Driving Resilient Supply Chains: Procurement Lessons from India’s Pharma Sector

India's pharmaceutical industry has traditionally been known as the ‘pharmacy of the world,’ exporting cheap generics and vaccines to the world. However, over the last few years, a sequence of disruptions ranging from border shutdowns and raw material supply disruptions to geopolitical tensions and logistics congestion have put the endurance of pharma supply chains to the test. These setbacks have transformed procurement into a strategic function that aims not just at minimizing costs but also at managing risks, ensuring continuity, and long-term viability.

Challenges of Procurement in Uncertain Times

India's pharmaceutical supply chains are highly reliant on imported Active Pharmaceutical Ingredients (APIs), especially from China, covering almost 70% of demand. Global transport disruptions, export restrictions, and price volatility tend to equate into value chain bottlenecks. The procurement leaders now have to steer through these uncertainties and provide seamless supply of life-saving drugs, ensure compliance, and keep costs under control.

Changes in Procurement Strategy for Enhanced Resilience

In order to create agility and protect from disruptions, a few significant changes have been witnessed across the sector:

• Supplier Diversification and Localization Indian companies are cutting dependence on one-country sourcing by diversifying to new geographies and placing investments in domestic production under the Production Linked Incentive (PLI) scheme, which has already backed the manufacture of 35 priority APIs.
• Strategic Supplier Partnerships Long-term supplier collaboration is taking over from transactional relationships. Joint planning, common risk assessments, and co-innovation are becoming norms.
• Digital Procurement and Visibility Procurement teams are implementing e-sourcing, AI dashboards, and supply chain control towers. Studies indicate digital adoption among Indian pharma is set to grow at a 19.2% CAGR from 2024-2029, allowing for improved forecasting and real-time risk monitoring.
• Risk Mapping and Scenario Planning Firms are stress-testing supply chains by creating second- and third-tier supplier maps, conducting disruption scenarios, and making contingency planning for geopolitical and environmental threats.
• Sustainability and Compliance As international buyers insist on ESG compliance, Indian pharma is integrating sustainability into procurement choices through more sustainable packaging, ethical sourcing, and tighter supplier audits.

Industry Examples from India

1. Serum Institute of India diversified its supply base for vials, stoppers, and cold-chain logistics to prevent single points of failure in mass-scale vaccine manufacturing.
2. Reddy's Laboratories expedited digital procurement, with increased transparency and responsiveness in purchasing.
3. Sun Pharma made investments in backward integration for key APIs, limiting dependence on external vendors.
4. Cipla has integrated sustainability into procurement by implementing green packaging and supplier ESG mandates.

The Road Ahead for Pharma Procurement

Procurement in the Indian pharmaceutical industry has evolved into a strategic function integral to decision-making. The future will be shaped by flexibility through diversified sourcing and increased domestic capacity, digital Maturity with predictive analytics and AI-driven insights and Sustainable Practices against global ESG standards. With 71.7% of bulk drug imports continuing to originate from China in FY24, becoming genuinely resilient is still a work in progress, but Indian companies are taking tangible action to minimize vulnerabilities and enhance long-term competitiveness.