Advice You - Business

Procurement management can be defined as the independent monitoring or tracking of manufacturin

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

g processes to purchase order requirements. An implicit assumption of Economic Order Quantity (

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

EOQ) analysis is that the purchase price per unit is constant. In an inflationary period, this

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

ssumption is not valid. If the rate of inflation is predictable the EOQ formula can be applied.

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

The standard EOQ model assumes that materials can be procured instantaneously, and hence impl

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

es that the firm may place an order for replenishment when the inventory level drops to zero. I

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

n the real world, however, time is required for the procurement of materials, and hence the ord

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

er level must be such that inventory at the time of ordering suffices to meet the needs of prod

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

ction during the procurement period.

If the usage rate of materials and the lead time for proc

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

urement are known with certainty then the ordering level would simply be lead time in days for

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

rocurement, multiplied by the average daily usage. When the usage rate and lead time are likely

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

to vary, the reorder level should be higher than the normal consumption period requirement dur

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ing the procurement period, to provide a measure of safety in face of variability of usage and

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ead time. Put differently, the reorder level should be equal to normal consumption, added by th

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

e safety stock.

When both the lead time and usage rate vary, which is often the case, and the

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

ange of variation is wide, complete protection against stockout may require an excessively larg

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

e safety stock. Since inventory-carrying costs are proportional to the level of inventories car

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ried, it rarely makes sense to seek total protection against stockout. In view of the trade-off

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

between stockout cost and inventory carrying cost, the optimal level of safety stock is usually

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

much less than the level of safety stock required to achieve total protection against stockout

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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