL when compared to the MNC distributors trying to put their feet in the country, the challenge appears to be quite tough for the company. And this is at a time when the distributors' body in India is on its way to become a corporate distributor. However, we can see more overseas firms entering into India with similar ideas in future too, that's what I feel," says Rajendra Pratap Gupta, an expert in pharma retailing, based in Mumbai.
Another expert from a MNC, on condition of anonymity, also pointed out doubts about the current reach and coordination of DHL in India. Even though the company has its presence in prominent cities, the reach to rural area is minimal and has to be enhanced in advance.
However, DHL is in process of increasing its focus in Asia Pacific logistics market and has lately announced US$ 15 million project to set up three Life Science Competence Centres - two in India and one in Singapore. Recently, the company has organised a meeting with many of the pharma companies in India collecting their views on the opportunities and challenges in the supply chain management. The company perceives that there is a huge opportunity in pharma logistics business in India, as the domestic demand for drug consumption in the country is expected to grow at a compound annual growth rate of more than 13 per cent to reach US$ 11.2 billion apart from the exports potential.