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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 98 000 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
Novartis
Health Oncology
CIBA health Generic Ophthalmology
Animal health General medicine
OTC in Pakistan
Pharmaceuticals
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
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
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 do–and is
key to our business success.
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.
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.
Regional offices:
• Quetta
• Karachi
• Hyderabad
• Sakkar
• Peshawar
• Islamabad
• Lahore
• Multan
• Faisalabad
Warehouses:
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 came through shipment but store them until
it meet the demand for the production .that usually save their transportation cost.
2. Hyderabad warehouse
Number of warehouses:
Novartis owned three warehouses in Karachi which are located at Karachi, Hyderabad
and jamshoro. The Karachi warehouse is located at WEST WHARF area and it manages
all the flow of Raw material from port to the jamshoro. The Hyderabad warehouse is used
to store 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 and products.
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 didn’t 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:
• 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
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:
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
Source: IMS, Q2, 2006
35%
30%
25%
20%
Series1
15%
10%
5%
0%
GSK PFIZER ABBOT NOVARTIS
Production inputs
Following are the production inputs used in plant/machinery:
Plant/machinery (should be according to cGMP regulations)
- HVAC systems
- Mixer
- Blender
- Granulation suits
- Packing area machinery
- Molding
- Water treatment plant
- Quality control equipment
- HPLCs
- GC etc
Energy
- Generator
- Electricity connection
Documentation
- SOPs
- Registrations
- Regulatory compliance
- Quality/standard certification
Building
- Drainage waste system
- Raw material temperature control
- Dispensary area
- Laboratory
- Stores
- Packaging material stores
- Finished goods stores
- Quarantine area
Personal
- Management
- Executives
- Regulatory
- Distribution and supply chain
- Marketing
- Import and export
- Engineering
- Technical staff
- Labour
Order processing for exports
The procedure of order processing is given below.
4. Prepare order requisition with calculation sheet i.e. invoice amount, wt/m3
Calculation/freight.
8. Export department:
Completes inspection formalities (if applicable)
Books cargo through cargo agent
Arranges NOC from ADC office:
- Commercial invoice
- NOC print (5) copies
- Bond paper for NOC affidavit
- Analysis report
- Any other document that may be required from time to time
Obtains Form E endorsement endorsement from bank as per L/C or contract
Completes other documents
- Certificate of origin
- Certification of various documents by the relevant embassy and chamber of commerce
- Commercial invoice (if required)
- Other documents
All documents attested by Customs are submitted to Customs House for rebate claim
Bill of exchange obtained from city court
Copy of documents sent to the customer:
- Commercial invoice
- Packing list
- AWB/BL
- Certificate of analysis
- Certificate of origin
- Weight certificate
- Others (if any)
Completes/verifies all documents with L/C requirements and presents to bank for
negotiation:
- Covering letter
- Form E (duplicate and triplicate)
- AWB/BL
- Copy of Letter of Credit
- Bill of exchange
- Packing list (original)
- Invoice (original)
- Certificate of analysis
Cash
Cash
Depo
Depo
sit
1 Order
Order
Booki
sit Booki
Into
Into ng
ng
Bank
Bank
7 2
Cash
Cash
Recei
Recei
ving
ving Invoic
Invoic
From ing
Process
From ing
Custo
Custo
mer
mer
Flow
6 Diagram 3
Suppl
Suppl Good
Good
ies
ies ss
To
To Segre
Segre
Marke
Marke gation
gation
tt
5 Loadi
Loadi
ng
ng
4
Into
Into
Del.
Del.
Vans
Vans
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.
1. CEO
2. General Manager (Operations and supply chain)
3. Manager (Solid, Liquid etc)
4. Manager procurement and Material management.
Head
Supply
Head technical
chain
operations
manager
Head
Eng. Head procurement Head MM
Head solid
Head liquid
Head semisolid
Head injection
Head QC.
Head warehouse
Logistics network
Distribution arrangements:
For distribution of its products, Novartis has a separate entity called parazelsus.
Parazelsus perform its functions separately than that of NOVARTIS. It looks after all the
matters associated with the distribution of product in the country. The table below is the
statistical view of the distribution network of Parazelsus.
National Statistics
Population 150 Million
# of pharmacies (approx) 35,000
These are the information about their distribution channels and how they cover
different cities of Pakistan as well as hospitals and other institutions.
PORT
(Air/Sea)
WEST HYDERABA
WHARF D F
WAREHOUS WAREHOUS
E E A
VENDOR
C
T
O
R
Y
VENDOR
VENDOR
VENDOR
• 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 it’s 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.
OUTBOUND LOGISTICS:-
OUTBOUND
LOGISTICS Parazelsus/Premier
Depots
1. KSD
EXPORT Karachi
TO 2. HSD
PHILIPPIN EXPORT TO Hyderabad
ES AFGHANISTA PSD 3. SSD
N ISD Sukkur
JHE 4. MSD
Multan
GUJ 5. FSD
FS Faisalabad
EXPORT TO D 6. LSD
AFGHANISTA
N
LSD Lahore
7. ISD
Islamabad
8. PSD
Peshawar
QSD 9. QSD
MSD Quetta
Premier Depots
10. NWB
Dispatch approx. 66.0 mio SSD
LKR Nawabshah
packs annually 11. MIR
NWB Mirpurkhas
12. LAR
MIR Larkana
JAMSHORO 13. GUJ
HSD
Gujranwala
KSD 14. JHE
Jehlum
• 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 Phillipines. Phillipines
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.
Materials Factory WW
Procurement
Manager Warehouse Warehouse Vacant
Manager
Manager Manager
karachi warehouse
Doctor’s
Doctor’s
Prescription Order Hyderabad warehouse
Prescription Order
Wholesaler
Emergency
Only
Novartis
Wholesaler
Other Hospitals
Hospital Pharmacy R
x
Wholesaler
Retail Pharmacies
International
and Local
Patient vendors
Karachi port
Local vendors
Karachi warehouse
Hyderabad
warehouse
Production
53% 32% 7% 8%
Retail /
Wholesalers Dispensing
Chain Distributors
Doctors
Pharmacy
100%
2% 6%
Retail / Others
Chain Hospitals (Institutio
Pharmacy ns)
Consumer / Patients
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.
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 upron 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.
This process flow diagram shows their exchange process as well as the documentation
process of their goods
SCOR MODEL
PLAN:-
Then it is sub
divided into weekly
schedule
This process is base on marketing plan which they develop through past years sales
as well as current demand.
Procurement process:
Marketing demand
Information flow
Marketing Market
strategy research Material flow
Budgetary Production
planning management
Sales forecast
Product requirement
planning
Material requirement Production
planning
schedule
Quality
vendor Production
assurance
RM/PM FG
Warehouse warehouse
Distribution
Sales to Sales
customer analysis
Material management functional flow is not stand alone activity, it is tightly integrated
with Market Demand and sales forecast.
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
Decanting
Separation
Centrifugation
Crystallization
Filtration
Purification
Drying
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
compound. If the compound’s 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.
Formulation, Mixing, and Compounding
To prepare a tablet, the active pharmaceutical ingredient is combined with filler, such as
sugar or starch, and a binder, such as corn syrup or starch. The filler is added to ensure
that the active ingredient is diluted to the proper concentration. A binder is needed to bind
tablet particles together. Coating may be used to offer protection from moisture, oxygen,
or light, to mask unpleasant taste or appearance, and to impart distinctive colors to
facilitate patient recognition. Once the tablets pass quality control requirements, they may
be held or sent directly to packaging.
Liquid Dosage
In formulating a liquid product, the ingredients are first weighed and then dissolved in an
appropriate liquid. The solutions are mixed in glass-lined or stainless steel vessels, after
which they are stored in tanks before final packaging. Preservatives maybe added to
prevent mold and bacterial growth. If the liquid will be used for injection or ophthalmic
use, sterilization is required. In this case, the container, which has also been previously
sterilized/dehydrogenated, is filled with liquid which has either been rendered sterile by
aseptic filtration in a sterile environment and/or the entire container and its contents are
terminally heat sterilized in an autoclave.
Injectibles Manufacturing
b. Autoclaving: all the dresses, equipment parts, gloves, glass containers etc are sterilized
by autoclaving.
c. Mixing and Filtration: Sterile liquid mixture is prepared by mixing active ingredients
and excipients in the specified ratio. The liquid mixture is then filtered under sterile
conditions. The distilled water is used for the washing of equipment, before starting the
mixing and filtration processes. The filtration assembly is also sterilized prior to the
process of filtration.
c. Filling and Sealing: The ampoules/vials are filled with the liquid mixture and then
sealed, on the automatic filling and sealing machine.
d. Optical Checking: The filled ampoules/vials are subjected to visual inspection, under
special light arrangement, to detect the presence of any particulate matter. The white
particles are optically checked against black background and black against white
background.
e. Printing and Packaging: After checking ampoules/vials are sent for printing, on a
Printing machine. The final packing is done in packaging area. At the end the packed
products are kept in big cartons and sent to warehouse for dispatch.
Sterilization 250 c
Autoclaving
Mixing
Filling &ceiling
Optical checking
Printing
Sourcing:
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.
• 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
• 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.
• Basic raw mat. And packaging mat. Is also imported through other countries
almost 95 % because basic manufacturing of these materials are not in Pakistan
Deliver:
Deliver process is take place through parazelsus which is separate company and the
distribution system is also discuss in parazelsus slides.
Parazelsus
Premier
In starting the distribution system was controlled by Novartis it self form jan. This year
they handed the distribution department to parazelsus
Others 3,121
Doctors ,363
Hospitals 503
Institutions 255
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
Retailers 62.35
Whole Salers 37.65
37.65
62.35
Return:
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.
BULLWICK 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.
They generally start their grounding of raw material four months earlier in order to met
the demand of these seasons
In summer the demand of calcium increase by 4 times so to overcome this demand they
collect the stock earlier to get prepare for that month.
The demand for kafkol rises 4 times in winter so they follow the same procedure as
mention above.
BOTTLE NECKS
Mechanical problems
Machine break downs
Maintenance break downs
Problems with raw material.
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.
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.
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.
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.
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.
Pricing is another issue which becomes serious for NOVARTIS day by day. The prices of
raw material and other inputs are rising. As they import most of the raw material from
different countries, it in turns increasing their manufacturing cost but when we analyze
their output price it doesn’t increase with more pace. It may be because of some
governmental barriers but Novartis has to cut down their input cost.