Pharmaceutical industry lose in two situations: when production is less than demand, which result in medicine shortages, or when production is more than demand, which result in expired products return. What is the current practice of manufacturer planning in determining batch sizes? What factors are taken in consideration?
Hi Ammar,
It is a very difficult task to measure. Usually pharmaceutical company hires some market information experts and potential executives to investigate the overall scenario. They continuously visit the doctors to know their requirement, visit the drug stores to know the sales volumes of different products and even to the hospitals to know the disease trends in a particular region. In this way, they roughly estimate a yearly need of a definite pharmaceutical product. Moreover, if the product already exists in the local / international market, in that case they tried to find out the overall sales volume or market need of that product. Then a panel of experts give their opinion to find out the trimester based (3 months) market need and share that information to the production unit of that company. Then based on the existing production facilities, the production manager splits that need to several batches.
Obviously this is not an absolute way, rather a common trend in different countries.
Dear Ammar,
To determine the batch size of any product there are lots of factors in consideration. First of all, all the pharma companies have their monthly planning and this planning is given by the marketing department usually head of marketing. The marketing department sends their monthly planning to production based on the market survey.
However, it also depends on the type of products. For example if the frequency of some products are more and they are required quite often then for such products usually a campaign batch is taken in which many batches are made subsequently and supplied to market.
If the product is new for the company and there are only a few competitors then there is always a chance for high volume if the marketing is strong. In such case, the company always keeps ready all the required raw materials and packing materials. They launch the product in the market and also keeps one batch in reserve. They will come to know about the sales within first few weeks of the product launching. If the sale is high only then they increase the batch size because they do not want to get shortage of their new product stock in the market.
If a company is going to launch a new product but there are a number of competitors already in the market, then it is always unsure and unpredictable about the sale. In this case, the company doesn't want to take any risk and usually launches the product with a smaller batch size in the market and once the sales increases, only then the volume increases.
Sometimes there are unpredictable demand for certain types of products. For example, demand from an institute, or a hospital, or any international NGO. In such case usually the monthly planning of production is changed but these are only exception and happens sometimes.
These are some of the ways in which a company maintains its stock in the market and also prevents from expired product return.
Any Manufacturer needs factors, numbers upon which he or she can decide the benefactors for the company. There are certain tools which help the manufacturer to assess the profitability with respect to the material consumption. However, for certain decisions such as the volume of the production, manufacturer optimize the minimal work load of the operation and maximize the production on availability of the raw materials. In my opinion, LCA would help the manufacturer because LCA is one major assessment towards sustainability and this will assert any manufacturer to take steps. What are your thoughts upon this? What others think of this?
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