SUPPLY CHAIN MANAGEMENT
main objective of this initiative is to enhance the eco-system of local production and hence reduce import dependence .
Another example is the support provided to micro and small custom synthesis start-ups founded by technically skilled entrepreneurs and located in the vicinity of our facilities . These start-ups are being given business opportunities to help scale up their operations and grow mutually . Admittedly , it is still cheaper to produce in China , but with proper support , these Indian start-ups are being equipped to punch above their weights in achieving similar cost advantages locally .
While these strategies offer a blueprint for reducing dependency on China , the transition will certainly not be without its challenges . China ’ s pharmaceutical and speciality chemicals industry has achieved significant cost-competitiveness over the past 15 – 20 years . It will take time for other markets , including India , to fully replicate the cost and efficiency gains achieved by Chinese suppliers .
Ongoing initiatives
Utilising these strategies , Aragen has lowered spending on nondomestic suppliers from over 40 % in 2017 – 2018 to just 19 % today , sourcing 81 % of our raw materials and indirect supplies domestically . By doing so we have also reduced cost of goods significantly and contributed positively to reducing carbon emissions .
To cite a specific example , a customer previously sourced a raw material from a Chinese CDMO at a significant cost and wanted to shift the project to India . While maintaining their existing supply chain in China , we executed the project locally .
During development , our team discovered that by adopting a different route of synthesis the same output could be achieved at a much lower cost with local Indian raw material supplies . As a result , the raw material is now being developed in India , leading to a 70 % cost reduction .
However , when working with new suppliers , maintaining continuous improvement is critical . Aragen ’ s quality and analytical teams test all incoming materials to ensure compliance with specifications before release to the factory floor .
We use a monthly scorecard to evaluate suppliers across six key metrics , including delivery performance , quality , sustainability and credit terms . This process leads to stronger supplier partnerships , helping both parties improve performance .
Any effective de-risking strategy revolves around four key pillars :
• Collaboration involves strategic partnerships with suppliers to secure stable supply chains
• Consolidation focuses on reducing the vendor base , enabling deeper engagement with higherperforming suppliers to ensure longterm sustainability
• Competition fosters innovation , drives cost reduction , and improves technical efficiency , as suppliers who offer enhanced capabilities and better synthesis routes become increasingly valuable
• Contracting , while complex due to limited long-term project visibility , can be facilitated through backward integration and technology transfer to third-party suppliers , who can execute contracts locally and provide more certainty over the long term In addition to supply chain resilience , sustainability is becoming a critical focus for pharmaceutical companies . Local sourcing reduces carbon emissions and supports local economies , while large pharmaceutical companies now expect their outsourcing partners to meet stringent environmental standards .
To rank sustainable products , we have implemented green procurement initiatives based on factors like green certifications , life cycle assessments and compliance with green chemistry principles . All strategic supply partners have also
been trained to include the green procurement status in the quotes they submit for each product .
Another trend gaining traction is the integration of artificial intelligence ( AI ) and machine learning ( ML ) into procurement and supply chain processes . Around 30 – 40 % of our customers now inquire about AI / ML capabilities during sourcing discussions . To meet this demand , we are developing systems that incorporate AI / ML into our sourcing activities , enabling smarter , more efficient supply chains .
Conclusion
The future of pharmaceutical supply chains will depend on continued innovation and adaptability . As regulatory pressures like the Biosecure Act reshape global sourcing , companies must explore new strategies beyond traditional models . AI and ML will play a key role in optimising procurement processes , while sustainability will remain at the forefront . For Indian CDMOs , this is a unique opportunity to lead the way in building resilient , diversified supply chains that meet both customer demands and environmental goals . ●
J j
Chandan P . Shirbayye
VP & HEAD OF SUPPLY CHAIN
ARAGEN info @ aragen . com www . aragen . com
56 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981