Table of Contents

Table of Contents ..................................................................................................................................... 1

Industry Type and Company Structure ..................................................................................................... 2

Product and/or Service Design ................................................................................................................. 2

Process Design .......................................................................................................................................... 3

Process upon Receipt of Raw Materials ........................................................................................... 3

Process upon Receipt of Materials into the Process Area ................................................................ 4

Process for Processing/Production ................................................................................................... 4

Process for Packing ........................................................................................................................... 4

Process for Dispatch ......................................................................................................................... 4

Location and Layout ................................................................................................................................. 6

Job Design and Human Resources ............................................................................................................ 9

Supply Chain Management ...................................................................................................................... 9

Manufacturers .................................................................................................................................. 9

Wholesaler...................................................................................................................................... 10

Pharmacies ..................................................................................................................................... 10

Pharmacy Benefit Managers (PBMs) .............................................................................................. 11

Overall Summary and Recommendations .............................................................................................. 11

References .............................................................................................................................................. 13
Industry Type and Company Structure
The chosen organization for the industry case study is a contract pharmaceutical
manufacturing company named as PharmaNZ. PharmaNZ is a one-stop-shop
pharmaceutical company located in Hamilton, New Zealand. It caters the clients’
need for pharmaceutical products constituting product development, product
manufacturing, applying quality and research, and branding and regulatory. With a
range of services available, PharmaNZ is a trusted support to the world's supplement
brands.
SWOT factors refer to the strength, weaknesses, opportunity and threats of the
company. Peter Lehrke, there technical director who has been in the industry for 30
years and has been with the company board for 10 years, is one who manages the
company and confidently defines the main strength of PharmaNZ as a
pharmaceutical company whose services are ideal for any companies wanting
high-quality standards, reliable service and continuity of
supply. PharmaNZ has been structured to service both scales of the
industry: start-ups and small companies that lack the internal resource to
directly manage every aspect of their products’ lifecycl e, as well as big
brands looking for a more economic option at scale
(www.naturalhealthproducts.com, 2019).
In August 2018 Peter Lehrke and Neil Farnworth met to discuss a new style of
pharmaceutical manufacturing business. One that understand the needs of today's
brand managers, and truly values the key relationships with the clients and
employees, and this is how PharmaNZ started. As their vision says, this company
intends to become a leading contract manufacturer, and trusted source to the
world’s health supplement brands. And as their mission says, this company’s
objective is to always ensure reliable, innovative, and sustainable product for their
clients. This company works under the core values of operational excellence, quality
and service, positive passionate people, trusted relationships, contribution to society,
and respect and integrity (www.pharmanz.com, 2018).

Product and/or Service Design

PharmaNZ is engaged in the development and manufacture of active
pharmaceutical ingredients (APIs), drug intermediates and formulations. Their main
products are natural health remedies, dietary supplements, health support
products, and related ingredients and services. The company offers products in
three different compositions namely, hard shell encapsulations, tablets, and
powders. Its in-house research and development department comprises of two
sections, namely, API and drug intermediates, and formulation development.
Pharmanz markets its products in domestic market through its own sales force and
sell them directly to various companies (www.bionity.com).
In the manufacture of pharmaceuticals, encapsulation refers to a range of
dosage forms—techniques used to enclose medicines—in a relatively stable shell
known as a capsule, allowing them to, for example, be taken orally or be used as
suppositories. The two main types of capsules are: Hard-shelled capsules, which
contain dry, powdered ingredients or miniature pellets made by e.g. processes of
extrusion or spheronization. These are made in two halves: a smaller-diameter
“body” that is filled and then sealed using a larger-diameter “cap”. Soft-shelled
capsules, primarily used for oils and for active ingredients that are dissolved or
suspended in oil. Both of these classes of capsules are made from aqueous solutions
of gelling agents, such as animal protein (mainly gelatin) or plant polysaccharides or
their derivatives (such as carrageenans and modified forms of starch and cellulose).
Other ingredients can be added to the gelling agent solution including plasticizers
such as glycerin or sorbitol to decrease the capsule's hardness, coloring agents,
preservatives, disintegrants, lubricants and surface treatment. Since their inception,
capsules have been viewed by consumers as the most efficient method of taking
medication. For this reason, producers of drugs such as OTC analgesics wanting to
emphasize the strength of their product developed the “caplet”, a portmanteau of
“capsule-shaped tablet”, in order to tie this positive association to more
efficiently-produced tablet pills, as well as being an easier-to-swallow shape than the
usual disk-shaped tablet (www.en.wikipedia.org).

Process Design
The process of manufacturing starts from the receiving of raw materials and
these materials will go to either dispensing or production depending on the result of
the material analysis. If the material was able to pas the test, it will go directly to
processing to of new products, if not, it will stay in the warehouse and will be
relocated to the quarantine area. After producing the products created, it will
undergo another bulk analysis test. If those products pass the test, it will then go to
the packaging process. Then those packed products will go with the final test, which
is the FG analysis, and if passed, will be ready for dispatch. The flow chart below
shows the summary of the whole process. Thereafter, the detailed procedure for
each phase is enumerated .

Process upon Receipt of Raw Materials

1. Process of receiving all raw materials and packing materials required for the
product, at warehouse.
2. Received materials to be arranged batch / lot wise.
3. Quality Control Dept. to be informed for sampling and analysis.
4. Materials to be quarantined till confirmation of status by QC by affixing yellow
status label
5. Materials approved by QC for use are affixed with green status label
6. Materials rejected are affixed with red status label and kept in reject area under
lock and key.

Process upon Receipt of Materials into the Process Area

1. While transferring the material into process area, ensure that both doors of
airlock of material entry are not open at a time.
2. Check all materials are received as per BMR.
3. Check all the containers are closed properly.
4. Ensure that the materials are kept on palettes
5. Clean the external surface of the container.
6. Check the gross weight of the dispensed material with issued quantity.
7. Check the dispensing label against BMR.
8. Segregate the material properly to avoid mix up.
9. Material for Binder preparation & blending shall be kept separately from rest of
the materials.
10. Check all the polythene bags if they are tightly secured.

Process for Processing/Production

1. Conversion of dispensed raw materials into dosage forms (e.g. tablets, capsules
etc.)
2. Initial check of identification details and weight of dispensed materials is very
important
3. Proper line clearance depend on the nature of the raw materials and the
intended dosage form.
4. Analysis of representative samples carried out during/after processing to ensure
that the product conforms to the prescribed quality parameters.

Process for Packing

1. Conversion of manufactured dosage forms into suitable package ready to be
delivered to the customer (e.g. blister, bottle, strip etc.)
2. The package is the first impression a customer gets about the product
3. Packing materials are mainly of two types:
4. Primary packing material
5. Secondary packing material
6. Proper line clearance is essential before starting packing operation

Process for Dispatch

1. The finished goods can be dispatched from warehouse only after obtaining
approval from Quality Assurance
2. The transport can be done through land, sea, or air.
3. Proper storage conditions required during dispatch to maintain the identity,
purity, efficacy, and safety of the product.
Location and Layout
The company building is located in 2-18 Lincoln St, Frankton, Hamilton 3204,
New Zealand. The following maps below show the vicinity map, site boundary map
layout, and the PharmaNZ floor plan layout.
From the vicinity map, it can be seen that the building (highlighted in color
orange) where the company is staying is bounded by other institutions near them,
and the nearest highway roads are the Massey Street and Lincoln Street. Having this
kind of layout considers no problem since there is enough access for transportation
of products from the building to the main roads.
 One possible change that they might consider in the layout is the position of the
production room. It can be seen in the site layout plan that the production room is in
the middle of the warehouses. From that, that there is no direct access to the
transport facilities for delivery of the products after the production process.
Looking at the floor plan, the operation rooms within the company office is very
well organized as it conforms to how the products are being processed. It can be
seen that the warehouse area occupies almost greater than 80% approximately of
the whole building. It is just appropriate for any pharmaceutical companies because
it is the area where the products will be stored and will be tested batch per batch.
Then from the warehouse, the products will be delivered into the production room,
which contains different rooms such as equipment rooms, operation rooms, process
rooms, etc, and all these rooms are in order from start to finish of the process.
Job Design and Human Resources
Although there is no specific number of employees found based on the
researches, it can be seen in the organizational chart below how the information
flows from the highest level officer up to the lowest level employee.
Neil Farnworth, the chief executive officer and general manager of the company,
and Peter Lehrke, the chief technical officer, are those who leads the company.
Under the general manager, there are the production managers who is the head of
the production process, quality managers who are the head of quality control and
material testing, the sales manager who leads the sales marketing, the finance
manager who leads the company budgeting, together with the people and culture
manager. The part that has the largest number of workers is under the production
team, which is comprised of the packaging team, workhouse and logistics team,
production team, and maintenance and machine fitters.

Supply Chain Management

In general, here is basically how PharmaNZ as a pharmaceutical manufacturing
company supply chain works. The major components of the pharma supply chain
network are manufacturers, wholesale distributors, pharmacies and Pharmacy
Benefit Managers (www.datexcorp.com, 2018).

Manufacturers
Brand name drug manufacturers devote a portion of their expenses to the
research and development of new drug therapies. Manufacturers of generic drug
products are focused on manufacturing generic compounds that compete directly
with the originally patented version of the drug product once the respective patent
has expired. Now Pharmanz, as a Pharmaceutical manufacturer, manages the
distribution of drug products from the point of production to the drug wholesalers
and in some instances, directly to retain pharmacy chains, specialty pharmacies,
hospital chains as well as to some health plans. While wholesale distributors are the
manufacturers’ largest purchasers, in some cases, drug manufacturers also distribute
products directly to government purchasers Only rarely are drug products
distributed directly to consumers or to a self-insured employer with an on-site
pharmacy.

Prescription drug manufacturers have the greatest amount of influence over

prescription drug pricing. They analyze the anticipated demand and future
competition and forecast marketing costs to produce the wholesale acquisition cost
(WAC). WAC is the “list price” of a brand medicine before any discounts, rebates or
other price reductions are applied. This is the baseline price at which wholesale
distributors purchase prescription drug products. Manufacturers can choose to issue
discounts and rebates based on factors including market share, volume and prompt
payment. Wholesale distributors are paid a distribution service fee for their
services. Usually based on a percentage of WAC, the distribution service fee is paid
in exchange for services including financial management, distribution service,
inventory management and data processing. Contractual agreements between
wholesalers and manufacturers may include discounts for prompt payment and bulk
purchasing.

Wholesaler
The role of the wholesaler in the life sciences supply chain management is to
make the process of purchasing drug products from pharmaceutical manufacturers
more efficient. Wholesale distributors connect 60,000 U.S. pharmacies and
outpatient dispensing outlets. This enables manufacturers to ship bulk quantities of
medications to a comparatively small number of wholesaler warehouses versus
shipping to thousands of pharmacy and outpatient dispensing outlets. Some
wholesalers specialize in dealing with a particular range of products, such as
biologics or to specific types of customers, such as nursing care facilities.

Pharmacies
The pharmacy category can include independent and chain pharmacies, food
stores or big box stores with pharmacies and mail-order pharmacies. Specialty
pharmacies focus on providing higher cost biotechnology drug
products. Internet/Mail order pharmacies have dramatically increased in use,
partially due to mandated use by major PBMs in the specialty pharmacy industry.
 Typically, pharmacies purchase prescription drugs from wholesalers at a
contracted discount off the WAC. The rate varies based upon the size and
purchasing power of the pharmacy. Pharmacies contract with wholesalers to stock
their facilities with prescription medicines and use agreements with facilitate full,
timely payment for drug product purchases and fulfillment of other obligations in
exchange for a discount.

Pharmacy Benefit Managers (PBMs)

The role of Pharmacy Benefit Managers in the pharma supply chain is designed
to provide an entity which focuses on improving cost savings, access, convenience
and safety for consumers, employers, unions and government programs. Pharmacy
Benefit Managers originated as basic claims administrators and have evolved to
become complicated organizations that provide a variety of services including:
 Claims processing and adjudication
 Reporting
 Developing formularies
 Manufacturer rebate negotiation
 Record keeping
 Drug utilization review
 Determine generic and therapeutic substitution
 Developing pharmacy networks
 Disease management
 Develop quality-focused programs for compliance strategies and clinical
expertise which promotes the safe, informed use of prescription drugs
 Consultative services such as helping clients establish their benefit structure
 Providing mail order pharmacy service and prescription drug order
fulfillment
PBMs are typically not considered to be a direct link in the physical
pharmaceutical supply chain as they usually do not assume possession or control of
prescription drugs, however they may do so if they provide mail order fulfillment
services.

Overall Summary and Recommendations

From the start of the discussion, PharmaNZ turns out that it is a pharmaceutical
company created to perform the ideal advantages of most drug manufacturing
companies. From the production process up to the delivery, everything positive
comment can be analyzed. As what have been said in the paper, one possible
improvements is the site layout especially the production area which will make the
process better if it will be positioned near the roadways.
Assuming to be an operations management consultant of the company, the
recommendations that are desired for the improvement are the following:
1. Long Term Approach Based on an Understanding of the Issues Identified
2. Make buy, build, acquire or partner decisions based on the need identified
above as well as the organization's strategy and integration capabilities.
3. Update the business case and financials and create an implementation and
integration office to execute the strategy
References

“How does pharmaceutical supply chain works?” Retrieved from

https://www.datexcorp.com/how-does-the-pharmaceutical-supply-chain-work/

“PharmaNZ: About Us.” Retrieved from https://www.pharmanz.com/

“PharmaNZ - Big Plans for Unique Contract Manufacturing Company”. Retrieved

from https://www.naturalhealthproducts.nz/pharmanz-big-plans-for-uniqe
-contract-manufacturing-company/

“Capsules Manufacturing process IN PHARMACEUTICALS: Hard Gelatine Capsules /

Capsule Machine/”. Retrieved from
https://www.youtube.com/watch?v=9LVqvD5V5s8

“Encapsulation”. Retrieved from www.en.wikipedia.org

“IPCA Laboratories Limited (524494) - Financial and Strategic SWOT Analysis Review”.
Retrieved from
https://www.bionity.com/en/studies/4675/ipca-laboratories-limited-524494-financi
al-and-strategic-swot-analysis-review.html